The IRS Is Attempting An Illegal End-Run Around States Opting Out Of Obamacare

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Written By:
Rob Port

Sep 10, 2012
11:25am

Several states, North Dakota among them, have chosen to opt out of the Obamacare health care exchanges for a lot of excellent reasons.  The argument for implementing the exchanges from Obamacare apologists is that state-implemented exchanges somehow represent local control.  Which is an illusion.  The states can only establish exchanges that meet guidelines met by the federal government.  There is no local control.  There is only the option for the states to saddle themselves with the obligation to pay for the exchanges.

That’s not a good deal for the states.

But another advantage is that states refusing to implement exchanges is that it throws a monkey wrench in the implementation of Obamacare as a whole.  The text of Obamacare allows only state-created exchanges, not federal exchanges, to distribute subsidies and credits for health insurance.  “Without these bureaucracies, Obamacare cannot work,” writes Cato’s Michael Cannon, and he’s right.

What’s more, while the Supreme Court may have upheld Obamacare as constitutional, the majority of justices did strike down a portion of the law allowing the federal government to punish states for not implementing Obamacare by withholding federal funding.

What’s troubling, though, is that the Obama administration, by way of the IRS, is attempting to circumvent these state opt-outs:

The president’s health care law attempted to coerce states into administering its vast new health care entitlement by offering huge subsidies if states would set up “exchanges,” new health care bureaucracies.  The Democrats who wrote the law thought every state would be eager to do it – but many states have chosen not to.

Now the IRS is attempting to illegitimately rewrite the law to force states that lawfully opted out back in by allowing subsidies to flow through federal exchanges.  And the IRS is claiming companies must pay penalty taxes of thousands of dollars per employee – even if their state lawfully opted out.  It’s literally taxation without representation – and it’s happening in secret, without the American people having a voice.

Senator Ron Johnson is seeking to protect states who have opted out by introducing Senate Joint Resolution 48.

If Americans want to protect their states’ right to opt-out of Obamacare they must contact their members of Congress and tell them to support Senator Johnson’s legislation.