Last Thursday, a group of small businesses owners and individuals in six states filed a new lawsuit against ObamaCare. Similar to the lawsuit filed in January 2011 by the Oklahoma attorney general, this one, filed in the United States District Court for the District of Columbia, alleges that the Internal Revenue Service is contravening the plain language of ObamaCare by making federal tax credits for health insurance available in states that chose not to create their own exchanges. ObamaCare, says the lawsuit, provides for the subsidies only through state-run exchanges, not the exchanges that the federal government will create in the states that decline to create their own exchange. Both the individual mandate to purchase a qualifying plan and the employer mandate to provide health insurance to employees are tied to the availability of the federal subsidies in a state; thus, the IRS’s decision triggers those mandates, which the plaintiffs would rather avoid.
Michael Cannon and Jonathan Adler have been writing about the IRS’s ruling on subsidies for some time; their latest offering is “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” published in Health Matrix: Journal of Law-Medcine, Spring 2013.