Since its passage, a number of lawsuits have attempted to undermine Obamacare as a law, with varying degrees of success. The individual mandate challenge failed before the Supreme Court in 2012, despite what seemed like positive reception to the challenge during oral argument. Hobby Lobby went before the Supreme Court on March 25 to challenge the religious liberty implications of the contraception mandate portion of the law.
While the media have largely focused on the Hobby Lobby challenge, a few blocks away, the D.C. Court of Appeals was hearing another argument about Obamacare-one that, if passed, could well have the effect of ending this law as we know it. And it has liberals running scared.
In the piece “Forget Hobby Lobby. The Bigger Legal Threat to Obamacare Still Has Life,” Alec Macgillis writes for the New Republic, “If the contraception challenge succeeds, it just means that that one sliver of Obamacare is struck down. If this other challenge succeeds, both sides agree that it would blow up the entire law.”
The argument for the plaintiffs is as follows: In order to provide the 60th vote, which was necessary to get the bill through the Senate, Ben Nelson, the then-Democratic senator from Nebraska, insisted on a clause that said that federal subsidies could only go to people who signed up on exchanges set up by the states. The purpose was to incentivize states to actually set up exchanges.
Then, the plaintiffs argue, the IRS wrote a rule in 2012 which reinterpreted the law to say that federal exchanges could give out subsidies as well. “The alternative policy under the IRS’ rewriting of the rule creates a bizarre circumstance where it’s almost impossible to fulfill the Act’s purpose of having state-run exchanges, because it eliminates any tangible incentive for these people to go ahead and adopt the exchanges,” argued Michael A. Carvin, the plaintiffs’ attorney, before the Court of Appeals on March 25. “So they’ve created a situation which has predictably resulted in only 14 states doing what Congress clearly wanted 50 states to do, which is to set up their exchanges.”