The Lack of State Exchanges could bring Obamacare Down

Obamacare’s penalties for not buying insurance, as well as the subsidies that make its plans affordable in the first place, may not be legal in a majority of states, according to Oklahoma Attorney General Scott Pruitt. 

Pruitt is suing the federal government on those grounds. 

According to the letter of the law, the government can only reward subsidies and levy penalties in states that have created Obamacare state exchanges, but conservative resistance has stopped state exchanges from being set up in a number of states, including Oklahoma.

“While the president’s health law is vast and extraordinarily complex, it is in one respect very simple,” Pruitt wrote in a Sunday Wall Street Journal op-ed. “Subsidies are only to be made available, and tax penalties for not signing up for health insurance are only to be assessed, in states that create their own health-care exchange.” 

The IRS, though, is still trying to levy penalties on citizens of those states. On Oct. 22, a U.S. district judge in Washington, D.C. declined to grant a preliminary injunction against the law, but agreed to hear the merits of the case in February. The Obama administration had attempted to derail the suit by arguing that it was too speculative.

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