Another Hole in the Halbig Verdict

Much attention has been paid recently to the contradicting decisions issued on the Halbig and King cases, which challenged the Obamacare subsidies offered to individuals purchasing insurance on federal exchanges. In a piece for Politico MagazineAbbe R. Gluck finds a weakness in the Halbig plaintiffs’ arguments, in their own words. As Gluck writes:

What’s less known, however, is that in 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.)

The challengers have spent more than a year arguing that no reasonable reader of text could construe the statute in any way other than denying federal subsidies to insurance purchasers on exchanges operated by the federal government. But what about their statements from 2012—statements then echoed by Justices Scalia, Kennedy, Thomas and Alito in their joint dissent to the Supreme Court’s ruling in the constituitional challenge, NFIB v. Sebelius?

You can read more, including the relevant passages from the NFIB v. Sebelius briefs, here.

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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Halbig is out and the gov’t lost (but long live the King)

By Kevin Outterson

My post at TIE: 4.683 million people get tax bills, lose coverage http://theincidentaleconomist.com/wordpress/4-683-million-unanswered-questions-in-halbig/

Also Nick Bagley at TIE: http://theincidentaleconomist.com/wordpress/a-stinging-defeat-for-the-government/

UPDATE: Gov’t wins in the 4th Cir companion case: http://theincidentaleconomist.com/wordpress/the-government-may-have-lost-in-d-c-but-it-just-won-in-the-fourth-circuit/