The Internal Revenue Service’s Implementation and Administration of the Democrat’s Health Care Law

Abstract

In a widely publicized paper, Jonathan Adler and Michael Cannon claim that the Affordable Care Act does not authorize federal exchanges to offer premium tax credits and that an IRS rule allowing them to do so is illegal. It is clear that Congress in fact intended all exchanges, including federal exchanges, to issue premium tax credits. Moreover, the language Cannon and Adler point to in the ACA as supporting their position, when read in context, does not preclude federal exchange premium tax credits. Timothy Jost’s testimony submitted to the House Ways and Means Committee explains why the IRS position is correct.

Keywords: health reform, affordable care act, tax credits, legislation federal exchange

JEL Classification: K10, K32