Oklahoma Attorney General Scott Pruitt testified before the U.S. House Committee on Oversight and Government Reform Wednesday morning.
Pruitt says the Affordable Care Act prohibits the Internal Revenue Service from imposing tax penalties on large employers if that state did not adopt its own health care exchange.
Starting in 2015, any company with more than 50 workers faces hefty tax penalties for not providing adequate coverage to employees who then go to a subsidized federal exchange.
Pruitt says the IRS is taking away Oklahoma’s right not to set up the health insurance marketplace.
“For a medium-sized company, already struggling to meet the needs of thousands of its employees, the penalty equates to millions annual when one of its employees qualifies for a subsidy,” Pruitt says.
U.S. Rep. James Lankford (R-Okla.) chaired Wednesday’s hearing. He says while the IRS was given an enormous role in implementing provisions of the Affordable Care Act, it appears the agency didn’t consider whether tax credits would be available in federal exchanges.
“Treasury assigned one individual to gather additional information,” Lankford says. “Rather than doing an unbiased review of the statute and legislative history, it appears this individual only sought out information to support the predetermined conclusion that the tax credits would also be available for federal exchanges.
U.S. Rep. Jackie Speier (D-Calif.) told Pruitt if his lawsuit prevails, all it would do is make health care unaffordable to 300-thousand state residents
“[They] would no longer be able to receive premium tax credits to help them buy health insurance in Oklahoma,” Speier says. “Contrary to any ideological victories some may think could be won by his lawsuit, the reality of a legal victory is a terrible loss for the lower-income people of Oklahoma who pay the attorney general’s salary and whose taxes are even underwriting the very lawsuit that would deny them benefits.”
Federal lawyers have said the Anti-Injunction Act prevents the state from raising questions about taxes before they're levied. Oklahoma argued its case before federal court in June, and awaits the court’s decision.