A Split Decision On Obamacare

Jason Millman summarizes yesterday’s news:

The federal appeals court in the District of Columbia ruled 2-1 this morning that the Affordable Care Act doesn’t authorize the federal government to provide subsidies to low- and middle-income Americans to buy insurance in the 36 states where the federal government set up exchanges to sell health-care coverage. Just two hours later, a three-judge panel of the Fourth Circuit Court of Appeals in a similar case unanimously found just the opposite — that the IRS correctly interpreted the text of the ACA when it issued a rule allowing all public exchanges, regardless of who set them up, to provide insurance subsides.

Emily Badger explains what the lawsuits hinge on:

This latest legal challenge focuses on four words in the mammoth law authorizing tax credits for individuals who buy insurance through exchanges “established by the States.” Thiry-six states declined to set up their own exchanges — far more than the law’s backers anticipated — and in those states, consumers have been shopping for health care on exchanges run instead by the federal government. Now the D.C. Circuit Court of Appeals has ruled that these consumers are not eligible for subsidies because, well, they bought their insurance on exchanges not “established by the States.”

This is a tremendously literal interpretation of a small but crucial part of the law, and it’s one that was arguably never intended by its creators.

Greg Sargent joins the debate over the meaning of “established by the States”:

[T]he phrase does not literally say that subsidies should not go to people who get subsidies from the federal exchange, which under the law must be established in states that decline to set up their own exchanges. In fairness, opponents are right — the phrase also does not literally say that subsidies should go to those on the federal exchange. But all of that is precisely what makes the statutory language in question ambiguous. Once you accept this point — that the meaning of the phrase is not clear — then there is ample precedent for the courts evaluating the intent of Congress as expressed in the whole statute.

Philip Klein quotes from the DC federal appeals court ruling, the one which went against the administration:

“We reach this conclusion, frankly, with reluctance,” they wrote. “At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges.”

Adrianna McIntyre disagrees with this logic:

You can’t examine the part of the statute that sets up federally-facilitated exchanges in isolation; you have to look at it in the broader context of the reform law. Since affordable coverage is a core tenet of the law, to say that people in state and federal exchanges aren’t equally entitled to tax credits would set the law at war with itself. That could be enough to call it ambiguous on its face.

When a law is ambiguous, the courts defer to the interpretation of the agency responsible for implementation. Obviously implementation has moved forward under the assumption that residents of every state are entitled to subsidies, regardless of what kind of exchange the state uses.

But Harsanyi calls the text in question “a fictional drafting error”:

As the plaintiff’s lawyers point out, entitlements and subsidies are regularly tied to state participation — this includes Medicaid, SCHIP, and other health care tax credits … Read Jonathan Adler and Michael Cannon here.

Sean Davis seconds that logic:

[I]f the law’s authors originally intended to constrain subsidies to state plans, what was the rationale for the IRS about-face in 2011? That’s actually an easy one to answer: the administration never imagined that so many states would refuse to establish Obamacare exchanges. The subsidies for state exchange plans were meant to be pot sweeteners—incentives for states to set up their own exchanges. If fines for mandate non-compliance were Obamacare’s stick, the subsidies for state exchange health plans were the carrot. To the law’s backers, that plan made sense: the White House didn’t really want to have to manage 51 separate exchanges. They wanted the states to do all the heavy lifting. Unfortunately, several dozen legislatures and governors had different plans.

Beutler counters such arguments:

What the challengers have asked judges to do is to ignore the “fundamental canon” and buy into the idea that the Democrats who passed the law unambiguously structured it to withhold premium subsidies from states that refused to set up their own exchanges, as some sort of high-stakes inducement. This is plainly false. It’s the giant whopper underlying the entire theory of Halbig. A completely fabricated history of the Affordable Care Act, which treats the scores of reporters who covered the drafting of the law as idiots, and the aides and members who actually drafted it as bigger idiots and liars as well.

Tomasky sighs:

What Randolph and Thomas Griffith, the other conservative judge who ruled with him, essentially did was to take one sentence of a law that runs to thousands of pages and play gotcha. What judges are supposed to do is look at statutory language in context and think about the drafters’ actual intent. But hey, don’t take it from me. Take it from a certain Supreme Court justice, who wrote in a decision just last month of the “fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” That was Antonin Scalia.

But these were strange words, coming from Scalia. The context was his majority opinion in last month’s case about the EPA’s regulation of greenhouse gas emissions, which was a complicated and split verdict, albeit one that ultimately gave the EPA most of what it was asking for under the Clean Air Act. More typically, Scalia is a textualist. You can tell what that means, I’d wager, without me even explaining it, and in this case, it ain’t good: “I can’t read legislators’ minds. I can go only by the words in the bill. If they left out a word, they left out a word. Tough.”

Abbe Gluck calls the opinion “terribly disappointing from a statutory interpretation perspective”:

[A]pplying the exclusio unius presumption  (that when Congress specifies X we can assume that it meant not to specify X elsewhere) to a statute as long and complicated as the ACA — and one that did not go through the usual linguistic “clean up” process in Conference (as I wrote here) does a disservice to textualism and all those who have defended it over the years–turning it into a wooden unreasonable formalism  rather than the sophisticated statutory analysis that textualists have been claiming they are all about.

Suderman has a very different view:

The challenge is legitimate. As with the challenge to Obamacare’s individual mandate, which ultimately lost at the Supreme Court, the health law’s backers and the liberal legal community had long argued that the argument made by the challengers was more or less meritless. The win in the D.C. Circuit makes clear that it is not, and even the Fourth Circuit ruling concedes that it is a tough call, saying that “the applicable statutory language is ambiguous and subject to multiple interpretations” and only coming to its conclusion by “applying deference to the IRS’s determination.” Basically, the government won not because it was obviously in the right, but because it got the benefit of the doubt.

Finally, Cohn compares the current Obamacare lawsuits to previous ones:

The previous lawsuits were about some big, weighty issuesnamely, the boundaries of federal power and the extent of personal freedom. The plaintiffs, whatever their true motives, at least claimed to be fighting on behalf of liberty.

These new lawsuits, about which two courts issued conflicting rulings on Tuesday, make no similarly lofty claims of principle. They focus, instead, on some ambiguous text in the language of the law and allegation that Congress intended the law to work differently than the Obama Administration says.

Oh, the legal briefs make some real arguments about constitutional principles and it’s entirely possible that the plaintiffs who wrote those briefs believe them. But it’s hard to escape the conclusion that these arguments are altogether secondary to the real goal herethat these lawsuits are simply one more attempt to cripple Obamacare and yank insurance away from millions of people, no matter what it takes.