Treasury Department Rejects House Panel Request for Exchange Rule Data

Citing “confidentiality interests,” the Treasury Department has turned down a request from Republicans on the House Oversight and Government Reform Committee for documents related to an Internal Revenue Service rule that opponents say improperly allows tax credits on health insurance exchanges run by the federal government.

Alastair M. Fitzpayne, assistant secretary for legislative affairs at the Treasury Department, in an Oct. 25 letter said the department had concerns about the scope of the request.

At the same time, Fitzpayne offered to meet with committee staff to find out if there were ways the department could satisfy the request without compromising confidentiality interests.

“These materials implicate longstanding Executive Branch confidentiality interests,” Fitzpayne wrote. “It is well-established that agency staff and counsel must have the ability to engage in free, full and unfettered discussions and debate about important policy and legal matters.”

He added, “Accordingly, as the Executive Branch has long maintained, public discourse of such material could have a significant chilling effect on agency staff and could inhibit their ability to fulfill their statutory responsibilities.”

In an Oct. 18 letter, House Oversight Committee Chairman Darrell Issa (R-Calif.), along with Reps. Trey Gowdy (R-S.C.) and Scott DesJarlais (R-Tenn.), reiterated an earlier committee request for Treasury and IRS documents (206 HCDR, 10/25/12).

Specifically, the GOP members sought information about the decision by the IRS to publish a proposed rule under the Affordable Care Act in August 2011 that authorized subsidies, or premium tax credits, to help people purchase health insurance on so-called federally facilitated exchanges (FFEs). The FFEs will be set up in states that choose not create their own insurance exchanges.

Tax Credits on Federal Exchanges Questioned.

Critics of the rule, which the IRS published in final form in May 2012 (97 HCDR, 5/21/12), contend that Section 1311 of the ACA authorizes tax credits only on exchanges “created by a state.”

A particular concern of opponents of the IRS rule is that under the ACA small employers can be subject to penalties if they do not offer health insurance and their employees obtain premium tax credits on health insurance exchanges, including those established by the federal government.

Fitzpayne, in his letter to the oversight panel members, said Treasury's Office of Tax Policy and the IRS Office of Chief Counsel “interpreted the statutory language in context and consistent with the purpose and structure of the ACA as a whole, pursuant to longstanding and well-established principles of statutory construction.”

At a hearing of the House Oversight Committee in August, IRS Commissioner Douglas H. Shulman testified that the IRS rule was proper under a comprehensive reading of the ACA (149 HCDR, 8/3/12).

Also at the hearing, Washington and Lee University law professor Timothy Jost, who supports the ACA and rule, argued that Congress added a technical corrections provision to the ACA which included definitions allowing tax credits on FFEs.

The issue is also pending in a federal court lawsuit. In September, the Oklahoma state attorney general added a claim challenging the IRS rule to an existing lawsuit challenging the ACA which is pending in U.S. District Court for the Eastern District of Oklahoma (183 HCDR, 9/21/12).

Gowdy is chairman of the Oversight subcommittee on Health Care, District of Columbia, Census and the National Archives. In June, DesJarlais sponsored a joint resolution (H.J. Res. 112) that would repeal the rule.

By Ralph Lindeman  

The letter from the Treasury Department is at