Feds: Oklahoma Obamacare lawsuit fails to meet test of law
BY WAYNE GREENE World Senior Writer
Wednesday, December 05, 2012
12/05/12 at 7:39 AM
Read the U.S. Justice Department’s response to Oklahoma’s suit against the Affordable Care Act.
While creative at points, Oklahoma Attorney General Scott Pruitt's legal challenge to the Affordable Care Act - Obamacare - is speculative, conjectural and fails to meet the test of law, attorneys for the federal government say.
In a Monday filing, the federal attorneys ask U.S. Eastern District Judge Ronald White to dismiss Pruitt's suit against U.S. Health and Human Services Secretary Kathleen Sebelius and allow the federal health-care law to move ahead as scheduled.
The state lacks any legal standing to make its key claim that the law's tax penalties against employers who fail to provide adequate health insurance to their workers can't be enforced in Oklahoma, federal attorneys argue in their filing at the Muskogee-based court.
Pruitt's claim rests on the fact that Oklahoma won't be establishing a state health insurance exchange, and the law doesn't allow for the tax penalties to flow through a federal exchange to be built in the state as a substitute.
The Affordable Care Act provides for tax penalties of $2,000 for each full-time employee against companies of at least 50 workers if the employer doesn't offer qualifying health coverage and any employee gets federally subsidized insurance through a state exchange. Because Oklahoma isn't planning a state exchange, the taxes can't be levied here, despite IRS plans to the contrary, Pruitt's suit argues.
But the U.S. Justice Department attorneys say that Oklahoma can't make its claim because it doesn't stand to be damaged by the law's tax penalties.
"Oklahoma can provide no more than conjecture and speculation that it will be subject to that penalty, which applies only if a large employer fails to provide coverage to its full-time employees that meets certain minimum standards," the filing says.
Pruitt doesn't make any claims about the insurance provided to state government employees, but the federal response says those benefits are "relatively generous" and it is unlikely the state would be subject to any penalties under the law.
While the federal response rejects the idea that the tax penalties can't come through a federal exchange, the crux of the argument is that the claim could only be made by a employer who is subjected to the tax, and then only after they have received and paid a tax bill, which wouldn't come until 2014.
"...(A)ny claim for relief from the large employer tax penalty belongs to the employer itself, not the state," the filing says.
While Pruitt's case argued that treating a federal exchange like a state exchange commandeers the state's constitutional authority, the federal filing says that position is logically and legally flawed.
"Oklahoma does not explain ... how a provision of federal law directing the federal government to act constitutes commandeering of the state's legislative powers," the filing says.
The legal memo points out that Pruitt's action seeks to deny some 381,500 uninsured Oklahomans with federal subsidies to help them purchase private insurance.
The average subsidy would be more than $5,000 per person per year, the filing says.
"In this case, Oklahoma asserts a position that is directly adverse to the approximately 381,500 Oklahoma residents who will receive a premium tax credit under the act, but who would not if Oklahoma were to prevail in this suit," the filing says.
Pruitt defended the state's lawsuit as a challenge to how the Affordable Care Act is being implemented.
"Oklahoma's lawsuit has never been about the policy or politics of the Affordable Care Act; it is about the legality of the IRS rule and ensuring that the federal government complies with implementation of its own law," Pruitt said in a prepared statement.
Key points of Attorney General Scott Pruitt's case against the Affordable Care Act
- Originally filed in 2011, arguing the state constitution prohibits the ACA's individual health insurance mandate, much of the original argument was rendered moot by the June U.S. Supreme Court decision that found that the Affordable Care Act and its individual mandate are constitutional.
- Revised in September to make a new argument that the IRS can't enforce the Affordable Care Act's taxes against businesses whose employees receive federal health insurance subsidies because Oklahoma has not set up a state health exchange.
- Oklahoma will not have a state exchange, although the Affordable Care Act provides for a federally imposed exchange to meet the same role.
- A state-operated exchange is essentially different and the federal law is sufficiently specific to prevent the taxes from being levied in the state.
Sebelius: Oklahoma saved $65.7 million on health
As the final week of Medicare Open Enrollment approaches, savings on prescription drugs made possible by the Affordable Care Act reached $5.1 billion - including nearly $65.7 million in savings for Oklahomans, Health and Human Services Secretary Kathleen Sebelius announced Monday.
More than 5.8 million people with Medicare have benefited from assistance the health-care law provides with the Medicare prescription drug coverage gap known as the doughnut hole, according to a HHS report.
In the first 10 months of 2012, almost 2.8 million people saved an average of $677 on prescription drugs and 23.4 million people with original Medicare received one or more preventive services at no cost to them, with 2.5 million having received an annual wellness visit, according to another HHS report.
In Oklahoma, HHS reported that 39,341 people saved an average of $539 on prescription drugs and 318,798 people with Medicare received one or more preventative services at no out-of-pocket cost, including 63,165 annual wellness visits.
For 2013 the health-care law provides people with Medicare in the so-called doughnut hole with greater savings.
The doughnut hole is the common name for the coverage gap in Medicare Part D's coverage of prescription drugs. After beneficiaries pass the program's initial coverage but before they reach the catastrophic coverage area, they are responsible for 100 percent of drug costs.
The Affordable Care Act narrows that coverage gap with increasing discounts that gradually increase until 2020, when the doughnut hole will be closed.
In 2013, the discount rises to 53 percent of the cost of brand name drugs and 21 percent of the cost of generic drugs.
Key points in U.S. government's response to Scott Pruitt's case against the Affordable Care Act
- Oklahoma lacks legal "standing" to raise issues with how taxes are levied by the Affordable Care Act because only a business that is liable to pay those taxes can make the claim, and then only after the taxes are levied in 2014.
- State employees receive relatively generous health insurance and the state wouldn't be liable for penalties under the law.
- Federal exchanges are legally the same as state exchanges.
- Oklahoma's "states' rights" claim isn't legally supportable. The Affordable Care Act, which has already been tested before the U.S. Supreme Court, is federal legislation that directs a federal agency to establish a health insurance exchange if the state declines to do so.
- The effect of Oklahoma's effort would be to deny some 381,500 uninsured Oklahomans federal subsidies to help them purchase private insurance. The average subsidy would be more than $5,000 per person per year, the filing says.
Original Print Headline: Feds: Health lawsuit fails to meet test of law
Wayne Greene 918-581-8308
wayne.greene@tulsaworld.com
