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Ignore The Law, Obamacare Subsidies Are Too Helpful

Despite a Supreme Court challenge, one union is arguing that Obamacare subsidies were never meant to coerce states into establishing their own exchanges.

The Supreme Court case, King v. Burwell, is part of a series of lawsuit which argue that Obamacare was written to allow subsidies only on state-run exchanges, meaning the IRS can’t provide subsidies to people in states that opted-out of setting healthcare exchanges.

Plaintiffs argue that state subsidies were allowed under the law to incentivize states into starting exchanges, but the plan backfired when states still refused to do so. This in turn prompted the federal government to offer subsidies to people in states that didn’t have exchanges — in violation of what the law actually specified.

If the federal government intended to use the subsidies to coerce states into participating, they would be in serious violation of the law.

The Service Employees International Union, however, argues that the subsidies were never meant to bribe states into setting up their own exchanges, and that the federal government can give subsidies to residents of states that opted-out of setting up exchanges.

“Congress used a variety of ‘carrots’ and ‘sticks’ to induce states to establish Exchanges voluntarily,” the plaintiffs argued in their petitioner brief. “The Act also penalizes states that do not create Exchanges, such as by barring them from restricting eligibility for their state Medicaid programs.”

“Contrary to Congress’s expectation, the ACA remained highly controversial in the years following its enactment,” they argue. “Perhaps concerned that some states would refuse to establish Exchanges even at the cost of subsidies, the IRS in 2011 proposed, and in 2012 promulgated, regulations extending subsidies to all Exchanges—not only those established by states.”

“These regulations (‘the IRS Rule’) contradict the statutory text restricting subsidies to Exchanges,” the plaintiffs add.

In their Amicus Brief, the SEIU challenged the theory by claiming the subsidies were never meant to bribe states into running their own exchanges.

“Petitioners’ carrots and- sticks theory raises serious constitutional and federalism questions,” the SEIU declared in their brief. “It should not be accepted unless supported by unmistakably clear evidence of congressional intent, which is not present here.”

“On petitioners’ view, Congress coerced state decisions about their internal operations by threatening the states with severe injury” their brief added. “Yet we are to believe that Congress did so in a manner never before seen in a federal statute.”

Additionally, the SEIU argues in a press release that these subsidies have helped millions of people gain affordable, quality healthcare in states without exchanges, and are therefore worth keeping.

Josh Archambault, a senior fellow at the Foundation for Government Accountability, notes that what matters in not the intention of the law, but how it is written.

“Intentions don’t matter, the words do,” Archambault tells The Daily Caller News Foundation. “The words in the law are pretty clear.”

Archambault notes that despite their moral claim of how many people the subsidies help, what truly matter when it comes to the Supreme Court’s decision is what the law actually says. In this particular case, he argues, it is clear the subsidies were only meant for states that have set up their own exchanges.

“There are some strange leaps that are not backed up with research,” Archambault adds. “It’s more politics then legal.”

In July of 2014, the Fourth Circuit in Richmond Va., and the D.C. Circuit Court of Appeals came to the opposite conclusion for two cases related to the issue of subsides provided to states without their own exchanges. The Supreme Court will hear oral arguments on March 4, 2015.

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