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Obama’s Direct Enrollment “Fix” is Likely Illegal

The Administration is on the verge of allowing federal subsidies for policies purchased directly from health insurance companies:

http://www.nytimes.com/2013/11/19/us/politics/administration-open-to-direct-insurance-company-signups.html?_r=0

Note that this proposed “fix” runs explicitly counter to the text of the legislation, which stipulates that federal subsidies will only be provided for people who obtain their health insurance on exchanges ”established by the state.”

There seems to be no way, given both the text of the ACA as written, and the intent of the ACA as generally understood at the time it was passed, that people who obtain their health insurance directly from a health insurance company can qualify for a federal subsidy.

Not that we expect the Administration to enforce the law…but the private sector for-profit and not-for-profit enterprises who are providing health insurance will not themselves want to run afoul of the law. 

We need to highlight this proposed egregious violation of the ACA before the Administration actually rolls it out.  The subsidies are potentially illegal and will be challenged in court, hopefully on an expedited basis given the harm that can result if they are used improperly by unsuspecting people believing they’re entitled to them.  And the health insurance companies should be fully aware of this before actually implementing this “fix” on behalf of the Administration.

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