Report: Administration Likely Knew Some Obamacare Subsidies Illegal

Tuesday, 29 Jul 2014 11:41 AM

By Melanie Batley

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The recent ruling by the D.C. Circuit that the implementation of Obamacare is illegal has uncovered the possibility that the Obama administration was aware of this all along, Politico Magazine reported.

The Halbig v. Burwell lawsuit ruled that the Affordable Care Act does not allow for Obamacare to provide subsidized health insurance for the 5 million Americans living in the 36 states using the federal healthcare website, HealthCare.gov.

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Instead, the legislation stipulated that subsidies would be extended only to those who enroll through an exchange "established by the State."

The administration, including Jonathan Gruber, who helped craft the ACA legislation, has insisted since the ruling that Congress never intended to withhold subsidies from residents of states that did not choose to set up their own exchanges.

Gruber, an MIT economist, described the ruling as "implausible," "screwy," "nutty," and "stupid."

But a 2012 video has since surfaced indicating that Gruber told an audience, "If you're a state and you don't set up an exchange, that means your citizens don't get their tax credits."

Another 2012 recording has also emerged of Gruber making similar comments, both of which may have been an attempt to try to "squeeze" the states into establishing their own exchanges, according to Politico.

Politico said Gruber's 2012 comments "demolish" the administration's case against Halbig.

"When the chief architect of the [Affordable Care Act] admits it withholds tax credits in uncooperative states, that establishes that the plaintiffs' interpretation of the statute in Halbig was not only plausible but that it had currency among the law's authors," Politico said.

Gruber has since tried to play down his 2012 comments, calling them a "speak-o," but Politico argues his explanation doesn't stand up.

"It is precisely because of Gruber's intellect and profound familiarity with the PPACA that his attempts to explain away his past statements are not credible," Politico added.

"Back in January 2012, before anyone knew 36 states would refuse to establish an exchange, Gruber understood and had no problem with what the law says. When it became apparent that two-thirds of the states would not establish exchanges, and that this language therefore threatened the PPACA's survival, Gruber changed his tune," Politico said.

"To claim Gruber didn't know what he was saying is as absurd as saying a conductor might fail to notice that the brass section suddenly stopped playing."

Politico added, "Gruber's comments raise questions about whether this (correct) interpretation of the law was also understood by the members of Congress and administration officials Gruber advised. They also corroborate other evidence showing that the administration was aware it was breaking the law all along."

The publication also noted that last year, seven career Treasury and IRS officials told congressional investigators they knew that the healthcare law did not authorize them to issue tax credits in federal exchanges and that their regulations only pertained to exchanges "established by the state."

"At the direction of their political-appointee superiors, however, they dropped that language and announced that tax credits would be available through exchanges established by the federal government, as well," Politico said. "Further investigation is in order and should proceed with all deliberate speed so as to inform the courts that will consider the appeals of these rulings."

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