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Why the Affordable Care Act Authorizes Tax Credits on the Federal Exchanges

7 Pages Posted: 1 Feb 2014 Last revised: 8 Nov 2014

David Gamage

Indiana University Maurer School of Law

Darien Shanske

University of California, Davis - School of Law

Date Written: February 1, 2014

Abstract

This Essay refutes Adler’s and Cannon’s argument that the Affordable Care Act (“Obamacare”) does not authorize premium tax credits for insurance policies purchased from the federal healthcare Exchanges. Adler’s and Cannon’s argument is the basis of challenges in a number of ongoing lawsuits, including Oklahoma ex rel. Pruitt v. Sebelius and Halbig v. Sebelius. This Essay conducts a textual analysis of the Affordable Care Act and concludes that the text clearly authorizes premium tax credits for insurance policies purchased from the federal healthcare Exchanges.

On November 7th, 2014, the U.S. Supreme Court agreed to hear the appeal of the King v. Burwell case. The Supreme Court will thus consider the arguments refuted in this Essay. If the Supreme Court accepts these arguments, commentators expect that the result will dramatically undermine the functioning of Obamacare in many states, potentially generating far worse outcomes than the status quo prior to Obamacare.

Keywords: Obamacare, healthcare reform, health, tax credits, Adler, Cannon, Pruitt, Halbig, Sebelius, Affordable Care Act, ACA

Suggested Citation

Gamage, David and Shanske, Darien, Why the Affordable Care Act Authorizes Tax Credits on the Federal Exchanges (February 1, 2014). State Tax Notes, Vol. 71, No. 4, 2014; UC Berkeley Public Law Research Paper No. 2389446; UC Davis Legal Studies Research Paper No. 368. Available at SSRN: https://ssrn.com/abstract=2389446

David Gamage (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

HOME PAGE: http://www.law.indiana.edu/about/people/bio.php?name=gamage-david

Darien Shanske

University of California, Davis - School of Law ( email )

400 Mrak Hall Dr
Davis, CA CA 95616-5201

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