Wednesday, December 11, 2013

So that's how that works - or at least how it's written

Way back in the mists of ObamaCare time - like probably a year ago or so - I read or heard something that implied that a State not having its own exchange was a good thing for the businesses in the State but I never quite understood why that would be. Last week, I ran across a Wall Street Journal piece that explains the connection:

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.

In other words, if a State didn’t set up an exchange then the residents of that State can’t get government subsidies to help pay for health insurance. And if subsidies aren’t available in a State, the IRS cannot penalize businesses for not providing the kind of health insurance the government wants them to. (The IRS also cannot penalize individuals who choose to forgo health insurance altogether.)

At least that’s the way ObamaCare is written. The Administration wants to ignore the law, provide subsidies to those who buy on the Federal exchange, and thus be able to penalize businesses (and individual consumers) who fail to meet the ObamaCare requirements. Employers - including State and local government entities - are suing.

It will be interesting to see what the courts decide but in the meantime it seems foolhardy for residents of States without their own exchanges to count on premium subsidies when making decisions about what health insurance to buy.

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