Phil Kerpen

A couple of weeks before President Obama's big immigration dictate, his IRS issued a more quiet but no less outrageous edict that attempts to up-end the ability of states to opt out of his health care law's new entitlement.

When the law was written, its supporters assumed states would be eager to participate and get access to enormous subsidies from federal taxpayers. Instead, more than half the states challenged the constitutionality of the law in court, and at least that many are likely to refuse to set up the so-called exchanges through which the new entitlement subsidies flow.

So the Obama administration is trying to bribe states to participate by manipulating language in the law that is meant to authorize start-up grants to instead fund years of operating expenses. A recent announcement from the Department of Health and Human Services (HHS) offered states six full years of funding.

Even that bribe isn't convincing many states that are flatly refusing to implement exchanges - which are subject to onerous regulatory control by HHS.

The statute does, under section 1321, authorize HHS to create federal exchanges in states that choose not to participate. But the law specifically denies taxpayers in those states "premium assistance credits," the subsidies at the heart of the new health care entitlement. This was supposed to be a way to coerce states into playing along - the Democrats who wrote the bill just couldn't imagine a state leaving billions in federal subsidies on the table. The author of the provisions, Senator Max Baucus, has reportedly stated that this was an intended feature of the law.

Now the IRS, likely at the direction of an Obama White House increasingly concerned that the whole law will crumble due to the number of states opting out, is scrambling to bureaucratically rewrite the law and allow subsidies to flow through federal exchanges.

The IRS, in a May 23 dictate, had the nerve to say: "The statutory language of section 36B and other provisions of the Affordable Care Act support the interpretation that credits are available to taxpayers who obtain coverage through a State Exchange, regional Exchange, subsidiary Exchange, and the Federally-facilitated Exchange."

Yet there is no mention of a "federally-facilitated Exchange" anywhere in 36B or in any section referenced in 36B. In fact, the definition of the new credit under 36B specifically requires enrollment "through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act." Identical language appears in the definition of a "coverage month" later in 36B.


Phil Kerpen

Phil Kerpen is president of American Commitment, a columnist on Fox News Opinion, chairman of the Internet Freedom Coalition, and author of the 2011 book Democracy Denied.

American Commitment is dedicated to restoring and protecting America’s core commitment to free markets, economic growth, Constitutionally-limited government, property rights, and individual freedom.

Washingtonian magazine named Mr. Kerpen to their "Guest List" in 2008 and The Hill newspaper named Mr. Kerpen a "Top Grassroots Lobbyist" in 2011.

Mr. Kerpen's op-eds have run in newspapers across the country and he is a frequent radio and television commentator on economic growth issues.

Prior to joining American Commitment, Mr. Kerpen served as vice president for policy at Americans for Prosperity. Mr. Kerpen has also previously worked as an analyst and researcher for the Free Enterprise Fund, the Club for Growth, and the Cato Institute.

A native of Brooklyn, N.Y., Mr. Kerpen currently resides in Washington, D.C. with his wife Joanna and their daughter Lilly.