More Important than Hobby Lobby and Terrifying to Obamacare Supporters

The IRS plans to tax millions of Americans without congressional authorization—itself a federal crime. Cato’s Michael Cannon explains here how Halbig v Sebelius asks the courts to force the administration to implement O’Care as Congress intended.

Tuesday, all eyes will be on a high-profile Obamacare case before the Supreme Court. But just a few blocks away, a lower court will hear a lesser-known Obamacare case that could have a far greater impact on the future of the law.

The Supreme Court hears oral arguments Tuesday in Sebelius v. Hobby Lobby, a case challenging the Obama administration’s attempt to force private companies to purchase contraceptives for their employees contrary to the owners’ religious beliefs. A ruling for Hobby Lobby would restore the religious freedom of potentially millions of employers and workers.

Just down the street, the Court of Appeals for the D.C. Circuit will hear oral arguments in Halbig v. Sebelius. Obamacare supporters call Halbig ”the greatest existential litigation threat to the Affordable Care Act.”

That description, while colorful, is not quite accurate. Halbig does not ask the courts to strike down any part of the law. It merely asks the court to force the administration to implement the law as Congress intended, a prospect that absolutely terrifies Obamacare supporters.

The issues in Halbig are simple.

Obamacare authorizes the IRS to provide health-insurance subsidies (nominally, tax credits) to consumers who purchase health insurance “through an Exchange established by the State.” That’s not a drafting error. The subsidy-eligibility rules employ that language a total of nine times, without deviation. The rest of the statue is fully compatible with this language.

The statute is therefore clear and unambiguous: the IRS may issue subsidies in the14 states that established an exchange, but not in the 34 states that left the job of establishing and operating their state’s exchange to the federal government. Congress’ purpose is likewise clear. It wanted states to operate the exchanges, so it conditioned subsidies on state cooperation. Medicaid and countless other federal programs do the same.

The IRS’s philosopher-kings have decided to issue subsidies in those 34 states anyway.