WASHINGTON — Someone you probably are not familiar with has filed a suit you probably have not heard about concerning a four-word phrase you should know about. The suit could blow to smithereens something everyone has heard altogether too much about, the Patient Protection and Affordable Care Act (hereafter, ACA). …
The four words that threaten disaster for the ACA say the [federal] subsidies shall be available to persons who purchase health insurance in an exchange “established by the state.” But 34 states have chosen not to establish exchanges.
— Four words in the ACA could spell its doom, George Will, Washington Post, today*
Ah. While George Will’s readers don’t know about the lawsuit and others like it, and don’t know about the the four words at issue, my readers, here on AB, are not so in-the-dark. The problem, of course, is that my readers are, well, not that numerous. And George Will obviously is not among them.
To refresh your memory, faithful readers, back on Dec. 3, I posted a detailed post, prompted by a New York Times article that day by Sheryl Gay Stolberg. Stolberg’s article was titled “A New Wave of Challenges to Health Law.” My blog post was titled “The Antidisestablishmentarianism Theory of Obamacare Illegality. (The ACA has a (dis)establishment clause! Who knew?).”
I began my post, as I often do for the sake of efficiency (I don’t get paid to write these things. Dan???)**, with a quote from the article that discusses the issue I want to write about. In this instance, the quote was:
A federal judge in the District of Columbia will hear oral arguments on Tuesday in one of several cases brought by states including Indiana and Oklahoma, along with business owners and individual consumers, who say that the law does not grant the Internal Revenue Service authority to provide tax credits or subsidies to people who buy insurance through the federal exchange. …
The subsidy cases, if successful, would strike at the foundation of the law. Subsidies and tax credits, which could be available to millions of low- and middle-income Americans, are central to Mr. Obama’s promise of affordable care. In drafting the law, Congress wrote that such financial help would be available to people enrolled “through an exchange established by the state” under the law.
“ ‘Through an exchange established by the state’ under the law.” I wrote:
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.
I do not suggest that this is a slam-dunk. As Will explains, the IRS, charged with enforcing the statute, has interpreted it as “consistent with,” and justified by, the “structure of” the ACA. By which, Will says, “The IRS means that without its rule, the ACA would be unworkable and that Congress could not have meant to allow this.”
Well, no, actually, what the IRS means is that in the 14 states that have established and run their own exchanges, the entirety of the law that remained after the Supreme Court struck down one part of it–more on that part below, because Will doesn’t understand the legal theory that succeeded in that part of the Supreme Court opinion; he should have phoned one of the legal eagles he mentions fondly before he bandied it about near the end of his column–is working reasonably well, thank you very much.
And that in the remaining 36 states, it’s also working fairly well now that the federal website is working fairly well.
And that if the Supreme Court does take the bait in these lawsuits, and strikes down the federal subsidies to lower- and some middle-income folks and families–who by then will be receiving those subsidies and enjoying meaningful healthcare insurance and the resulting relief from fear of economic hardship or calamity, should they need major medical care (or even just a broken ankle set)–the ruling likely will be the final nail in the federal-programs-via-federalism juggernaut so strongly supported by Republicans until Barack Obama became president.
Yes, as those links show, I’ve written extensively here about the death of federal-programs-via-federalism, courtesy of the Tea Party. In those posts, I’ve also discussed the probable result of this for healthcare insurance: a major push for single-payer coverage, albeit not as a monopoly. This is a.k.a, “the public option.”
Will and his compadres apparently haven’t noticed that, with the exception of the Tea Party, most people who are concerned about Obamacare are not raging about “freedom!”/“liberty”! Instead, they complain that their provider networks are too narrow or that the healthcare plan that they “liked” has been cancelled but usually are easily replaced by a plan they like better.
Or would like better if they knew of its availability. Either because, with subsidies, it’s much less expensive, or because for a small additional cost, it’s much more comprehensive. And because, well, it or something similar will continue to be available even after they actually make a large claim. Many people who have a pre-existing medical condition and who have feared that losing their job and therefore access to healthcare insurance at all, have some strong opinions about this, too. Many of them agree that the issue is “freedom! liberty!”
As a liberal who would love to see a public option available to all–a system that uses its near-certain bargaining power to significantly lower healthcare costs and broaden provider networks or eliminate the very concept of it–I say to the justices, “Go for it!” And as a Democrat, I’ll be licking my chops during the following campaign season, if they do.
Will says that some people argue that “the language limiting subsidies to state-run exchanges is a drafting error.” To which he responds: “Well.” But he also disputes that the drafting-error claim is accurate. The words “established by the state,” were “carefully considered and express Congress’ intent.” “Congress,” he says, “made subsidies available only through state exchanges as a means of coercing states into setting up exchanges.”
Okay. Except that, well, what exactly is the hammer, the gun held to the head, in the coercion equation? The states can establish and run their own exchanges or instead choose to allow the federal government to establish and run an exchange for the state; each state, remember, needs its own exchange, because the insurance policy options are for each state alone. Coercion? Really? The state saves money by allowing the federal government to establish and run the state’s exchange. Our money or our life, isn’t all that coercive. “In Senate Finance Committee deliberations on the ACA, Chairman Max Baucus, D-Mont., one of the bill’s primary authors, suggested the possibility of making state-run exchanges the sole source of subsidies because only by doing so could the federal government induce state cooperation with the ACA,” he says.
I’ll take his word for it. The problem is that there is nothing inherently problematic with the federal government attempting to induce cooperation with the ACA or any other statute, when there is no penalty to the state for refusing the inducement and failing to cooperate. Will might want to check out how, say, federal transportation funds usually are distributed. He doesn’t understand this, though, and the last three sentences of that paragraph run off the rails.
Baucus, he says, suggested the possibility of making state-run exchanges the sole source of subsidies because only by doing so could the federal government induce state cooperation with the ACA, because, um, that way “the law’s insurance requirements could be imposed on states without running afoul of constitutional law precedents that prevent the federal government from commandeering state governments.”
The constitutional law precedents he’s referring to are actually, first, a line of dictum in a Supreme Court opinion suggesting that there is a line, not crossed in that case, beyond which the federal government cannot go in trying to obtain a state legislature’s enactment of legislation, and, second, the section of the Supreme Court’s multipart ACA opinion issued in late June 2012. That opinion upheld all but one of the challenged sections of the ACA as constitutionally permissible use of federal fiscal power, and struck down the part of the Medicaid-expansion section that made continued federal Medicaid funds available to each state contingent upon the respective state’s agreement to expand the Medicaid program under the ACA.
The commandeering of state governments, the Court held, occurred because the Medicaid program, a program in which every state voluntarily participates and that is funded jointly by the state and the federal government, is too popular for state legislators to vote to end. Thus, coercion by the federal government, not because of the federal funds that would be provided to the states for the additional Medicaid coverage but because of the state funds, albeit only a small percentage of the costs of the expansion, that the expansion would require beginning a few years into the expansion program.
The success of this argument dismayed scads of legal scholars and other followers of the litigation. But the theory requires something resembling coercion of state legislators. A huge part of modern conservative-legal-movement constitutional federalism claims do flip the Constitution’s Supremacy clause upside-down. But, really. No one, not even Paul Clement, at least to my knowledge, claims that the absence of a state veto over legitimate federal legislation constitutes the commandeering of state governments by the federal government, and therefore states must approve federal legislation. The federal government is entitled to use its constitutionally “enumerated” spending power to provide subsidies, in the form of tax credits or in some other form, toward the purchase of private healthcare insurance. Will’s claim to the contrary is ridiculous.
Will says, accurately, that passage of the ACA required the vote of every Democratic senator. He also says that one senator, Ben Nelson of Nebraska, “admirably opposed a federal exchange lest this become a steppingstone toward a single-payer system.”
Nelson, as a longtime lawmaker, probably is aware of the law of unintended consequences. Will, by contrast, has never been a lawmaker.
*Link is to a non-pay-wall republication titled slightly differently.
**As we Bears know, Dan Crawford has a sense of humor. Or did have one.