Politics & Policy

On Obamacare, Oklahoma Leads

Oklahoma attorney general Scott Pruitt

Oklahoma attorney general Scott Pruitt has found an ingenious way to call a halt to the Obamacare project: Hold the federal government to the letter of that misbegotten law. His fight is a lonely one: While a majority of states signed on to the 2010 lawsuit opposing Obamacare on constitutional grounds, Oklahoma is standing largely alone today.

It should not be. Its lawsuit challenging the IRS’s attempt to spend tax dollars and levy taxes without authorization from Congress speaks to a fundamental issue. Simply put, the executive cannot will into being a tax that Congress has not created through legislation because it suits the president and his party to do so. Nancy Pelosi’s famous retrospective approach to creating health-care legislation turns out to be a pretty poor way to write a law.

#ad#The ACA contains an assortment of carrots and sticks, the pertinent ones here being the subsidies available for the purchase of health insurance through state-created exchanges, and the penalties for individuals who do not buy insurance and employers who do not provide it. The employer taxes are triggered when employees use the tax credit, and in some cases the individual taxes are triggered when the credit is available to them. The tax credits apply only to those using exchanges created by the states. The federal government can create its own exchanges within states; however, it has no authority under the law to use them to offer subsidies and inflict the accompanying taxes.

But there was an unforeseen development: Some 33 states have refused to create those exchanges, Oklahoma among them. If a state’s residents are not eligible for exchange subsidies, then its employers are not subject to the associated punitive tax. Contra the administration’s amen corner in the media, this was not a rookie drafting error in the legislation — it was an intentional feature of the bill. The law is explicitly written to deny subsidies to states that refuse to create exchanges. The president and congressional Democrats simply failed to anticipate that the majority of states would refuse to create exchanges.

By offering the subsidies in states that have not set up exchanges, the federal government is inflicting tax penalties on individuals and employers that go beyond even what Obamacare allows. But the Obama administration, demonstrating its habitually cavalier disregard for the rule of law, is proceeding as though it has the legal right to offer subsidies and impose penalties in states that have refused to create exchanges. That the law does not give the administration that right apparently is of little concern at 1600 Pennsylvania Avenue. But then, Eric Holder has a knack for retrofitting inventive legal theories to the president’s political needs, and the IRS has shown itself to be an effective advocate of Democratic political interests.

Pruitt v. Sebelius has been supplemented by a lawsuit filed last month by a group of small businesses and individual taxpayers also challenging the IRS’s authority to impose penalties outside of state-created exchanges.

One would think that at this particular moment in history, fighting back against the administration’s illegal use of the IRS to punish those who refuse to go along with the Obama health-care agenda would produce a very full political bandwagon. Republican governors who have pronounced themselves opposed to the ACA and yet have knuckled under to the associated expansion of Medicaid — meaning, among others, Governors Brewer, Scott, Kasich, and, especially, the ambitious Governor Christie — ought to be supporting Oklahoma and filing lawsuits of their own. Those in states that have refused to set up exchanges should not allow the IRS to in effect overrule them. Stopping the IRS from imposing punitive taxes where it has no legal power to do so should in fact be a popular and bipartisan issue, regardless of one’s opinions about the ACA itself.

Republicans may not have a great deal of power in Washington, where they control, in John Boehner’s words, one half of one third of the federal government; but we have 50 states for a reason, and Republican governors lead 30 of them. Republican governors, attorneys general, and state legislators looking to use their offices to the significant benefit of the nation as a whole should be lining up to create a 30-state united front with Oklahoma. Scott Pruitt is fighting for the rule of law, and Republican governors might trouble themselves to give him a hand. 

The Editors comprise the senior editorial staff of the National Review magazine and website.

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