“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.”

“While the resistance of Republican governors has dominated the debate over the health-care law following last month’s Supreme Court decision to uphold it, a number of Democratic governors are also quietly voicing concerns about a key provision to expand coverage. At least seven Democratic governors have been noncommittal about their willingness to go along with expanding their states’ Medicaid programs, the chief means by which the law would extend coverage to millions of Americans with incomes below or near the poverty line.”

“But while much attention has focused on Congress’s intention to repeal or replace the Affordable Care Act, too few are studying the law’s practical impact. The best place to see the effects of the law is in our nation’s laboratories, the states. Although the Supreme Court has ruled on the constitutionality of the act, Wisconsin shows that it is bad policy.”

“Setting aside the brazen intrusion into state sovereignty and the gross federal overreach, the practical problem with ObamaCare’s Medicaid expansion is that the product the administration is selling is broken. State and federal budgets are simply unable to handle an expansion of this magnitude.”

“So, by refusing to go along with Obamacare’s Medicaid expansion and by blocking state-run exchanges, governors are not just saving state taxpayers money. They are potentially reducing future federal spending by as much as $1.5 trillion over the next ten years. While congressional Republicans have been reduced to taking symbolic repeal votes, and Mitt Romney struggles to determine whether or not the individual mandate is a tax, governors — and state legislators — have become the real heroes of the fight against Obamacare.”

“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.”

“With Thursday’s Supreme Court ruling upholding President Obama’s landmark health-care law, debate has shifted to whether deadlines key to the law’s goal of expanding coverage to tens of millions of Americans will be pushed back. Some say states and the federal government are facing such complex technical and political realities that some deadlines need to be relaxed, including the Jan. 1, 2014, opening of online marketplaces where individuals and small businesses will be able to shop for coverage. And there may be pressure in Congress to delay some spending on the law to help reduce the federal budget deficit.”

“The Roberts court declared this threat unconstitutional, finding that Washington could use the carrot (dangling new money) but not the stick (withdrawing old money). The states, when they initially signed up for Medicaid, could not have anticipated that Congress would one day enact a law that caused Medicaid to be ‘no longer a program to care for the neediest among us, but rather an element of a comprehensive national plan to provide universal health insurance coverage,’ the Court reasoned.”

“For states, this is a clear winner – covering more individuals and saving budget dollars at the same time. For the taxpayer this is a nightmare. The taxpayer would save some money on the Medicaid expansions that would not take place (where the feds pay 90 percent of the cost) but they will pick up the full cost of the additional and generous insurance, bearing an additional $500 billion over ten years.”