Cuccinelli bases that legal theory on a quirk in the law, one variously attributed to sloppy drafting, political miscalculation or both: It includes a provision to impose those fines under state-based exchanges, but not under a federal one.
“In the law, it says those penalties don’t apply if the federal government sets up the exchange,” he told a tea party gathering in suburban Richmond last week. “Whoops!”
Supporters of the law acknowledge the wording glitch but say the matter has been clarified through regulations subsequently issued by the Internal Revenue Service. They dismiss Cuccinelli’s line of attack as wishful thinking or willful distortion.
“That argument is effectively null and void, but it’s not stopping people from making it,” said Chad Shearer, deputy director of Princeton University’s State Health Reform Assistance Network.
Crafted by a Cato Institute scholar about a year ago, the theory started quietly making the rounds among conservative think-tank scholars, attorneys general, lawyers and bloggers while the matter was before the Supreme Court. It has picked up steam since the court upheld the law in June.
For Affordable Care Act foes who first tried to kill the law in the courts, and now aim to do so by electing Republican Mitt Romney president, the do-nothing approach is a long-range Plan C.
“This could bring down the entire law,” said Michael F. Cannon, the Cato Institute’s director of health policy studies who crafted the argument and urged Cuccinelli, a longtime friend who grew up near him in McLean, to pick up on it. “If Virginia just sits on its hands and does not implement Obamacare, then state officials will protect Virginia employers from a $2,000-per-worker tax.”
Even the law’s most ardent supporters admit it was hurriedly and inartfully drafted. It was riddled with errors that would have been cleaned up if, after the U.S. Senate passed what was supposed to be a draft, the Democrats hadn’t lost their filibuster-proof majority in the upper chamber with the election of Scott Brown (R-Mass.) in January 2010.
Some of those supporters acknowledge that a plain reading of the text Cuccinelli points to would seem to support his argument about the exchange, an online marketplace to shop for health insurance provided by law. But they also contend that given the broader context of the law, and how the IRS has interpreted it, it’s clear that businesses cannot escape the fines no matter who runs the health-care exchange.
“It’s not a legal threat. I don’t think it’s going anywhere in court,” said Timothy S. Jost, a health-care law expert at the Washington and Lee University School of Law. “But it’s a potential threat to the extent that Cuccinelli and others like him can convince state legislators and governors that they can just forget about this law and make it go away. That’s unfortunate.”