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Me v. William Cannon, Part II: The Jonathan Gruber Canard

Okay, well, as all you AB regular readers know, yesterday I posted a post deconstructing—and, yes, that’s what I did—a blog post on the Forbes website by William F. Cannon.  He blogs there on “health, freedom, and other uncertainties,” but his day job is Director of Health Policy Studies at the Cato Institute.

The studies apparently entail mostly studying such things as YouTube video of Jonathan Gruber speeches and interviews.  Which, at least in this instance, is academic.

Gruber, Cannon explained in a Jul 28, 2014 opinion piece on Politico, is “the MIT economist who helped congressional Democrats write the Patient Protection and Affordable Care Act in 2009.”  Or, as Wikipedia says, “In 2009–10 he served as a technical consultant to the Obama Administration and worked with both the administration and Congress to help craft the Patient Protection and Affordable Care Act (PPACA).”  I’ll let Cannon, in his Politico piece, help me explain further:

[Gruber] has been sharply critical of Halbig v. Burwell, a lawsuit alleging the Obama administration is illegally subsidizing health insurance for 5 million Americans in the 36 states with exchanges established by the federal government. The PPACA offers those subsidies to only those who enroll through an exchange “established by the State.” (Disclosure: I helped lay the groundwork for Halbig and three similar lawsuits.)

The occasion for his Forbes blog post yesterday was that:

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 occasion for my blog post here at AB yesterday was to point out that the issue is not whether some IRS administrator or HHS official initially used the statute’s “through an Exchange established by the State” phrase in drafting the agency regulations to implement the ACA.  The issue is instead, uh, what “established by the State” means within the statutory scheme.  The question, more specifically, is whether mandatory default delegation, by a state to the federal government, of the setup and operation of a state’s exchange is, y’know, the establishment of an exchange by the state.  Sorta like whether the delegation of, say, prison operations by a state to a private for-profit company is the establishment of a prison system by the state or is instead a rogue operation with coopted police powers to hold people against their will.  Which I think would be called false imprisonment, in tort law.

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