Could a single word undo ObamaCare?

posted at 8:41 pm on July 17, 2012 by Ed Morrissey

Wouldn’t that be nice?  In the haste to pass ObamaCare through arcane parliamentary maneuvers — whoever heard of “reconciliation” outside of the Beltway before Scott Brown won a US Senate seat? — maybe the drafters of the Affordable Care Act made a one-word mistake in the 2800-page bill that would demolish the entire law.  After all, didn’t Nancy Pelosi say we need to pass it before we know what’s in it?  According to an argument by two Cato Institute scholars, one word may make it impossible for the federal government to supply the subsidies needed to get people to use the exchanges.  The extract gives the bare bones of their case:

The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because the granting of tax credits can trigger the imposition of fines on employers, the IRS rule is likely to be challenged in court.

Sarah Kliff expounds further on the argument for the Washington Post’s Wonkblog:

Let’s back up and look at Adler and Cannon’s argument. It starts with the the Affordable Care Act’s defining a health insurance exchange, in scintillating Section 1311, as a “governmental agency or nonprofit entity that is established by a state.”

The last three words are the crucial ones, because they indicate that only states can establish exchanges under that Section 1311. There’s a whole other part of the law, Section 1321, that allows the federal government to set up federal exchanges in states that do not take on the task themselves.

This all matters in the all-important Section 1401, where it lays out who can get a federal insurance subsidy. There, the law says that only those who are “enrolled … through an Exchange established by the State under 1311.”

If there’s a smoking gun in this case, it’s that sentence right there. It says that the only people who can qualify for subsidies are those who get coverage through a state-based exchange.

“The statute was very poorly drafted if the intent was to cover federal exchanges,” says Kevin Outterson, a Boston University professor who focuses on health policy and who previously worked as a tax attorney. “If I had a client who had recently lost some money on a provision like this, I’d say you have a pretty good chance to win that case.”

Does that sound familiar?  It’s probably the same advice the attorneys gave the plaintiffs in the ObamaCare challenges at the Supreme Court this session.  They had a lot more grounds for optimism in that case, too.

All due respect to Outterson, but it seems as though he didn’t pay attention to Chief Justice John Roberts’ contortions.  In order to find that the individual mandate in ObamaCare passed constitutional muster, he had to consider it a tax while at the same time consider it not a tax to get past the Anti-Injunction Act.  A Chief Justice who can do that — while accompanied by four liberal justices — can certainly overlook a conflict between two different clauses in order to let the federal government run federal subsidies through federal exchanges.

Don’t get me wrong — I’m certain that Adler and Cannon have a sound legal argument, and I’d certainly love them to be right.  Even if they are, though, the technicality is so minor, and the intent clear enough, that the court that created a non-tax tax (or a taxalicious non-tax, depending on your preference) will hardly bother to toss out the entire mechanism over a single word.

There is, however, one word that will work to end ObamaCare: repeal.  It’s time to stop looking for courtroom Deus ex machina arguments and start working on the political solution.

Or you can try this word, if you still want to indulge in some magical thinking:

Naah — too cheery.  Maybe it’s this one?

Okay, okay … that’s two words.


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