A former senator from Nebraska—and the current CEO of the National Association of Insurance Commissioners—could be key in the case to eliminate federal tax credits for Obamacare customers in states using HealthCare.gov to purchase insurance.
Challengers to federal subsidies say former Sen. Ben Nelson, a rare Democratic holdout in the Congressional debate over the Affordable Care Act, argued that tax credits go only to residents in states that had established their own insurance exchanges.
The point, plaintiffs in
King v. Burwell argue, was to force states to establish their own exchanges rather than rely on the federal government.
“For Nelson and some other senators, it was important to keep the federal government out of the process, and thus insufficient to merely allow states the option to establish exchanges, as the House bill did,” attorney Michael Carvin wrote in the brief filed on behalf of Virginia residents challenging the ACA.
“Rather, states had to take the lead role, which given the constitutional bar on compulsion, required serious incentives to induce such state participation.”
Nelson disputes this characterization, however. In a letter written to Pennsylvania Sen. Bob Casey, a fellow Democrat who sought Nelson’s view, he wrote:
“I always believed that tax credits should be available in all 50 states regardless of who built the exchange, and the final law also reflects that belief as well…In either scenario—a state or federal exchange—our purpose was clear: to provide states the tools necessary to deliver affordable healthcare to their citizens, and clearly the subsidies are a critical component of that effort regardless of which exchange type a state chooses.”
The passage was included in a brief filed by Democratic congressional leaders, among others.
If ACA challengers are successful in their attempt to eliminate subsidies for those using the federal health insurance exchange, many experts believe the health reform—particularly the requirements placed on employers—would be rendered toothless.
Scott Sinder, a partner at Steptoe & Johnson and general counsel for the Council of Insurance Agents and Brokers, believes either outcome will be beneficial to insurance agents and brokers.
“At some level, brokers will always win because they’re advisors,” Sinder said. “The [Supreme Court case] will cause confusion, and employers and individuals will need guidance through the confusion.”
The National Association of Health Underwriters has previously said a strike-down of subsidies would likely not result in past policyholders having to return federal tax credits.
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