Obamacare Court Ruling in Halbig a Major Blow to Opt-Out States

Washington, DC, Jan. 15, 2014 – In a blow to states that opted out of Obamacare, a District Court on Wednesday upheld an IRS regulation extending the law’s employer mandate to those “refusenik” states that decided against setting up their own insurance exchanges. The Competitive Enterprise Institute is assisting in the coordination and funding of the lawsuit and, now, the appeal.

Statement by CEI General Counsel Sam Kazman

The court’s ruling today in Halbig v. Sebelius delivers a major blow to the states that chose not to participate in the Obamacare insurance exchange program. It is also a blow to the small businesses, employees and individuals who live in those states as well. In upholding this IRS regulation that is contrary to the law enacted by Congress, this decision guts the choice made by a majority of the states to stay out of the exchange program. It imposes Obamacare penalties on employers and on many individuals in those states, penalties that Congress never authorized, putting their livelihoods and the jobs of their employees at risk. Worst of all, it gives a stamp of approval to the Administration’s attempt to substitute its version of Obamacare for the law that Congress enacted.

The court does all this despite its own finding that our arguments were supported by, in its words, “the plain language” of the law’s key provision regarding state-established exchanges.  And by erasing the distinction between functions carried out by states and functions carried out by the federal government on behalf of states, the ruling undercuts some basic aspects of federalism. We have appealed this decision, and will shortly move to expedite the appeal.

In its ruling, the court first dismissed the three employer plaintiffs in the case, holding that their claims were barred by the Anti-Injunction Act. But the court found that at least one of the individual plaintiffs had a sufficiently concrete injury to proceed. In its ensuing substantive analysis, the court based much of its reasoning on the alleged congressional purpose of providing nationwide subsidies for health premiums regardless of whether states cooperated or not.

• View the District Court opinion
• View the Notice of Appeal
• For more information about the case, visit www.cei.org/obamacare