The Affordable Care Act says low income Americans can receive tax credits by purchasing insurance “through an exchange established by the state.” However, 36 states have not opened exchanges. If the federal government open exchanges for them, the exchanges would then not be established by the states. In retrospect, it’s difficult to understand how the Democrats let this ginormous loophole get through. The IRS has attempted to clarify the situation by issuing a regulation that defines “exchange” to include “federally facilitated exchange.”
Four lawsuits have been filed so far. A federal judge refused an administration request to dismiss one of them. The lawsuits say Obamacare must honor the strict interpretation of the law.
“This is a problem,” said Timothy Jost, a law professor at Washington and Lee University. “This case could have legs,” although “it was never the intent of Congress to establish federal exchanges that can’t do anything. They were supposed to have exactly the same powers.”