Michael Cannon, director of health policy studies at the Cato Institute, is -- according to CNBC -- the "intellectual godfather" of what is perhaps Obamacare's most serious court challenge. Cannon says when Congress drafted Obamacare, they made it clear: Tax credits, grants and other subsidies would be available only to those enrollees who sign up via state-funded exchanges.
Right after the appellate court decision, Cannon told me; "The way the [ACA] law works ... and it's all there in black and white, the statute gives states the ability to veto certain parts of the law's regulatory scheme, including the subsidies that shift from enrollees in the health insurance exchanges the cost of their very expensive insurance ... to the taxpayers. That's what those subsidies are there for, to shift those costs from the enrollee to the taxpayer. States have the power to veto those subsidies, and all they have to do is not cooperate -- not implement the law by creating a health insurance exchange or doing other things."
But only 14 states agreed to set up their own exchanges. So Obama simply picked up his pen and rewrote the law to give the tax credits to the federal exchange as well.
Cannon says: "So what these lawsuits are about is the people who are being injured by that decision by the administration -- the people who are being subject to those taxes, those penalties, even though they are by law exempt, saying, no, wait a second, what you are doing here is illegal. The law is clear; you don't have the authority to implement those provisions where states have vetoed them. Congress gave states that power. If you want to call this a glitch, you can call it a glitch, but it's a glitch that has to be fixed by Congress, because that's who writes the laws in this country -- not the IRS, not the executive. If you want to fix the law, go back to Congress."
Defenders of the administration's decision claim that Congress actually just made a boo-boo, a drafting error, an unintentional mistake by not giving the fed exchange the same benefits. And therefore Obama's interpretation is simply following the intention of Congress.
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