Rob Weiner
In
prior posts, I have described Halbig v.
Sebelius and King v. Sebelius,
the legal challenges to tax subsidies under the Affordable Care Act, as anti-democratic
-- an effort by the losing side in a legislative battle to induce credulous or
partisan judges to overturn the policy choices of our elected
representatives. The charge has prompted
righteous indignation among opponents of the ACA. Now, the Constitutional Accountability Center
has turned up a video documenting the genesis of the legal theory advanced in Halbig, and it proves my point.[1]
At an American Enterprise Institute
conference in late 2010, Thomas Christina, a lawyer for various industry groups
on health care issues, presented the results of his search for a statutory
“defect” to undermine the ACA. Focusing
on the ACA’s tax subsidies enabling low income families to afford health
insurance, Christina identified the statutory language that opponents of the
Act have read to bar tax subsidies in States with Federal, rather than state-established
insurance Exchanges. Immediately after
Christina’s presentation, AEI scholar Michael Greve, like a fire
and brimstone preacher, urged the flock to find some way -- any way -- to
eviscerate the statute:
This bastard [the ACA] has to be killed as a matter of political
hygiene. I do not care how this is done, whether it’s dismembered,
whether we drive a stake through its heart, whether we tar and
feather it and drive it out of town, whether we strangle it. I
don’t care who does it, whether it’s some court some place, or the United
States Congress. Any which way.
Any dollar spent on that goal is worth spending. Any brief filed toward that end is worth
filing. Any speech or panel contribution toward that end is of service to the
United States.[2]
Law Professor Jonathan Adler later
came across the video of the Conference and took on Mr. Greve’s challenge, publishing an article
with the Cato Institute’s Michael Cannon that elaborated on the “defect” discovered
by Christina. Initially, Adler and
Cannon characterized the ostensibly defective provision as a “glitch” or “legal
mistake.” And if that supposed error
gutted the statute, well, all the better.
Although
many by now are familiar with the theory that Adler and Cannon developed and
that the plaintiffs advanced in Halbig and
King, a brief recap may be helpful in
understanding how politics and ideology can erode legal rules and judicial
restraint. The dispute involves the
insurance marketplaces, or Exchanges, set up in every state under the ACA. The Act requires each state to establish an Exchange,
but if the state does not, the Secretary of HHS must do so on the state’s
behalf. The anti-ACA argument rests on a
section, of the more than 900 in the Act, dealing with the tax subsidies that
enable low income families to buy insurance on an Exchange. The first provision of the section at issue
makes almost everyone with income less than 400 percent of the federal poverty
level eligible for a subsidy. But the
ACA opponents focus on another subsection of the same section, setting out the
formula for determining the amount of
the subsidy. That formula turns on the
price of health insurance purchased on an “Exchange established by the State.” Based on this phrase, the ACA opponents
contend that low income families in states with a federal Exchange forfeit the
tax subsidies the Act would otherwise grant them. Indisputably, when the Secretary steps into
the state’s shoes and sets up the Exchange, the Exchange is established for the state. And it clearly is established in the state. But the ACA opponents assert that it is not
established by the state.
A
key problem the ACA opponents faced in advancing this theory, however, was that
it conflicts with fundamental rules of statutory construction. For example, courts interpreting a statute
must consider the overall context, while the opponents’ theory focuses on one
phrase in isolation. Another canon
requires courts construing a statute to avoid interpretations that negate central
features of a law, yet the ACA opponents take pride that their theory “guts”
the ACA, “drives a stake through its heart,” “blows Obamacare to smithereens,”
and so on and so forth. In light of
these canons, the opponents of the Act came to recognize -- or at least they
should have recognized -- that their textual argument by itself could not
likely overcome the deference due the IRS’s contrary interpretation.
Faced with this gap, the
opponents came up with a second, belated “discovery.” The statutory “glitch”
was not in fact a glitch. Rather, they now
claimed, in order to coerce states to establish insurance Exchanges, Congress
had intended all along to deny insurance subsidies to low income families in states
that did not cooperate. The language
buried in the formula for calculating subsidies, they asserted, implemented
this intent. The argument brings to mind
the scene in the classic Woody Allen movie, Take
the Money and Run, where a would-be bank robber ends up arguing with the
teller as to whether his note says he has a “gun” or a “gub.” The ACA
opponents argue, in effect, not only that the note said “gub,” but that it did
so by design.
This
position is an after-the-fact rationalization (and not a very good one, at
that). At the time the statute was
enacted, no one – not legislators, not the press, not academics, and not even plaintiffs
themselves – suggested that this provision implemented any such design.
In
Congress, no legislator debating these provisions of the ACA articulated the
opponents’ reading or the coercive purpose the opponents allege. Common sense counsels that if the statute were
intended to hold subsidies hostage in order to cow the states into setting up
Exchanges, some legislator would have said so directly. Just a simple declarative sentence would have
sufficed: “If the State does not
establish an Exchange, its low income citizens will not receive tax
subsidies.” No one said that, or
anything close to it. But many said the
opposite. For example, Senator Baucus,
the manager of the bill, noted in debate on November 29, 2009, that “tax
credits will help to ensure all Americans can afford quality health
insurance.”[3] “All Americans” does not mean “Americans in states
that establish their own Exchange”.
Likewise, on December 17, Senator Bingaman stated that the “legislation
will also form health insurance exchanges in every state,” which will “provide tax credits to significantly
reduce the cost of purchasing that [insurance] coverage.[4] “Every” is also an inclusive word, and “every
state” includes those with federal Exchanges.
Similarly,
in the House, Congressman Paul Ryan complained on March 15, 2010, that the tax
credits in the Act were “a new open-ended entitlement that basically says that just
about everybody in this country -- people making less than $100,000, you
know what, if you health care expenses exceed anywhere from 2 to 9.8 percent of
your adjusted gross income, don’t worry about it, taxpayers got you covered,
the government is going to subsidize the rest.”[5] Nothing in the phrase “just about everybody”
excludes residents in states with federal exchanges. Lest there be any doubt, Congressman Ryan
added that, “[f]rom our perspective, these state-based exchanges are very
little in difference between the House version - - which has a big federal
exchange . . . . But what we’re basically saying to people making less than
400% FPL . . .don’t worry about it. Taxpayers got you covered.”
But it wasn't only members of Congress
who thought that the subsidies were available on federally facilitated
Exchanges. The supposed targets of the
coercion, the decision-makers in the states, thought so, too. The ACA provided state governments with
grants to plan for and to establish Exchanges.
Almost every State used the funds to assess how the Exchanges would work
in their jurisdictions. Governors
directed their Departments of Health or Insurance to study the matter,
appointed commissions to analyze it, employed outside consultants to dissect
it, or deployed some combination of all these approaches. The reports these efforts yielded did not
rely on the fear of losing tax subsidies for state residents as the reason to
establish state Exchanges. Just the
opposite. For example:
·
In
a report issued on December 15, 2011, the Georgia Health Insurance Exchange
Advisory Committee appointed by the Governor advised him that “Georgians will be eligible for the[] subsidies whether the
[Exchange] in Georgia is established by the state or federal government.”[6]
·
The
Kansas Commissioner of Insurance testified on November 24, 2011, that a federal
Exchange would perform all the core functions, including determining
eligibility for subsidies and tax credits.[7]
·
A
consultant hired by the State of Arizona reported to the Governor that administration
of the subsidies was one of the responsibilities a federal exchange would
undertake.[8]
·
In
a study commissioned by the North Carolina Department of Insurance, the
consulting firm Milliman, Inc. listed the pros and cons of allowing the federal
government to set up an Exchange in the state.
Denial of subsidies to low income families in North Carolina was not one
of the cons.[9]
After these studies, the
Governors announced their decisions on whether to establish a state Exchange or
have the federal government do so instead.
Here, too, common sense tells us that a Governor who knew his or her
decision would cost taxpayers in the state millions of dollars in subsidies
would address the issue directly, justifying the imposition as unavoidable, or
arguing that the benefits outweighed it, or blaming the Federal Government.
Instead, the principal reasons the Governors advanced for declining to
participate were uncertainty about requirements the Federal Government would
impose on them, fear of having responsibility for the Exchanges without control,
and potential cost.[10] As late as July 2012, the Governor of South Carolina
echoed the typical explanations in a letter to Senator Jim DeMint, noting that,
“In the case of insurance exchanges, the federal government is not coercing states as much as it is
luring them with outrageously large and unaccountable ‘establishment’ grants of
taxpayer money. . . .”[11] Far from complaining about the potential
demise of tax subsidies, the Governor saw no downside to defaulting to a federal
Exchange: “By refusing to implement
state-based exchanges, the state is
ceding nothing –we were given very little in the first place and,
unsurprisingly, asked to give far too much in return.”[12]
With
regard to other sources, an army of journalists covered the debate, markup, and
hearings on the health care bill, and scholars analyzed the legal, economic,
medical, and logistical issues the legislation presented. In extensive searches, I have found no
statement while the Act was pending before Congress, treating the disputed
provision as an effort to coerce states by withholding tax subsidies, even
though commentators homed in on other features of the law designed to induce
and coerce state action.
Even
the ACA opponents themselves thought that subsidies were available in all
states. In a recent post on Politico, Yale Law School Professor Abbe
Gluck pointed out that some of the same
people presenting themselves now as
champions of this newly-discovered Congressional intent had argued just the
opposite in seeking to strike down the Act as unconstitutional.[13] Back then, they characterized the subsidies
as integral to the operation of the statute and the Exchanges - - all
Exchanges. Moreover, in their
constitutional challenge to the Act, the states did allege that the provisions
involving the Exchanges were coercive, but
not because states would lose subsidies if they defaulted to a federal
Exchange. The Act coerced states to
establish Exchanges, the challengers alleged, because states would otherwise cede
regulatory authority to the federal entities.
In
short, as the after-the-fact timing of
Thomas Christina’s “discovery” indicates, the universal assumption when the ACA
was enacted was that the tax subsidies were available to low income families in
all states. Notwithstanding the claims of the ACA
opponents, no principled form of textualism, nor any other legitimate mode of
statutory interpretation, blinds itself to such common understanding. Justice Scalia, the principal judicial
proponent of literalism in interpreting statutes, has made clear that even his
approach is not so extreme. He has
emphasized the importance of the overall context in interpreting statutes and has
taken statutory purpose into account. To
disregard those limits, to dismiss or distort the common understanding of a
statute, to embrace, in Mr. Greve’s words, “any which way” to kill disfavored laws,
promotes the political preferences of unelected judges over the policy
judgments of the elected branches of government.
Just
last week, in a speech to the American Bar Association, Chief Justice Roberts
observed that “lawyers fulfill their professional calling to the fullest extent
when they rise above particular partisan debates and participate as problem solvers." Tarring
and feathering the ACA, driving a stake through its heart, killing it “any
which way,” and, in the process, depriving low income families of subsidies
they need to buy insurance, could hardly fall farther from the Chief Justice’s
mark.
Rob
Weiner, formerly Associate Deputy Attorney General in the United States
Department of Justice, is a partner at Arnold & Porter LLP. You can
reach him by e-mail at robert.weiner at aporter.com
[1] Joey Meyer, The Tale of a Political Attack in Search of a Legal Theory, Constitutional
Accountability Center (Aug. 11, 2014), available at
http://theusconstitution.org/text-history/2879/tale-political-attack-search-legal-theory.
[2] Id., at 1:30:56 in the video.
s
[3] 155 Cong. Rec. S11964 (Nov. 21,
2009).
[4] 155 Cong. Rec. S13375 (Dec. 17,
2009).
[5]
House Committee on the Budget Holds a Markup on the
Reconciliation Act of 2010, Roll Call, 2010 WL 941012 (Mar. 15, 2010).
[6] Georgia Health Insurance
Exchange Advisory Committee, Report to
the Governor, Dec. 15, 2011, at p. 13.
[7] Sandy
Praeger, Kansas Commissioner of Insurance, “WRITTEN TESTIMONY FOR SPECIAL
COMMITTEE ON FINANCIAL INSTITUTIONS AND INSURANCE: Federally Facilitated Exchange and
State/Federal Partnership Model,” Nov. 14, 2011.
[8] Social Interest Solutions, ACA Health Insurance Exchange Gap Analysis,
June 1, 2011 at pp. 73-79.
[9] Milliman, Inc., North Carolina Health Benefit Exchange
Study, July 18, 2011, at pp. 85-86.
[10] Halbig v. Sebelius and State Motivations to Opt for Federally Run
Exchanges (Feb. 11, 2014), available at
http://chirblog.org/halbig-v-sebelius-and-state-motivations-to-opt-for-federally-run-exchanges/
[11] Letter from Governor Nikki Haley
to Senator Jim DeMint, July 12, 2012 (emphasis added).
[13] Abbe Gluck, Another Hole in the Halbig Verdict, Politico,
Aug. 10, 2014, available at http://www.politico.com/magazine/story/2014/08/how-the-halbig-plaintiffs-changed-their-mind-109897.html?hp=pm_2.