“The freshman senator from Wisconsin is challenging the IRS rule that circumvents Congress to support the creation of federal-facilitated health insurance exchanges and expose millions of Americans to Obamacare penalties.”

“The U.S. health care law’s process for providing insurance subsidies to middle-income families will produce a ‘burdensome, costly and frustrating quagmire,’ a former Internal Revenue Service commissioner told a congressional committee.”

“So, benefits and HR professionals are going to be responsible for providing information on a new state-run program that won’t be part of anything they do in their everyday job? The simple answer is yes. So, on March 1, 2013 when you hand an employee the state health insurance exchange guide, get ready for the following questions from employees…”

“The Affordable Care Act sets up new insurance exchanges through which people can buy coverage, and it provides tax credits to help low-income people with that purchase. The law says each state should set up its own exchange but also directs the federal government to set one up in any state that does not. The IRS is planning to provide tax credits in state-based and federally run exchanges. Issa and other conservatives say the subsidies should only be available in state exchanges — not the federal fallback.”

“Amid the political bickering, however, many have lost sight of the most important question: Does the aAffordable Care Act’ improve the quality of care and thereby make health care more affordable? The answer, unfortunately, is no. “

“There’s good reason to believe that in short order, the health plans sold in Obamacare’s heavily regulated, state-based insurance exchanges will degrade into something akin to today’s Medicaid managed care plans. If a lot of consumers who presently get their health coverage at work are dumped into these state exchanges (as many independent analysts predict), then tens of millions of Americans could find that they’re worse off under the new law and that their health benefits have been substantially devalued.”

“On the ever-lengthening fiasco list, the ‘exchange’ problem is one of the worst. Congress told states to build these bureaucracies that will dispense health insurance subsidies and regulate coverage, but by and large the states aren’t doing so. The National Academy for State Health Policy reports that only 13 states are making ‘active’ progress on their exchange. That means they’ve checked off five or six of the seven basic boxes that the Health and Human Services Department says they must, like pass legislation or issue an executive order establishing an exchange.”

“The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because the granting of tax credits can trigger the imposition of fines on employers, the IRS rule is likely to be challenged in court.”

“If the courts were to accept Adler’s and Cannon’s argument, that could effectively enable states to kill federal exchanges by empowering them to cut off the subsidies. Without subsidies, the federal exchanges would not be economically viable because they couldn’t get as many people to sign up for coverage.”

“Much attention has been given to the argument that without the individual purchase mandate, other parts of the health care law would become unworkable. Much less attention has been given to the fact that without the states forced to be on board with the Medicaid expansion, the law’s health exchange subsidies might be fiscally unworkable. The Supreme Court may have just set in motion of chain of events that could lead to the law’s being found as busting the budget, even under the highly favorable scoring methods used last time.”