A few days ago an article the LA Times announced LA Times More legal trouble for Affordable Care Act.

The Affordable Care Act proposes to make health insurance affordable to millions of low-income Americans by offering them tax credits to help cover the cost. To receive the credit, the law twice says they must buy insurance “through an exchange established by the state.”

But 36 states have decided against opening exchanges for now. Although the law permits the federal government to open exchanges instead, it does not say tax credits may be given to those who buy insurance through a federally run exchange.

Apparently no one noticed this when the long and complicated bill worked its way through the House and Senate. Last year, however, the Internal Revenue Service tried to remedy it by putting out a regulation that redefined “exchange” to include a “federally facilitated exchange.” This is “consistent with the language, purpose and structure … of the act as a whole,” the Treasury Department said.

But critics of the law have seized on the glitch. They have filed four lawsuits that urge judges to rule the Obama administration must abide by the strict wording of the law, even if doing so dismantles it in nearly two-thirds of the states. And the Obama administration has no hope of repairing the glitch by legislation as long as the Republicans control the House.

This week, U.S. District Judge Paul Friedman in Washington, a President Clinton appointee, refused the administration’s request to dismiss the suit. Instead, he said the challengers had put forward a substantial claim, and he promised to issue a written ruling.

“This is a problem,” said Timothy Jost, a law professor at Washington and Lee University. “This case could have legs,” although “it was never the intent of Congress to establish federal exchanges that can’t do anything.

Might Such a Challenge Work?

After reading the LA Times article, I pinged a couple of very bright lawyers and asked if there was any chance such a strategy might work. One of them replied ….

Hello Mish

It’s hard to say, especially since there were probably matching changes in the Internal Revenue Code as well.

Usually you can make arguments to help interpret language like this from its context by reading other sections of the law. But what if other sections of the law are worded similarly?

I tend to think that no one intended this result. Will the court rule on intent?

This is highly political charged and tight legal analysis goes out the window when politics enters the room.

It will be interesting to see what happens.

More Constitutional Challenges

In addition to the above legal challenge, the Constitution Daily discusses three additional complications. Please consider Is Obamacare’s legality still in doubt?

From the very day in March 2010 that the President signed that measure into law, it has been under assault on three fronts: in the courts, in Congress, and in nearly three dozen states.   Its central feature is a mandate that individuals obtain health insurance, or pay a penalty to the Internal Revenue Service. Many Americans believe, and even President Obama has been known to say, that the Supreme Court has upheld that mandate.   Perhaps only lawyers and judges can draw a point so finely, but the Court last year actually upheld the penalty without explicitly upholding the duty to obtain insurance, and now both are scheduled to go into effect next year.

One of the reasons why Obamacare cannot escape repeated challenges in court is that it has so many parts to it, and arguments can be made against a good many of them. And one of the reasons that it may continue to be vulnerable, in a potentially devastating way, is that so many of the parts are interacting, and a court decision against one may have a spreading impact on others.

The reality is that the Supreme Court has only begun to be asked to reject key parts of the law, with more cases making their way through the lower courts.  There are four potentially very significant new challenges under way.

Within coming weeks, the Justices are expected to act on the first of this new round of challenges. That is a case being pursued by Liberty University, the religious college in Lynchburg, Va., which contends that the individual insurance mandate interferes with its and its workers’ religious beliefs – a point that the Supreme Court did not consider last year.
The administration itself has asked the Court to review, in the current term, the part of Obamacare that requires employers with more than 50 employees to provide their workers with coverage for a variety of birth-control drugs and pregnancy screening methods. This second challenge developed in more than five dozen lawsuits across the country, with conflicting results that the Supreme Court is likely to step in to resolve.

The third new legal protest that may reach the Justices in coming months is a claim, now under review by a federal appeals court in Washington, that the penalty provision that the court upheld last year is itself unconstitutional.  The argument is that, since the Constitution requires that all tax and revenue measures must get their start in the House of Representatives, this provision is invalid because it originated in the Senate. A federal judge blocked that claim, on procedural grounds.

The fourth new challenge is just getting started in several federal courts around the country, and it apparently has major potential for disrupting Obamacare’s interdependent scheme of coverage and thus is growing in popularity with the law’s critics.

Under the law, if individuals’ income is too low for them to afford insurance coverage, they are exempted from the mandate to buy it and can expect to be eligible for government-provided medical care for the poor.

But the government wants many of those individuals to be able to shop for affordable coverage on the new “exchanges,” or insurance marketplaces, that the law creates.   To make them eligible, Obamacare provides a tax credit they can apply toward insurance premiums.  The tax credit offer is considered vital to making the exchanges work, to assure that many of the nation’s lower income families get covered, and to assure that there are enough customers to keep insurance companies offering affordable policies in those exchanges.

The Internal Revenue Service has ruled that this tax credit will be available to lower income people in every exchange across the country. But the new lawsuits contend that the IRS has simply misapplied the law. The law, as they read its wording, says that the tax credit only applies to those shopping at an exchange run by a state government, not at the federal substitutes.

Will Any Challenges Work?

I am not a lawyer, but the first two attacks presented in the Constitution Daily seem narrow enough in scope the court could easily uphold Obamacare but allow individuals to opt out of aspects of the law for documented religious beliefs.

If someone has no insurance now, corporate or otherwise, and can prove on religious grounds that religion is the reason, let those persons opt out, under the proviso they never take medical care at taxpayer expense. How many individuals will that be?

The second attack is even sillier. After all, the law does not force anyone to take birth-control pills or undergo pregnancy screening. If a person does not want those procedures, the remedy is easy: Don’t take birth control pills and don’t undergo medical procedures you don’t want!

The second challenge is so ridiculous it’s no wonder Obama actually wants a Supreme Court ruling.

The fourth challenge is the same one presented by the LA Times. My friend offered an educated guess worth repeating “This is highly political charged and tight legal analysis goes out the window when politics enters the room.

I suggest the same may apply to the third argument “Obamacare is invalid because it originated in the Senate“.

It is the third and fourth challenges that may have legs.

Second Thoughts?

One California resident with second thoughts says “I was all for Obamacare until I got the bill“.

Recall that the Supreme court ruling was 5-4. Is it inconceivable that one of the 5 has second thoughts? If so, Obamacare may die a sudden death and we can start all over.

Let’s hope so. This law, as passed is a clear boondoggle in more ways than one.

As many as 16 million Americans will lose their existing coverage that they want to keep. For details, please see More Obamashock! Glitches Hit Paper, Phone Applications; Obamacare Glitch Great Quotes.

Mike “Mish” Shedlock