The bad news keeps coming for Obamacare.
Besides the humiliation of a technical rollout that’s forced the president of the United States into the role of Rose Garden pitchman, the law suffered a setback in court Tuesday that could mean even worse news as 2014 gets into gear.
U.S. District Judge Paul Friedman turned down a Justice Department request to throw out a lawsuit filed by the Competitive Enterprise Institute challenging health-insurance subsidies for individuals and health-insurance requirements for businesses in the 34 states that have refused to set up their own health insurance exchanges, according to the Wall Street Journal.
The decision means the Obama administration will have to defend the law in a full trial, with a decision expected in February – when Americans will face the deadline for buying insurance or being fined under the widely despised “individual mandate” portion of the law.
“We have been hoping for a quick ruling since we filed this case, and now it looks like we will get it,” Competitive Enterprise Institute Sam Kazman said in a news release.
Under the Affordable Care Act (the official, Orwellian name for Obamacare), Americans who are required to buy health insurance may qualify for federal subsidies if their income is low enough, while businesses are required to provide insurance for full-time employees or face fines.
But the law states that those subsidies and the business mandate apply only in states that have a health insurance exchange “established by the state,” according to the news release. Most states have refused to set up exchanges.
According to the lawsuit, the IRS decided on its own authority that the law applied to states that have set up their own exchanges and those that haven’t, making the subsidies available to all Americans and imposing the mandate on all businesses.
The Competitive Enterprise Institute suit says the IRS doesn’t have the authority to overrule Congress. If the challenge succeeds in February, it could cripple Obamacare, Kazman told the Daily Mail.
“The fiscal impact while sizable, wouldn’t be large enough to bring down the house,” Kazman told the Daily Mail.
“You’d have 34 ‘refusenik’ states exempting their employers and many of their citizens from the employer mandate and portions of the individual mandate,” he said.
“You’d have companies in participating states considering whether to move their operations’ to states where they don’t have to obey the Affordable Care Act. And you might even have some of those states seeking to undo their choice to participate.”
This post was used with the permission of BizPacReview.