U.S. Representative Scott Desjarlais, The Tennessean
By Paul C. Barton, Gannett Washington Bureau
The health care advocacy group Families USA recently proclaimed at least 575,000 Tennesseans will qualify for tax subsidies next year to help them buy the individual health insurance policies mandated by the Affordable Care Act.
Many conservatives, meanwhile, grow increasingly confident the system of tax credits and penalties the 2010 act calls for will not apply in Tennessee or other states refusing to create their own special health insurance marketplaces or "exchanges."
In fact, they say, the tax subsidies may be struck down in the courts before 2014 arrives.
One of those making this case is Rep. Scott DesJarlais, R-Jasper, who argues that the sloppy wording of President Barack Obama's signature legislative accomplishment provides one of the best remaining opportunities to stop it in its tracks.
As for all those Tennesseans that might get help through tax subsidies or credits, "I think it (Families USA) is giving false hope," DesJarlais said.
"This health care law is collapsing upon itself."
Defenders of the health care law have consistently maintained DesJarlais represents a frivolous legal argument, and that there is no doubt about what Congress intended -- the tax provisions would apply to both types of exchanges.
DesJarlais' is peddling "absolute nonsense," said Ron Pollack, head of Families USA. He added there is "no difference whatsoever" in how tax rules apply to state or federally-run exchanges.
To ensure compliance, the law set out a system of tax credits and penalties the Internal Revenue Service will administer in regard to "state exchanges." But as some read it, it leaves in serious doubt how the tax provisions would apply to "federal" or "federally-run" exchanges. Neither are mentioned in the part of the law covering the tax implications.
Tennessee is one of 26 states that will have a federally run exchange because it declined the option of establishing a state-run marketplace.
The tax subsidies are supposed to go families and individuals with incomes betweeen 100 percent and 400 percent of the federal poverty level. That could be an individual with income of no more than $47,100 or a family of four making no more than $94,200.
The IRS would calculate the subsidy amounts available to different income levels and forward the money itself to insurance companies as premium payments on policies.
"This reaches into the middle class -- deeply," Pollack said.
Firms with workers qualifying for the subsidies will face tax penalties, an incentive to get them to offer health coverage as an employee benefit.
The IRS, in May 2012, issued administrative language to specify the tax provisions would apply to either state or federally run exchanges.
In response, DesJarlais and Rep. Rep. Phil Roe, R-Johnson City, introduced legislation to make it clear the IRS had no authority to take a law Congress passed and make that clarification -- effectively rewriting the law -- on its own.
And their argument has since gotten the endorsement of numerous conservative legal scholars around the country, as well as the Republican attorney general of Oklahoma, E. Scott Pruitt.
Pruitt has incorporated it into a federal lawsuit in the Eastern District of Oklahoma challenging the Affordable Care Act's constitutionality.
Obama administration lawyers, meanwhile, are trying to get the suit dismissed, citing the federal Tax Anti-Injunction Act of 1867. The latter was designed to keep tax and revenue measures from being challenged before their effects were even experienced.
Tom Miller, analyst at the conservative American Enterprise Institute, said he expects a ruling on the constitutionality question before 2014, when the health care law is scheduled to take full effect.
"It's a strong argument," he said of Pruitt's case. "You can't reinvent a law different from what Congress actually passed."
But Miller also said he is also not ready to say the Oklahoma case would completely undue the Affordable Care Act.
"I think that is reaching for too much, too far," he said, but added it should at least give states more leverage in bargaining with the administration over how the exchanges are run.