Thursday, June 20, 2013

Obamacare Backers: Ignore What Obamacare Says!

Obamacare Backers: Ignore What Obamacare Says!:
Over the years, Obamacare’s
defenders have made plenty of absurd arguments in service of the
law, but perhaps the most absurd argument of all is that the
language of the law does not actually mean what it plainly says.
Yet that is essentially the argument that some of the health law’s
defenders are making in public and that they are preparing to make
in court.
The law expands health coverage by providing subsidies to people
buying health insurance through government-run health
exchanges—online marketplaces intended to allow people to compare
and purchase health plans. But the text of the law clearly states
that those subsidies are only available to individuals who purchase
insurance in exchanges erected by states. The Internal Revenue
Service, however, has ruled that the subsidies will be also be
available in the 34 exchanges run by the federal
Obamacare's backers now have to defend the IRS ruling, as a
challenge to the tax agency's rule
makes its way to court
. It's no mere legalistic squabble. The
outcome of this dispute could eventually determine whether the IRS
has the authority to disburse some $800 billion in federal
funds—the estimated value of the subsidies in the 34 states where
the federal government has taken responsibility for creating the
The legal text in question is not fuzzy or inscrutable. As Cato
Institute Health Policy Director Michael Cannon and Case Western
Law Professor Jonathan Adler noted in a recent
, it clearly states that subsidies are available to
individuals who purchase insurance “through an Exchange established
by the State under Section 1311 of the Patient Protection and
Affordable Care Act.” In case there was any lingering confusion,
the law elsewhere defines “State” as any of the 50 states or the
District of Columbia. It also refers to exchanges created under
section 1311 of the law, which governs state-created exchanges.
Nowhere does it mention that subsidies are available to insurance
purchased through section 1321—the segment of the law that provides
for the creation of exchanges by the federal government.
One does not need to be an ideologue to see that the clearest
and most obvious way—indeed, the only way—to understand language is
that the law’s insurance subsidies are limited to state-created
exchanges. Indeed, one only need be an analyst at the Congressional
Research Service, which noted last
year that a “strictly textual analysis of the plain meaning of the
provision would likely lead to the conclusion that the IRS’
authority to issue the premium tax credits is limited only to
situations in which the taxpayer is enrolled in a state-established
Yes, it likely would. But not, apparently, at the IRS, which saw
fit to offer a more expansive interpretation. The tax agency issued
a rule saying that individuals are eligible for subsidies if they
purchase insurance through exchanges “established under section
1311 or 1321 of the Affordable Care Act.” Where
did the extra bit come from? We can only guess. Former IRS
Commissioner Douglas Shulman defended the rule as “consistent with
the language, purpose, and structure” of the health care law, but
notably failed to cite any specific legislative language allowing
for subsidies in federally run exchanges.
So it’s just the general sense of the thing? Well, more or less.
Robert Weiner, a partner at the law firm Arnold & Porter,
defended the IRS rule at an event hosted
by the Cato Institute on Monday. Much of his argument could be
boiled down to the notion that those who oppose the rule fail to
see the bigger picture. Critics of the IRS rule, he said, had made
“an effort to quarantine” a small portion of the law by “isolating
seven words.” That’s an approach that excises the relevant context,
he says, such as statute titles that refer to making health care
“affordable…for all Americans.” It’s an argument that comes
perilously close to suggesting that the health law’s headline
generalities should override its specific language.
Weiner also argued that the “Exchange created under 1311” could
also be read to include exchanges created by the federal
government, which he said would be “standing in the shoes of the
state.” If that’s the case, then why does the law elsewhere
explicitly set out requirements for exchanges created under either
1311 or 1321—an indication that they are separate entities and
cannot stand in for each other?
But forget the legal details. Supporters of the IRS rule say
you’d have to be totally nuts to believe that Congress would have
written a law that denies subsidies to residents of so many states.
Simon Lazarus, Senior Counsel for the liberal Constitutional
Accountability Center, said at the Cato event that “it makes no
sense” to imagine that the law’s authors would have designed a
“poison pill” for their own legislation.
Yet there’s no need to presume that the law’s authors intended
the provision as self-destructive. It’s perfectly plausible that
the provision was intended to entice states into creating the
exchanges themselves, since Congress is constitutionally prohibited
from requiring them to do so. In fact, it’s not just plausible,
it’s consistent with the way the law handled its Medicaid
expansion, which also included various penalties and incentives for
states—including, originally, the potential loss of all federal
Medicaid funds (a provision that was struck down last year by the
Supreme Court). Conditioning the subsidies on state
participation would mean that the subsidy funding would function as
both carrot and stick—a bonus for states that comply, and a loss
for states that don’t.
Lazarus gave perhaps the best objection to this argument, which
is that for the threat to work it must be obvious to all involved.
“By its nature,” he said, “a threat must be communicated.” And yet
he noted that there was essentially no discussion of this threat,
and even Cannon and Adler admit that when they first encountered
the language, they initially understood it as a
. How could the condition have been effective as a threat
if no one knew about it?
Like Weiner, Lazarus also urged a holistic sensibility when
interpreting the law, one that looks at “the whole statute” and
avoids the “quarantine approach.” But the defenders of the IRS rule
are the ones who have ignored the relevant historical context. When
Obamacare was drafted, everyone—supporters and critics
alike—assumed as a given that all states would create their own
exchanges. So there was no reason to have much discussion about
what would happen if they didn’t. (Nor, for that matter, was there
much incentive for the law’s authors to talk up a provision of the
bill that would have resulted in fewer individuals getting coverage
As a challenge to the IRS rule
heads to court
, Obamacare’s supporters hope to convince both
the public and the legal system that the argument made by critics
is absurd. But what’s truly absurd is their argument that the law’s
clear and unambiguous language means anything other than what it
clearly says.