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The Obamacare tax credit and subsidy case argued today in the shadow of Hobby Lobby

The Obamacare tax credit and subsidy case argued today in the shadow of Hobby Lobby

“the greatest existential litigation threat to the Affordable Care Act.”

All eyes today are focused on the Hobby Lobby case, argued in the Supreme Court.

Michael F. Cannon from CATO argues that Hobby Lobby isn’t the most important case being argued today:

Tuesday, all eyes will be on a high-profile Obamacare case before the Supreme Court. But just a few blocks away, a lower court will hear a lesser-known Obamacare case that could have a far greater impact on the future of the law.

The Supreme Court hears oral arguments Tuesday in Sebelius v. Hobby Lobby, a case challenging the Obama administration’s attempt to force private companies to purchase contraceptives for their employees contrary to the owners’ religious beliefs. A ruling for Hobby Lobby would restore the religious freedom of potentially millions of employers and workers.

Just down the street, the Court of Appeals for the D.C. Circuit will hear oral arguments in Halbig v. Sebelius. Obamacare supporters call Halbig the greatest existential litigation threat to the Affordable Care Act.”

That description, while colorful, is not quite accurate. Halbig does not ask the courts to strike down any part of the law. It merely asks the court to force the administration to implement the law as Congress intended, a prospect that absolutely terrifies Obamacare supporters.

The issue is whether the IRS can issue subsidies for people who sign up for Obamacare through federally run exchanges, which would seem to be contrary to the plain language of the statute.  Prof. Jonathan Adler at Volokh Conspiracy analyzed the issues yesterday:

As has been recounted in this space before, the plain text PPACA authorizes tax credits and cost-sharing subsidies for the purchase of qualifying health insurance plans purchased in health insurance exchanges “established by the State under section 1311” of the Act. PPACA supporters believed every state would create its own exchange. They were mistaken, however, and over thirty states have refused. In response, the IRS promulgated a regulation authorizing tax credits and subsidies in all exchanges, whether or not they were “established by the State under 1311.” Halbig is one of four pending challenges to this regulation.

On January 15, Judge Paul Friedman of the U.S. District Court for the District of Columba upheld the IRS rule. According to Judge Friedman’s opinion, an exchange may provide tax credits and cost-sharing subsidies even if it was neither “established by a State” nor “established . . . under section 1311.” As should be clear, I take a different view. Indeed, my work (with Michael Cannon) has been credited with inspiring this litigation and I co-authored an amicus brief in Halbig expanding on our research (see also here).

We’ll update as we get analyses of today’s argument.


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If ONLY it was about forcing a business to install foot washing stations so that employees of faith could practice their religion of peace with respect…

Emperor Penguin | March 25, 2014 at 12:43 pm

Its scary that now we have to argue for religious freedom in our own companies.

How far we’ve fallen…

The usual suspects are hysterically shrieking that Hobby Lobby and other employers want to “control women’s bodies”. The position of the left is if you don’t give women free birth control and pay for their abortions, you are “controlling their bodies’. I guess if I don’t pay for their groceries, I’m also “controlling what they eat” and if I don’t pay for their housing, I’m “controlling where they live”.

We’ve come a long way, baby.

    Observer in reply to Sanddog. | March 25, 2014 at 1:08 pm

    It’s truly remarkable how they can make such logically inconsistent arguments, without having the slightest clue how idiotic they sound. “My body is not my boss’ business!” Agreed, but then why are you lefties trying to use the force of law to make your boss pay for your body’s contraceptives and abortion pills?

    If your body is not your boss’ business (and we agree that it’s not), then your boss should not be required to pay for your body’s health insurance, and he certainly should not be required to purchase your body’s contraceptives and abortion pills.

      Exiliado in reply to Observer. | March 25, 2014 at 4:47 pm

      Who needs “logically consistent arguments” when you have “a pen and a phone” and complicit DOJ and MSM ?

    gxm17 in reply to Sanddog. | March 25, 2014 at 6:18 pm

    Actually, the position on the left is that a company should not be allowed to engage in discriminatory practices based on the company’s “religion.” The idea of a corporation claiming a religion should scare the bejesus out of everyone. What next? Muslim-owned businesses that only allow women in burqas to enter, and even then make them use the back door? Or refusing healthcare coverage for gay spouses? Personally, I support the single payer system which would have kept Hobby Lobby from showing its ass by justifying discrimination in the workplace as an act of (incredibly bad) faith.

    ACA is now law, so all the folks screaming “I don’t want to pay for your birth control,” well I don’t want to pay for the folks who don’t use birth control and breed like rabbits, but I have to because it’s the law. So quit your whining already. We’re all in this together.

      Sanddog in reply to gxm17. | March 25, 2014 at 9:41 pm

      gxm17, If I’m your employer, under what moral code do you believe I should be forced to pay for your birth control so you can have carefree sex without worrying about pregnancy? Am I your MOTHER?

      It’s not discriminatory for me to tell you that if you want to play, you’re going to have to pay yourself. You need to grow up and start taking responsibility for your own actions and for your own health. Presumably you’re an adult (chronologically), it’s time to start acting like an adult.

        gxm17 in reply to Sanddog. | March 26, 2014 at 8:01 am

        And if I’m an employer, then why should I have to worry about the workers who are having carefree sex and breeding like rabbits? Let them pay their own obstetric and pediatric bills! And then there are the smokers. Let them pay for their own respiratory illness bills. And what about the obese? Let them pay for their own weight-related health problems. And don’t forget the gun owner who accidentally shoots himself. There’s no need to cover his accident-related medical care because it’s his responsibility to handle his gun safely, not mine. If one is going to start omitting health care coverage because of a patient’s causative lifestyle choices then you need a really big brush because that includes just about everybody.

        As I said, I’m a single payer proponent and I hate the Health Insurance Profit Protection Act just as much as, probably more so, than the folks on the right. But ACA is now law and it needs to be applied without discriminatory exceptions based on an employee’s lifestyle choices that the employer does not approve of. That’s just plain wrong. It’s bad medicine. And it’s bad business.

      ConradCA in reply to gxm17. | March 29, 2014 at 1:08 am

      There is no ObamaCare law. What we have now is inside the head of Tyrant Obama and what ever he says goes. The law passed by Congress is ignored.

      Furthermore, the majority of the people hate the law. They know that it has no redeeming features. That it gives the government control over their healthcare, when it should be private, between each person and their doctor. The federal government spent 20 times the dollars that a private company would and it fails to create a functioning website to perform the simple task of selling insurance. This proves that they are too incompetent to be in charge of our healthcare.

All private companies ALREADY offer a form of indirect coverage of contraceptives.

It’s called a PAY CHECK. You buy whatever you want with it, including contraceptives.

If the GOP were smart, they would turn the table on Obama and dare him to get the IRS to tax exempt all profits and expenses related to free market gynecological services and products.

That would put demonstrate how far Obama is willing to earn his bogus pageant title of being pro-Women reproductive “rights”.

    gxm17 in reply to Aucturian. | March 25, 2014 at 6:45 pm

    That indirect form of coverage (ever-shrinking for many Americans) should include pregnancy and childbirth too? And don’t forget pediatrics, that should be covered with a paycheck too. Right?

      randian in reply to gxm17. | March 25, 2014 at 6:51 pm

      Yes. Why are you having children you can only afford if you steal from your neighbors?

      Voyager in reply to gxm17. | March 26, 2014 at 1:15 am

      It already does. Where do you think your health insurance comes from?

      Heck, this whole mess started out as a way to get around payroll taxes and wage freezes.

The Internal Revenue Service is an administrative department under the Department of the Treasury, and as such falls under the Executive branch.
The Executive branch must execute the law as written and not redefined so as to completely bypass such law passed and foolishly not read by Congress.
“In response, the IRS promulgated a regulation authorizing tax credits and subsidies in all exchanges, whether or not they were “established by the State under 1311.”
With such action taken, the IRS, the Treasury and the Executive Branch are each acting unconstitutionally. All subsidies must stop unless… Harry Reid, Nancy Pelosi and Barrage Obama want to pay for it out of their own pockets.

Raise your hand if you think Hobby Lobby will prevail;with or without condition?

Me, I’m in the camp that says this ruling will become a future precedent that says Hobby Lobby and their ilk must provide free abortions to their customers on site, on demand.

    Voyager in reply to Browndog. | March 26, 2014 at 1:32 am

    Ruling that directly obligate people to violate their morale codes generally end in the Dread Scott territory.

    Most appeals to authority rely on on the people being pulled into it to be able to pretend they aren’t really doing anything they consider wrong. By contrast, this is storming into people’s homes and workplaces and demanding they renounce their beliefs. That’s more likely to get peoples’ backs up than it is to get compliance.

    I have no idea how the court is going to rule, but it isn’t really going to matter. The administration is not going be able to force people to provide things they believe are immoral.

Trooper York | March 25, 2014 at 1:48 pm

Not only will they be forced to provide free abortions on site but they will be forced to recycle the fetal tissue as fuel to heat their business.

The English heat care system is after all their model.

Don’t forget that Obama has several more years to appoint rogue judges like Paul Friedman.

The main point of these cases is that the plaintiffs have clear standing to sue, they will experience losses if the PPACA is administered as HHS intends.

Halbig and the other suits against the subsidies have plaintiffs who will suffer tax liabilities unintended by Congress if IRS is allowed to amend the law itself.

The most disturbing aspect is that Obama has hinted he may ignore a court order against the IRS rule. The silence of the Democrats about this reminds me of the dissent in the Central Committee when Stalin began to rant: there was none.

2nd Ammendment Mother | March 25, 2014 at 4:44 pm

I don’t have much faith in the plain language argument. If the Justices were bound by that then they would not have been able to rewrite the law to make the clearly written fine into a tax, in spite of the very clear and repeated statements that this is NOT A TAX.

So, Professor, what does your crystal ball say about the case’s outcome?