Patrick B. McGuigan
OKLAHOMA CITY – It’s been a rough week for defenders of the Affordable Care Act.
The ruling issued Tuesday (July 22) vacated an Internal Revenue Service (IRS) regulation that had authorized the federal exchanges to issue premium subsidies in the 36 states that have not created state-managed exchanges.
As a matter of law, the decision early this week reversed a district court ruling that said the IRS regulation was legally sound.
As a matter of public policy, the ruling shreds the fabric of the ACA, ratifying a legal position first advanced by Oklahoma Attorney Scott Pruitt. Oklahoma’s argument was submitted into the federal court system through a lawsuit filed in the Eastern District of Oklahoma in 2011.
In the D.C. case, private petitioners presented the same legal interpretation as Pruitt’s office.
In an interview with CapitolBeatOK, Pruitt said, “This is a consequential ruling. I am delighted the D.C. circuit spoke as firmly and as clearly as they did. They even took note of the fact that as judges they were reticent and troubled to have to fashion the decision they did. But honesty required them to reach this result, because of the language of the law itself.”
Pruitt has challenged legality of the premium subsidies and IRS approval of large tax penalties on “large employers” who declined to offer coverage under the ACA guidelines.
Also applauding the ruling in the nation’s capital city, and cheering on his statewide elected colleague, was Oklahoma Commissioner of Insurance John D. Doak.
In a statement, Doak noted, “The law is unambiguous. If its supporters had actually read it before they voted for it they would have seen that the subsidies were only for state-established exchanges. These exchanges have been so burdensome that 36 states chose not to create one and some states that did are now abandoning them.”
Doak added, “This overtaxing and unauthorized spending at the federal level has to stop.”
Writing this week for Reason.com, analyst Paul Suderman reported the comments of Case Western University Law Professor Jonathan Adler, who asserted, "If people lose those subsidies, it’s because the courts rule that those subsidies are and always have been unlawful.”
Adler believes the Obama administration "never had the authority" to manage subsidies in non-exchange states, saying, "Halbig did not cause those effects. Those are the effects of the Affordable Care Act."
As things now stand, the D.C. Circuit Court ruling will take effect in 45 days. However, the U.S. government is likely to appeal the decision to the entire Circuit Court.
In a related development, the Fourth U.S. Circuit Court of Appeals in Richmond, Virginia ruled, just hours after the D.C. case came forth, that the subsidies and the underlying IRS regulations are just fine. In that case (King vs. Burwell), the Appeals panel decided that despite language within ACA barring federal subsidies in non-exchange states, the context of the law as a whole leads to legality.
In our interview, Pruitt said, “The job of judges is to say what the law is, not what they wish it were. I believe the Circuit Court of Appeals for D.C. did a great job. This is a great ruling keeping separation of powers intact and upholding the plain meaning of law.”
Although no time frame is formally been set, Pruitt and other lawyers believe a decision will come soon in the federal district court case.
As for an ultimate appeal of the emerging conflicts among lower federal courts, Pruitt reflected, “I hope and pray that [The Halbig precedent] is persuasive to the Supreme Court, which I believe will eventually review the case and the conflicting precedents.