U.S. Senators Pat Toomey (R-Pa.), Ranking Member of the Senate Banking Committee; Richard Burr (R-N.C.), Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee; and Senator Bill Cassidy, M.D. (R-La.) sent a letter to Internal Revenue Service (IRS) Commissioner Charles Rettig demanding clarity on its proposal to illegally expand the Affordable Care Act’s premium tax credit (PTC), which would cost taxpayers billions more each year and give the federal government an even larger role in families’ health care decisions. One estimate projects this unilateral move could cost the taxpayers $45 billion over the next ten years.

 On April 5, 2022, the Biden Administration proposed a change to the affordability test of employer-sponsored insurance by basing affordability on the cost of family coverage, not self-only coverage, in clear violation of existing law. Given ongoing concerns about the ability of the IRS to act as a non-partisan enforcer of tax law, the Senators question the IRS’ decision to reverse its long-held practice of following the law, as written.

 “The proposal in question runs contrary to the long-held position of the IRS, including under former President Obama,” the Senators wrote. “This not only runs counter to the plain reading of the law, but would dramatically expand spending on Obamacare plans and result in a significant shift of individuals out of employer-sponsored insurance and into government-designed and subsidized Obamacare coverage.”

 The Senators also criticized the Administration for its unconstitutional attempt to unilaterally change existing law and for failing to provide necessary analyses of the rule’s effects on government spending and health coverage. Past estimates from the Urban Institute and Congressional Budget Office project the proposal will cost taxpayers tens of billions over the next decade.

The senators continued, “According to Article I, Section 8 of the U.S. Constitution, Congress is empowered to ‘lay and collect Taxes, Duties, Imposts and Excises.’ The IRS has no constitutional basis for unilaterally changing the laws Congress has enacted.

“Moreover, in its proposal the IRS did not include necessary projections of its impacts on cost and coverage. President Biden and White House officials are touting estimates that nearly 1 million Americans who already have insurance would receive additional subsidies, while just 200,000 previously uninsured Americans would gain coverage under the proposal. This would suggest an analysis has been conducted, raising questions as to why such an analysis was not published in the proposal.”

To read the full letter, click here.

 Background:

 During consideration of the Affordable Care Act, or Obamacare, several provisions were included to prevent the erosion of employer-sponsored health insurance. One specific provision prevented individuals from receiving subsidies for Obamacare plans if they had an offer of “affordable” coverage from their employer. Obamacare specified that if a family received an offer of employer-sponsored health insurance, each family member is considered to also have an offer of “affordable” coverage if the employee’s premium contribution for self-only coverage – not family coverage – is less than 9.5 percent of income. 

The IRS’ proposed rule reverses this long-held practice of following the law, as written, and threatens Americans’ access to employer-sponsored insurance. 

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