As millions of Americans see their health-insurance premiums increase, have their coverage dropped as a result of the Affordable Care Act, and are unable to use the federal exchange, Oklahoma has sued the Obama administration. The Sooner State and several others are trying to stop the government from imposing tax penalties on certain states, businesses and individuals in defiance of the law. If these legal challenges are successful, the deficit spending associated with the new health-care law could be reduced by approximately $700 billion over the next decade.
While the president's health law is vast and extraordinarily complex, it is in one respect very simple. Subsidies are only to be made available, and tax penalties for not signing up for health insurance are only to be assessed, in states that create their own health-care exchange. The IRS, however, is attempting to enforce tax penalties in all states—including Oklahoma and the majority of the other states that have declined to create their own exchanges. Citizens and businesses in these states must use the federal exchange instead.
The distinction is critical, because under the terms of the law it is the availability of government insurance-premium subsidies that triggers the penalties against businesses if they fail to provide their employees with health insurance that the administration deems acceptable. This is a huge problem for the administration, which desperately needs to hand out tax credits and subsidies to the citizenry to quash the swelling backlash against the law.
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