Copyright ©2012 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

RENEE MONTAGNE, HOST:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, HOST:

And I'm Steve Inskeep. Good morning. If you thought last month's Supreme Court ruling was the final word on President Obama's Affordable Care Act, think again. Some conservative scholars think they may have found a flaw that could send the health care law back to court - or at least make the law harder to implement. NPR's Julie Rovner reports on the latest potential challenge to a part of the law that takes effect in two years.

JULIE ROVNER, BYLINE: To understand the potential problem, you have to understand a little about how the law is supposed to work. Starting in the year 2014, every state is scheduled to have a health exchange - a sort of online marketplace where individuals and small businesses will be able to go to shop for health insurance. And for individuals with lower and middle incomes, there will be help in the form of tax credits to pay for the insurance.

Now, states don't have to set up these exchanges. Indeed, many governors have already said they won't. The law takes that into account. It says if the states don't create an exchange, the federal government will set one up and run it instead. But here comes the problem, says Michael Cannon.

MICHAEL CANNON: The statute doesn't authorize tax credits in federal health insurance exchanges. It authorizes them solely through state health insurance exchanges, state-run exchanges.

ROVNER: Cannon is head of health policy at the libertarian Cato Institute and an opponent of the health law. Cannon says when he first discovered this last year, he assumed it was a glitch. But he says further research showed it might have been intentional. In a paper out this week, Cannon and a colleague from Case Western Reserve University claim Democrats decided that it was important for states to run the exchanges.

CANNON: And as an incentive to encourage states to do so, we're going to offer these tax credits in exchanges established by the states and not offer them in exchanges established by the federal government because that would be a tremendous incentive for states to create exchanges.

ROVNER: Recent rules issued by the IRS allow tax credits to be offered in exchanges run by either the states or the federal government. Cannon says that's illegal.

CANNON: The clear language of the statute and the legislative history show that the IRS does not have the authority to do that.

TIMOTHY JOST: Well, that's, unfortunately for them, wrong.

ROVNER: Timothy Jost is a professor at the Washington and Lee University College of Law in Virginia and a strong backer of the health law. Jost admits the law isn't written as clearly as it could have been. But he says what is pretty clear is that a federally run exchange will be able to do everything a state exchange can, including provide tax credits. And Cannon's claim that federal exchanges can't?

JOST: So this is an interesting theory, but it is completely contrary to the structure of the legislation and even the language of the legislation.

ROVNER: And what about Cannon's assertion that Senate Democrats gave only the state exchanges the right to provide tax credits as a way to encourage the states to create them? A quick survey of Senate Democrats yesterday who were involved in writing the health law didn't uncover any who recall it that way.

SENATOR TOM HARKIN: No, I think they're available in both.

ROVNER: Iowa Senator Tom Harkin chairs the Senate health committee. He's talking about tax credits being available in both state and federally run exchanges. Oregon Democrat Ron Wyden, a senior member of the Finance Committee, remembers it the same way.

SENATOR RON WYDEN: That's correct, and I make that judgment on the basis of everything that came up in the Senate Finance Committee and the fact that the exchanges were something that were popular on both sides of the aisle.

ROVNER: In fact, Democratic senators like Ohio's Sherrod Brown say that those who are still trying to challenge the law are just out to make trouble.

SENATOR SHERROD BROWN: They're just going to keep trying to find things in the law that they think for whatever reason won't work. And I just think they should be ashamed of themselves.

ROVNER: But between now and Election Day, opponents of the health law are likely to continue to hammer against it any way they can.

Julie Rovner, NPR News, Washington.

Copyright © 2012 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: