Obamacare author says subsidies only apply to state exchanges
On January 18, 2012, Jonathan Gruber, a Massachusetts Institute of Technology economist who helped write Obamacare, said:
“What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”
You can see him saying it in this video. Link set to start video at 31:25, the relevant point: https://www.youtube.com/watch?v=GtnEmPXEpr0&feature=youtu.be&t=31m25s
So how is it that the federal government is giving subsidies through the federal exchange?
It’s because under the corrupt leadership of President Obama, the IRS illegally gave itself new power without approval from Congress.
On May 23, 2013, the Washington Post wrote of this:
The law allows the Department of Health and Human Services to set up federal health exchanges in the holdout states. But the statute makes no mention of the IRS providing credits and subsidies through federal exchanges.
The IRS resolved this conundrum by denying its existence. In a May 2012 regulatory ruling, it asserted its own right to provide credits outside the state exchanges as the reasonable interpretation of an ambiguous law. But the language of the law is not ambiguous. And health scholars Jonathan Adler and Michael Cannon, in an exhaustive recent analysis, find no justification for the IRS’s ruling in the legislative history of Obamacare. “The statute,” they argue, “and the lack of any support for the IRS rule in the legislative record put defenders of the IRS rule in the awkward position of arguing that it was so obviously Congress’ intent to offer tax credits in federal exchanges that despite a year of debate over the PPACA, it never occurred to anyone to express that intent out loud. A better explanation is that the PPACA’s authors miscalculated when they assumed states would establish exchanges.”
So: The IRS seized the authority to spend about $800 billion over 10 years on benefits that were not authorized by Congress. And the current IRS scandal puts this decision in a new light. What was the role of politics in shaping this regulatory decision? What pressure was applied?