The D.C. Circuit Got it Wrong. Congressional Intent on Exchange Subsidies Is Clear, If You Know Where to Look

By Robert I. Field

Why would Congress have limited Affordable Care Act subsidies to residents of only some states – those that establish their own insurance exchanges? The law authorizes credits for the purchase of insurance “through an Exchange established by the State under section 1311.” The D.C. Circuit found that this wording excludes federally established exchanges and that Congress might have intended this to induce states to establish their own exchanges rather than letting the federal government take over.

But the Court acknowledged that there is no evidence of such intent in the legislative history. And such a purpose would conflict with the ACA’s overall goal of extending health insurance access to all Americans.

With no legislative history as a guide, is there another plausible explanation of Congressional intent? Is the best answer to the D.C. Circuit’s opinion that the phrase was a drafting error, as the dissent seems to imply? Why else would it have found its way into the law?

Inartful though it may be, the wording can be seen to serve a different purpose that is consistent with the rest of the ACA. It can be understood not as a way to distinguish exchanges established by a state from those established by the federal government but to distinguish those established publicly from those created privately.

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