Via the Corner, a perfect note on which to end the week, not only as a palate cleanser after bumming you out with that impeachment post but because it’s quite likely we’ll have a ruling from the D.C. Circuit next week on the case. Prepare accordingly.
Don’t read any further, though, if you haven’t read this post already as background. The issue, remember, is one line in the ObamaCare statute that says subsidies shall be available only to consumers who buy their new health insurance on “an Exchange established by the State.” Thirty-four states refused to build their own exchanges, so the federal government went ahead and built Healthcare.gov for people in those states as a substitute. Question: Is that “an Exchange established by the State”? If not, a lot of people who were counting on subsidies to help pay for their insurance are about to have the rug pulled out from under them. Right, Laurence Tribe?
Harvard legal scholar Laurence H. Tribe warned Tuesday of a “very high risk” that a crucial aspect of Obamacare – its government subsidies provision – could fall victim to a major legal challenge being mounted by conservatives. That is why, he also said, that the Supreme Court will almost certainly get “a second bite of the apple” in determining the fate of President Obama’s signature health law, with uncertain consequences…
Tribe, whose new book, Uncertain Justice, takes a deep dive into the Roberts court, said the plaintiffs make a strong argument. The legislative language is clear, he said, that the subsidies apply to exchanges established by states. Yet in drafting the law, Tribe said the administration “assumed that state exchanges would be the norm and federal exchanges would be a marginal, fallback position” – though it didn’t work out that way for a plethora of legal, administrative and political reasons.
“You could argue that as long as a state triggers it by asking the federal government to come in [and establish insurance exchanges] that it’s a state-established exchange, even though it’s a federally run exchange,” Tribe added. That might give some of the justices who aren’t strict constructionists some leeway in looking beyond the law’s specific language, he said.
“I don’t have a crystal ball,” Tribe said, “but I wouldn’t bet the family farm on this coming out in a way that preserves ObamaCare.” “I would!”, says law prof (and O-Care supporter) Timothy Jost. Healthcare.gov is merely a conglomerate of individual state exchanges, he argues. The feds established each of those exchanges on behalf of a state, which is close enough to the language in the statute to survive judicial scrutiny.
The Affordable Care Act was meant to “provide affordable . . . coverage choices for all Americans.” A key section says, “Each state shall . . . establish an . . . Exchange,” but another section provides that if a state “elects” not to establish the “required Exchange,” the secretary of health and human services must “establish and operate such Exchange.” These sections both require states to establish exchanges and allow them not to do so.
Congress gave the IRS the responsibility to resolve such contradictions, and the IRS adopted the only reasonable approach. If a state does not create the “required Exchange,” HHS steps into its shoes and sets up “such Exchange.” The law, in other words, requires the federal government to create the “Exchange established by the state,” with the same authorities and responsibilities as state exchanges, including offering premium tax credits…
ACA opponents, however, hope that the other two judges on the D.C. Circuit panel, both Republican appointees, will share enough of their Obamacare phobia to detonate the imaginary bomb. If that happens, their success will be short-lived. The U.S. Court of Appeals for the 4th Circuit seems poised to uphold the IRS rule in an identical challenge, and the entire D.C. Circuit is likely to reverse the three-judge panel if it issues such an outlier ruling. There is no secret bomb in the ACA, as the courts have told us and will tell us, and the imaginary bomb will not destroy the law.
It’d be weird to pass a law called the “Affordable Care Act,” Jost says, that disallows affordable coverage for tens of millions of people just because it was the feds who set up their state’s exchange instead of the state itself. For a reply to that, read Michael Cannon’s comments at the Corner. He and Jonathan Adler have spearheaded this suit, arguing all along that the reason subsidies were limited to true state exchanges was to create an incentive for each state government to build their exchange themselves rather than forcing the feds to do it. It’s not just a semantic distinction, in other words. Subsidies were supposed to be restricted to state exchanges for a reason.
Exit question: If the D.C. Circuit strikes down the subsidies for Healthcare.gov customers, 34 state governors — all of them Republican, I believe — are going to suddenly face a lot of pressure at home to build their own exchanges, huh?