The Halbig Subpoena. Oh, the Fright!

Last week, the House Committee on Oversight and Government Reform subpoenaed documents from the Treasury Department and IRS that could have a huge impact on Pruitt v. BurwellHalbig v. BurwellKing v. Burwell, and Indiana v. IRS – four lawsuits that could have a huge impact on ObamaCare.

Those cases challenge the federal government’s ability to implement the Patient Protection and Affordable Care Act’s major taxing and spending provisions in the 36 states that failed to establish a health insurance “Exchange.” The federal government established fallback Exchanges within those states, but the PPACA says the IRS can implementthe law’s Exchange subsidies, employer mandate, and (to a large extent) its individual mandate only “through an Exchange established by the State.” Nevertheless, the IRS issued a regulation implementing those taxes and expenditures in states with federal Exchanges anyway. That regulation that is being challenged as illegal by taxpayers, employers, school districts, and states, who claim the IRS is taxing them without congressional authorization.

The Halbig Subpoena, Michael F. Cannon, Forbes.com blogger on “health, freedom, and other uncertainties,” today

Oh, dear.  Scaaaaary.

I’m pressed for time, so for background I’ll quote from a Jan. 30 post of mine about Halbig:

Hmm.  Okay, let me take a crack at this.  The law gives each state the option of running its own exchange or instead allowing the federal government to run an exchange for the state–an operation that must be done separately for each state, because each state has its own insurance companies offering different policies than other states, and subject to state insurance laws and state agency oversight.

The law doesn’t say “through an exchange run by the state” under the law; it says “through an exchange established by the state” under the law.  The states know their options.  Fourteen of them chose to establish an exchange by setting one up and running it.  The rest have chosen to establish an exchange by delegating to the federal government the job of setting up and running the exchange for the state.

The law itself, in other words, by requiring that each state choose one of two mechanisms to establish an exchange–directly or instead by delegation to the federal government–required every state to have (i.e., to establish) an exchange.  The tax credit, or subsidy, provision of the statute does not limit tax credits (subsidies) to people who live in states that choose to physically set up and run the state’s exchange itself.  It provides that benefit to people regardless of their state of residence, because by operation of law–specifically, by operation of that law–states can establish their exchanges by delegating to the federal government the physical setting up and running of the exchange.

Depends, in other words, on what the meaning of established is.  Or, more accurately, on what Congress intended the meaning of “established” to be.  And I’ve just told you what that is.  Surely, the federal courts understand the concept of contracting out a tech job.  Thirty-six states have chosen to contract out this job to the federal government.  Except, of course, that the contract was not negotiated but instead compelled by law.

Voila!  The antidisestablishmentarianism theory is disestablished.  The tax credits/subsidies clause in the ACA applies even to you, Red State denizens who qualify financially.  Congratulations.  I mean, my condolences.

The occasion for that post was a column by George F. Will, who expressed delight at what he thought was a surefire court victory ahead for freedom! Liberty!  The title of my post: “George Will Comes Out for Single-Payer Healthcare Insurance! Cool!”  I titled an earlier post of mine about Halbig, on Dec. 3 of last year, “The Antidisestablishmentarianism Theory of Obamacare Illegality. (The ACA has a (dis)establishment clause!  Who knew?)

I guess that as a practical matter, Cannon, like Will, supports single-payer healthcare.  But Cannon’s post is about the legal issue, not the political one.  And since the legal issue concerns the meaning of the phrase, “through an exchange established by the state,” as a part of the ACA’s statutory scheme, what matters is, um, the meaning of the phrase, “through an exchange established by the state” within the context of the law, as a part of the ACA’s statutory scheme, not whether or not the IRS initially included the words “through an exchange established by the state” within the context of the law. Because, y’know, the fact that the IRS initially included the words “through an exchange established by the state” within the context of the law only brings us back to the issue of what the meaning of the phrase, “through an exchange established by the state” is within the law’s statutory scheme.

And so, taken seriously, Cannon’s claim would just make us dizzy.  After all, the context of that law—in fact, an express provision of that law–provides that states have the option of setting up their own exchanges or instead allowing the federal government to establish an exchange for the state.

The bottom line is that what matters is what Congress said and intended when it enacted the ACA, not what someone at HHS said to someone at the IRS in 2011, or whatever.

One thing that has amused me all along about Halbig and its companion lawsuits is their implicit argument that a state’s delegation of its legal authority to some entity that is not actually a state entity or state operation does not effectuate an operation or service established by the state.  If that’s accurate, then the privatization of so many state and local government operations and services–prisons; parking meter operations, waste management collection, to name just a few–are being operated not on behalf of the state or local government but are instead independent of the state or local government that is paying these companies.  I’m not talking about ordinary contractors—construction companies, architectural and engineering firms, and the like.  I’m talking about companies that operate–to use the phrasing of the main federal civil rights law enacted in 1871 as the mechanism to enforce the Fourteenth and Fifteenth amendments—under color of law.  In other words, of the Halbig plaintiffs’ analysis is accepted: rogue operations that have been given government police powers.

As for the ACA, each state that has not set up its own healthcare insurance exchanges under the ACA has— as per and as mandated by the ACA—delegated to the federal government the setting up and running of that state’s exchange.  The delegation is mandated by law.  That law being none other than the ACA.

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