Obamacare in Intensive Care

Obamacare was moved Tuesday to intensive care. Two federal appellate courts split over whether the administration can bypass Congress and rewrite the Obamacare law as it wishes Congress had written it. Such a split on a high-profile case can be resolved only by the Supreme Court.

The U.S. Court of Appeals for the District of Columbia Circuit held that the IRS cannot subsidize the premiums for Obamacare insurance in the 36 states that did not establish a state health-insurance exchange. The 4th U.S. Circuit Court in Richmond came to the opposite conclusion.

The dilemma was wrought when the IRS, under White House direction, offered tax credits to subsidize policies bought through federal exchanges. This runs contrary to the plain words of the Obamacare statute, which says that only insurance purchased through state-run exchanges qualifies for the subsidy.

In drafting his law, President Obama intended the subsidies as the carrot to entice states to create their own health care insurance exchanges. He never expected states to reject the scheme — what politician would turn his back on “free” money? This is no minor legal detail. The subsidies add up to $36 billion a year.