Tuesday, August 12, 2014

ObamaCare Plaintiffs’ 2012 Supreme Court Briefs Read the Act Exactly As They Now Say It Cannot be Read (and Why that Matters for Chevron)

Abbe Gluck

I have another piece out in Politico on the Halbig and King  (Obamacare subsidies) cases.  Here are a few excerpts (a lot more in the full link):

"[I]n the 2012 constitutional case, these same challengers filed briefs describing Obamacare to the court in precisely the way they now say the statute cannot possibly be read. Namely, they assumed that the subsidies were available on the federal exchanges and went so far as to argue that the entire statute could not function as written without the subsidies. That’s a far cry from their argument now that the statute makes crystal clear that Congress intended to deny subsidies on the federal exchanges.

I am not a fan of the “gotcha” flavor that some aspects of this case have taken on, but the challengers’ 2012 statements are relevant as a legal matter because what the government has to prove to win—as a matter of black-letter law under the Chevron doctrine—is that the statute is ambiguous. (Chevron says that federal courts defer to the relevant agency’s reading of the statute when a federal statute is unclear—here, that agency is the IRS.)

Indeed, the plaintiffs went so far as to say the entire Affordable Care Act should have been struck down without the subsidies—because the act would not be able to function as written without them.
From the brief:
The Federal Government only subsidizes coverage purchased within an exchange, thus giving insurance companies a reason to sell there despite the distinct regulatory burdens imposed on plans offered through the exchanges. The exchanges cannot be severed from the provisions already addressed. Without the subsidies driving demand within the exchanges, insurance companies would have absolutely no reason to offer their products through exchanges, where they are subject to far greater restrictions. Premised on the mandate, the insurance regulations, and the subsidies, the insurance exchanges cannot operate as intended by Congress absent those provisions. (p. 51, emphasis added).

 Next, consider the 2012 brief of the state governments who joined the constitutional challenge—a brief that, along with the joint dissent’s description, flatly contradicts the challengers’ new narrative that 1) Congress never thought any states might not operate the changes themselves; 2) the subsidies were somehow intended to be a carrot to entice states to establish their own exchanges on penalty of losing them entirely if the feds had to do it; and that 3) this makes the ACA’s exchange provisions analogous to Medicaid’s carrot/stick cooperative federalism regime.
From the State Government Petitioners 2012 brief:
The ACA’s second set of supply-side provisions is found in Subtitles D and E of Title I. Subtitle D mandates the creation in each State of “health benefit exchanges,” which will be run by either the State or the federal government. ACA §§ 1301–1343…. If a State is not willing to create and operate an exchange, the federal government will step in and do so itself. ACA § 1321(c). Subtitle E then establishes tax credits and other subsidies for the lower-income individuals and small businesses that purchase plans on the exchanges. ACA §§ 1401–21. Congress has estimated that getting these new exchanges up and running will cost at least $350 billion in federal spending by decade’s end. Letter from Douglas Elmendorf, Director, CBO, to the Hon. Nancy Pelosi. (p.9, emphasis added)


Far from arguing—or even suggesting—that the subsidies were limited to state exchanges, the challengers and the joint dissent affirmatively argued that subsidies are essential for the insurance-exchange provisions to function as written. Now, however, the same challengers say that Congress purposefully designed a federal exchange without those same subsidies—that Congress intentionally configured that exchange, and all the pieces of the statute linked to it, to be doomed to fail.

I have argued before, and continue to argue, that the Affordable Care Act, read textually in context and as a whole—as interpreters of all stripes (textualist, purposivist, pragmatist) agree statutes should ideally be read—makes clear that the subsidies are to be provided on federal exchanges. Other provisions of the statute, like 36B(f), which requires reporting to the IRS of subsidies on state and federal exchanges, make no sense otherwise. But the government does not even need to go that far to kick this challenge where it belongs—out of the courts and back into the political arena of Congress, where it is entirely appropriate to haggle over the act to the death as a matter of policy. But this is a law case, and all the government needs to show under the law is that the statutory text is, at a minimum, ambiguous—that there are at least two ways it can be read. The court and the challengers (alongside the Congressional Budget Office, the reporters covering the statute’s enactment and former staffers and elected members) already have made that case, and then some."

For more, check out the full piece....

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