A federal judge on Tuesday refused to dismiss a case that could fatally cripple the Obamacare health insurance law.
The Affordable Care Act forbids the federal government from enforcing the law in any state that opted out of setting up its own health care exchange, according to a group of small businesses whose lawsuit got a key hearing Monday in federal court.
The Obama administration, according to their lawsuit, has ignored that language in the law, enforcing all of its provisions even in states where the federal government is operating the insurance marketplaces on the error-plagued Healthcare.gov website.
Thirty-six states chose not to set up their exchanges, a move that effectively froze Washington, D.C. out of the authority to pay subsidies and other pot-sweeteners to convince citizens in those states to buy medical insurance.
But the IRS overstepped its authority by paying subsidies in those states anyway, say the businesses and their lawyers
The subsidies serve as a trigger that determines who has to comply with the now-famous individual and employer mandates. So, the lawsuit claims, the Obama administration illegally enforced the Affordable Care Act – suddenly making millions of taxpayers and small employers subject to paying fines if they don't play ball.
The Affordable Care Act authorizes subsidies only for policies purchased 'through an Exchange established by the State.'
A different section of the law empowers the federal government to set up its own exchanges for each state that chose not establish one.
