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Oklahoma challenges ACA in lawsuit

Posted on September 20, 2012 | No Comments

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Yesterday, Oklahoma’s attorney general Scott Pruitt filed suit challenging the Affordable Care Act (ACA). The challenge focuses on the penalties that large employers would pay if they do not offer affordable health care coverage for employees, as mandated under the ACA. Oklahoma had previously joined 25 other states in arguing that ACA was unconstitutional due to the minimum coverage provision. However, the Supreme Court upheld the constitutionality of the individual mandate in its landmark June 28th decision.

The new complaint focuses on the ACA’s premium tax credits for low-income Americans to purchase health insurance coverage in the exchanges. Under the ACA, consumers will be able to apply for federal subsidies to purchase coverage in state-run health insurance exchanges. The ACA penalizes large employers that do not offer affordable coverage and whose employers thus receive a federal subsidy to purchase coverage in the exchanges.

Many states have reported that they do not plan on creating their own exchanges. By default under the ACA, the federal government will establish exchanges in these states. Some opponents of the ACA have interpreted the law to say that only state-run exchanges may offer premium subsidies to consumers. These opponents argue that the Internal Revenue Service (IRS) did not have jurisdiction to issue a regulation in May indicating that federally-run exchanges will also offer such subsidies.

Oklahoma is challenging this IRS rule in its suit. Pruitt argues in the brief that Congress intended only for state-based exchanges to provide subsidies. The IRS rule, he argues, will cause employers to face unnecessary penalties for not providing comprehensive and affordable coverage.

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