Oklahoma stands as the last, best hope for defunding, or at least minimizing the impact of, President Barack Obama's health care legislation. State Attorney General Scott Pruitt has filed suit against the federal government alleging that the Obama administration plans to violate the clear wording of Obamacare. The court recently ruled the lawsuit can move forward.
If the state's lawsuit is successful, it could effectively defund most of Obamacare, nearly eliminating the individual mandate to have insurance and the employer mandate to provide it. Here's why:
One of the key components of Obamacare is the health insurance exchange, a supposed marketplace for insurance where individuals can shop among various plans available in their state. The coverage will be expensive, so Obamacare includes hundreds of billions of dollars in taxpayer subsidies to help defray the costs.
But the legislation also includes a safe harbor: Individuals must have access to "affordable" coverage, defined as less than 8 percent of his income, or he is exempted from the mandate. And if a worker is exempted from the mandate to have coverage, his employer is exempted from the $2,000 penalty for not providing it.
Obamacare gave states three exchange options: A state could create its own exchange, it could enter a partnership with the federal government, or, if the state did nothing, the federal government would create the exchange and impose it on the state.
Those writing the law assumed the majority of states would create their own exchange. To ensure this outcome, Obamacare drafters included a "carrot" making the federal subsidies available only in the state-created exchanges, not in the federal-state partnerships or the federally created exchanges. However, 34 states, including Oklahoma, refused to create an exchange, which means the federal subsidies would not be available in those states.
And without the subsidies, those very expensive Obamacare insurance policies would become "unaffordable" for the vast majority of middle-income families. So they would be exempted from the mandate to have coverage; their employers would be exempted from the fine for not providing it - in essence, defunding the legislation at the state level.
The Obama administration and the Internal Revenue Service have signaled that they intend to provide subsidies to all exchanges anyway, regardless of what the law says. Just imagine, the IRS exceeding its authority! As Pruitt told Congress recently, "The IRS is acting as a super legislative body in this capacity by enacting regulations that Congress did not authorize ... and when informed of this, the regulators ignored public warnings and concerns that pointed out the problem."
That's why Oklahoma and its many out-of-state sympathizers hope the court rules in the state's favor before the end of the year. This is the last, best chance to end the Obamacare train wreck.
Matthews is a resident scholar at the Institute for Policy Innovation in Dallas.