The Right Prescription

An IRS Scandal Inseparable from Obamacare

The IRS attempts to save Obamacare by unilaterally declaring that it will disregard the law.

By 5.28.13

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Thanks to ubiquitous if imperfectly honest press coverage, most Americans know about the IRS scandal involving tax-exempt applications from various Tea Party groups. The public is still, however, getting the mushroom treatment on two other outrages by that rogue agency. The media have devoted scant coverage to its theft of 60 million medical records, now the subject of a class action lawsuit, and they have been all but silent regarding the illegal IRS scheme to fund Obamacare’s federal insurance exchanges.

As scary as is the medical record theft, which I wrote about here last week, the more important of these two additional scandals involves IRS skullduggery relating to the exchanges. A year ago, the IRS finalized a regulatory ruling to the effect that it will issue tax credits through Obamacare’s federal insurance exchanges. Why is that such a big deal? Well, the IRS has been granted no legal authority, by the Affordable Care Act (PPACA) or any other act of Congress, to issue such credits. In fact, the ruling flouts the explicit language of Obamacare.

PPACA stipulates that all such assistance must emanate from state-run exchanges. Even if the federal government sets up an exchange in a state that has declined to do so, it wouldn’t be authorized to issue tax credits. And because 27 states have refused to set up exchanges, this restriction will cripple Obamacare. Without the ability to dole out tax credits and subsidies in more than half of the states, the Beltway bureaucrats attempting to implement the much-despised “reform” law will be hamstrung.

The IRS is attempting to save Obamacare by unilaterally declaring that it will issue tax credits through all exchanges, federal and state alike. Immediately upon the promulgation of this rule, a number of experts on the health care law pointed out that it was illegal. In a paper for Health Matrix, Jonathan Adler and Michael Cannon wrote, “The plain text of the Act only authorizes premium-assistance tax credits … for those who purchase plans on state-run Exchanges.”

Adler and Cannon go on to spell out the breathtaking scope of this IRS plan to offer tax credits through all exchanges: “[T]he IRS is attempting to create two entitlements not authorized by Congress.” Michael Gerson, one of the few who have addressed this in the MSM, puts it thus: “The IRS seized the authority to spend about $800 billion over 10 years on benefits that were not authorized by Congress.” In other words, the IRS has arrogated “the power of the purse,” a right reserved to Congress by the Constitution.

This is obviously an unprecedented and dangerous power grab. And it gets worse. Adler and Cannon also point out that the arbitrary IRS rule will allow it “to tax employers whom Congress did not authorize the agency to tax.” Just as PPACA stipulates that tax credits can only be issued through state-run exchanges, it also says that employer mandates can only originate from these entities. Therefore, the IRS isn’t legally authorized to fine noncompliant businesses in a state that has refused to set up an exchange.

Yet it clearly intends to do so. As it did with the tax-exempt applications of conservative groups and the confidential medical records of millions of U.S. citizens, the IRS plans to simply disregard the law. Because of the harm this feature of the rule will inflict on many businesses, it has generated several lawsuits. The most promising of these was filed last month in the U.S. District Court for the District of Columbia by a group of small businesses challenging the rule as an extralegal expansion of Obamacare.

According to Michael Carvin, one of the attorneys representing the group, “The IRS rule we are challenging is at war with [PPACA’s] plain language and completely rewrites the deal that Congress made with the states on running these insurance exchanges.” Another of the group’s lawyers put the rule in context thus: “ObamaCare is already an incredibly massive program. For the IRS to expand it even more, without congressional authorization and in a manner aimed at undercutting state choice, is flagrantly illegal.”

It will come as no surprise that this illegal expansion of Obamacare involved at least one of the IRS officials at the center of the Tea Party scandal. According to United Liberty’s Brian Gilmore, the regulation has short-lived Commissioner Steven Miller’s “fingerprints all over it.” Indeed, Gilmore reports that it was Miller who approved it: “Page 30400 of the Federal Register states you-know-who as having approved the regulation: ‘Steven T. Miller, [then] Deputy Commissioner for Services and Enforcement. Approved: May 16, 2012.’”

Interestingly, that was two weeks after Miller was informed that “applications for tax-exempt status by tea party groups were … singled out for extra scrutiny.” And yet we are told by the hot shot “reporters” of the establishment media that the metastasizing IRS scandals have nothing to do with Obamacare. In reality, the IRS scandals and the crime against democracy known as the “Affordable Care Act” are symptoms of a single disease, merely the two most obvious pustules of an administration scabrous with corruption.

As long as the voters allow this sick regime to stay in office, we can expect it to use the IRS and any other handy bureaucracy to target its political enemies and to issue illegal decrees. They have little respect for the law and less for the voters. There is only one cure for this disease: Obama, his congressional accomplices, and the enabling media must be replaced by people with at least a passing familiarity with ethics and integrity.

Photo: UPI

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About the Author

David Catron is a health care revenue cycle expert who has spent more than twenty years working for and consulting with hospitals and medical practices. He has an MBA from the University of Georgia and blogs at Health Care BS.