EDITORIAL: A new threat to Obamacare

OPINION:

Judges aren’t likely to save us from Obamacare — Chief Justice John Roberts, who didn’t want the Supreme Court to look bad, crushed that hope. But U.S. District Judge Paul L. Friedman deserves credit for doing the right thing in Washington on Tuesday, allowing a lawsuit to challenge one of the least defensible parts of the president’s health care takeover, his scheme of subsidies.

The administration doled out freebies to residents of the states that declined to establish Obamacare exchanges, which is contrary to the plain language of the law. Since the majority of states declined to participate, individuals have to go to an exchange run by the Department of Health and Human Services or sign up on the dysfunctional healthcare.gov website. They get a means-tested tax credit from the federal government, though the law does not authorize it.

The Obamacare statute set up the subsidies as a carrot to encourage states to establish exchanges. The plain language of Section 1401 of Obamacare requires that federal insurance subsidies go only to those “enrolled … through an Exchange established by the State.” The president wants to encourage people to sign up, so he ignores the law and sends the subsidies to federal exchange participants anyway.

With the carrot comes a stick. As the plaintiffs in Halbig, et al. v. Sebelius argue, availability of subsidies in their states exposes them to penalties tied to the employer mandate, currently deferred, which requires companies with 50 or more employees to offer insurance or pay fines.

The Obama administration nonetheless argues that it can extend the subsidies to the federal exchanges on the premise, which sounds flimsy to us, that Congress didn’t specifically include the federal exchanges in the text of the legislation because it didn’t anticipate that any states would decline to set up their own exchanges.

Judge Friedman, appointed a federal judge by President Clinton in 1994, brushed away the gossamer and denied the administration’s request to dismiss the case. This won’t please the White House, which is not accustomed to argument when it blows off deadlines, and amends, postpones or rescinds numerous other provisions of a law it doesn’t like. Without the consent of Congress, Mr. Obama declared a one-year delay in the employer mandate and has delayed enforcement of a number of eligibility requirements for the subsidies.

Judge Friedman declined to issue a preliminary injunction against the subsidies, saying he would rule on the lawsuit’s merits by the middle of February. That’s too late, as the subsidies are set to kick in on New Year’s Day. It won’t be the last word, but if upheld on appeal, Judge Friedman’s ruling would kick the props out from under Obamacare, writ large. Without the federal subsidies, enforcement of the individual mandate would be all but impossible. Low- and moderate-income Americans in 34 states would be required to buy costly Obamacare-approved insurance policies which, without the subsidies, they couldn’t afford.