Terry Jeffrey
The Supreme Court may soon need to decide whether the federal government can be considered a "state" in our federal republic in the same sense that Iowa, Wyoming and Wisconsin are states.

On the face of it, this question may seem absurd. In fact, given any level of reflection, it is absurd. The federal government is not one of the states.

But this absurd question was at the heart of Halbig v. Burwell, decided this week by the U.S. Court of Appeals for the District of Columbia, and it could soon become a defining issue in American life.

Section 1311 of the Affordable Care Act, the court explained, provided for "each State" to establish an exchange to sell health insurance.

However, the federal government cannot force a state government to create a health insurance exchange.

So, Section 1321 of the ACA empowered the secretary of Health and Human Services to directly create an exchange, under the authority of the federal government, in those states where the state government exercised its right not to create one.

But then the lengthy and complicated law did an interesting thing. It provided that people earning up to 400 percent of the poverty level could get a federal subsidy to buy health insurance -- so long as they bought that insurance in an exchange "established by the State under Section 1311."

The law did not extend the federal subsidy to people who make more than 400 percent of the poverty level, or who buy their insurance some place other than in an exchange "established by the State under Section 1311."

For example, the law did not include language providing a federal subsidy to people who bought their insurance in an exchange established by the federal government under Section 1321.

But the actual language of the law proved no obstacle to the Internal Revenue Service. When the IRS wrote the regulation governing the federal subsidies that people can get to buy health insurance under the Affordable Care Act, it simply pretended the law extended subsidies to people buying health insurance on federal exchanges as well as state exchanges.

For advocates of Obamacare, the IRS's expansion of the law turned out to be extremely important. Only 14 states established exchanges under Section 1311. The federal government, using Section 1321, established exchanges in the other 36 states.


Terry Jeffrey

Terence P. Jeffrey is the editor-in-chief of CNSNews

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