Many More Halbigs to Come

flying cadeucii“Then you should say what you mean,” the March Hare went on.

“I do,” Alice hastily replied; “at least–at least I mean what I say–that’s the same thing, you know.”

“Not the same thing a bit!” said the Hatter. “You might just as well say that “I see what I eat” is the same thing as “I eat what I see”!”

Alice in Wonderland. A Mad Tea Party. Lewis Carroll.

The brilliant Carroll had a field day with logical fallacies in the fictional mad world of hyper rationalism. Alice in Wonderland still passes for children’s fiction. The verdict in Halbig versus Burwell is a Tea Party no less. Alice from Dickensian London, if magically teleported to present day might have believed she had fallen in to a rabbit hole.

The DC Court of Appeals ruled in a narrow 2-1 decision that citizens who bought insurance in the individual marketplace in states where the Federal government runs the exchange do not qualify for subsidies. But in states with state-run exchanges they do qualify for subsidies. The IRS’s subsidies are unlawful in the former but perfectly lawful in the latter.

The statutory language in the Affordable Care Act (ACA) states that subsidies are available to those “enrolled in an exchange established by the state…”

Personally, I can’t see the issue. What’s the difference, in principle, between subsidizing citizens in exchanges established BY the states and citizens in exchanges established FOR the states by the Federal government?

Is this the first war between prepositions in human history?

The argument is that we must follow the rule of the law as it is written. Section 1401 (rules on who can get subsidy) applies to Section 1311 (the one about how exchanges are set up) not Section 1321 (the one about Federal government running the state exchanges when states don’t).

1311 – 1321 – 1401

What seems to be absent is even a weak covalent bond of common sense linking these section.

There are serious scholars, and scholarship taken seriously on legal interpretation of statutory language and the intent behind the language. See writings of Michael Cannon, Timothy Jost and Nicholas Bagley. This is battle familiar to scholars of constitutional law: one between Textualism and Originalism.

Originalism looks at the original intent of writing the statute.

A fundamental issue is whether the framers of the ACA intended selective language to threaten depriving the states that would not develop exchanges, arguably more likely to be governed by the GOP, of subsidies to their citizens, in order to motivate the states to develop exchanges. Thereby, using the carrot as the stick.

Was the omission of specific language stating that federal run exchanges should also receive subsidies deliberate or an accident?

The trouble with determining intent, after the fact, is that it is the opposite of the “he knew that I knew that he knew” game.

Yet when one switches off the partisan neurons in the reptilian hemisphere it’s hard to see how the language was intentionally selective or purposefully ambiguous.

Why would the Democrats conspire to jeopardize their own healthcare law, and collapse of the individual market would jeopardize the law, to not only vehemently deny they had any intention of compromising the law but not act in a manner that such a motivation would logically produce?

Stating the obvious: subsidies have not been withdrawn for citizens in states whose exchanges are run by the Federal government.

It’s like being accused of robbing a Nike store and saying: A) I didn’t rob the store, B) I don’t like Nike shoes and C) I’m not wearing, never have worn and never will wear Nike shoes.

(C) is relevant to (A).

The Textualists, those who believe in plain interpretation of legal language, will say we don’t get it. Letter of the law must be respected. Otherwise anyone can interpret what they feel like, per their own convenience in accordance with the fad of the time, making the legal process even more arbitrary. As a corollary there is no point of a law that exists only for its own sake.

The Textualists have a point. They always do. That’s their job. A more fundamental question is why more and more of how healthcare ought to be delivered has been codified in legal language and thus handed to the interpretation of Textualists and imagination of the Originalists.

This is the crux of the problem.

The spirit of the law has been disemboweled from healthcare and more actions have been consigned to its letter. From language involving insurance coverage to regulatory language of the multiple agencies, nothing is left to common sense. From physician’s documentation for posterity (and legal protection) to billing, if it is not written precisely it was never done, never thought of, never intended.

Recently, an imaging study I interpreted was denied for payment by a major insurance carrier. Why?

Had I committed fraud? Did I short change the patient?

No. In the imaging examination I did more than what it normally entailed, without asking to be reimbursed for the additional stuff. Thus it was no longer that examination the bean counters had deemed that matched a code and its reimbursement. So no payment.

A restaurant analogy would be when you order Kobe Beef and you accidently get both the beef and rare New Zealand lamb. You are charged just for what you ordered (i.e. the beef) but you refuse to pay because you got the lamb as well.

To call this logic for denying payment stupid is to insult stupid.

Welcome to our world lawmakers! This is the world in which physicians in the 21st century United States live in. In this world if you didn’t say it you didn’t mean it because if you meant it you would have said it.

Halbig versus Burwell is ultimately a silly decision for a silly lawsuit for a cumbersome law that attempts to solve societal problems with reams of statutes.

The trouble with a law comprising 2000 pages is not just the 2000 pages but what does not appear in the 2000 pages. When there is such an affectation of rationality and precision, common sense will happily depart. Society is left to the mercy of the Textualists and Originalists, remorselessly bickering with one another, and nitpicking how many angels can dance on the head of a pin.

In the Merchant of Venice, Portia remonstrated with Shylock not to use the letter of the law and spare Antonio of his forfeiture of a pound of flesh. Instead defer to the spirit of the law and accept the three thousand ducats. Later she used the very letter of the law, the very precision of precision, against Shylock cautioning that if he either exceeded or came short of a pound of flesh, even by a fraction, he would forfeit his life.

As always Shakespeare was prescient. The hyper regulatory state eventually gets hoisted by its own petard.

Or, those who live by rules die by rules.


Since the piece was written a video has been uncovered of Jonathan Gruber, chief intellectual architect of the ACA, which supports, though not proves, the hypothesis that the omission of language specifically linking subsidies to states in which the exchanges are federally run, might not have been a grammatical error or because the pen ran out of ink cartridge.

John Maynard Keynes famously said “when the facts change I change my mind. What do you do sir?”

I will do no such thing. The recent revelation underscores my main points:

1) The whole debacle is a monstrous opportunity cost of cognitive energy, time and resources which are better spent healing, educating or finding clean fuel.

2) The codification of economics and delivery of healthcare in to law will lead to many more Halbigs.

41 replies »

  1. “you are right that health care probably consumes wealth rather than creates it.”

    Bob that statement pretty much says it all. From that statement we have the ability to recognize the requirement of wealth to provide healthcare. Since wealth generates more wealth, wealth has to be used sparingly and correctly if we wish to maximize its benefits.

    Teles’ Kludgeocracy: A leftist makes his case that one shoe fits all. If you are comfortable wearing two left shoes instead of a right and a left, that might be strange, but it is your choice.

    Tyler Cowen: Context is everything (almost) and without context paraphrasing is dangerous. If you wish Tyler Cowen to debate an issue for you then quote him directly and provide a correct citation. The last time it appears you misinterpreted what Uwe said along with providing the wrong citation.

  2. 1. Allan,. you are right that health care probably consumes wealth rather than creates it.

    Tyler Cowen — a libertarian economist — recently described America as a place where daring high-tech export industries create new wealth, but some of that wealth is taxed away so that clunky governments and schools and hospitals can create jobs.

    Otherwise we would have a few Silicon Valleys surrounded by extreme poverty.

    2. I am sorry for not bringing this in earlier, but Steven Teles has a great article called Kludgeocracy. You can find it on New America’s website.
    He makes the point that America’s convoluted system of bowing to the states while needing federal dollars creates very inefficient programs.

  3. Saurabh, I didn’t call this a dictatorship. Nor did I say we were entirely free. You write “It’s simply democracy in action.” and though we have many similar views this is where I think we might have a difference. The US is not a ‘democracy’, rather it is a constitutional republic where democratic means are utilized when voting. Many of the founders did not want a democracy and feared a democracy more than a king as in a democracy 51% can vote to enslave the other 49%. There are subtle and not so subtle changes that occur when a constitutional republic starts turning into a dictatorship and that is when the leaders no longer place the principles of our constitutional republic ahead of their personal objectives.

    I read your excellent American Thinker article and have a good deal of agreement with what you said. However, the tone of the government can negatively affect the tone of the people (one of the dangers of a very powerful central government). I liked your use of the term ‘mob’. It describes what happens when principle is forgotten or neglected. In fact it describes the difference between the French and the American revolutions. The former was mob rule and didn’t succeed.

    We agree the market “is nothing but the will of the people” if that market is free. Spending money on goods and services is like voting, but when the basic principle of a willing buyer and a willing seller is compromised so is the vote.

  4. Difference is this “contract” included wording (aka consideration) “subsidies only available in exchanges established by the state” in order to get enough of the other parties of the contract (senators) to sign on the dotted line. Now, when you are sued because you unilaterally changed the wording of the contract, the judge should interpret both your intentions and the original wording of the signed contract. In both cases the judge should simply rule you are in breach of the contract and order you to comply with the contract and possibly award damages.

  5. Saurabh, you are right. You and I don’t make the rules. Dictators do. Individuals can make rules as a group as well, but that is a difficult process where one group has the potential of enslaving another. It is the rules of the group that are under discussion.

    The individual vs the group. Should government assign people to different classes or should we all be considered equal under the law and work for our status (whatever status means)? What has pushed the world’s economy forward? Capitalism or socialism? The state or the individual?

    ” Simply put, people are risk averse.”

    So? People still take risks and in fact it is the risk taker that advances civilization the furthest.

  6. allan, you and I don’t make the rules.

    Why do institutions degenerate? Simply put, people are risk averse.

  7. Saurabh, Did I say the US would be spared? Absolutely not, but considering the value it has provided to the world I think extending its existence would be a good thing. Don’t you?

    Why do economies and nations degenerate? In the case of the US we have had very bad leadership and too many people that seem ignorant of long term goals that lead to economic stability and strength.

    I note you hear that the sale of fiddles is on the rise. Maybe the price is as well. Do we need ObamaFiddles?

  8. “You might agree with that metric, but is it good for the economy in the long run?”

    Democracies degenerate. Republics become corrupt. Aristocracies undergo revolution.

    You very well know what’s going to happen in the “long run,” allan. It happened to Greece, to Rome, to Pax Britannica.

    Why do you think the long run will spare your country?

    I hear the sale of fiddles is on the rise.

  9. You might agree with that metric, but is it good for the economy in the long run?

    Healthcare is something that is desirable, like ice cream, but a bit more important for our lives. Does it create wealth? What pays for government entitlements and everything else government does? Wealth. The vast majority of healthcare spending doesn’t create national wealth. But it does take cash from the capital markets that create industry etc. that bring wealth into the nation. I think sometimes we get confused about what is good for employment and what is good for the long term economy.

  10. The majority view seems to be that health care spending is holding down our economy.

    I am attracted to the view of Michael Mandel and William Spence, among others, who say that health care spending is propping up the American economy.

    Health care creates jobs that are (thus far) hardly ever outsourced. Health care has propped up the labor market in many cities that lost industrial jobs (cf Pittsburgh). Hospital overbuilding has even propped up many local construction industries.

    I receive two weekly newspapers in the semi rural area in which I live.
    At least 75% of the advertised family-wage job openings are in health care.
    This is not scientific but I suspect the experience is common in the USA.

    I see health care as yet one more non-productive, labor-intensive industry that we are using to forestall the crisis of an automated, jobless future.
    (see the wrtiings of Martin Ford and Marshall Brain)

    Now it could well be that the health care spending bubble cannot go on.
    All I am saying is the end of this bubble will not be an unalloyed blessing.

  11. Saurabh, I’m not sure what you are saying. Greg said ” ‘big medicine’s” response was silence “, but as we all know the AMA doesn’t represent the physician in the trenches. Of course he could have meant practicing physicians.

    As far as the physician voice I believe they are split with regard to the ACA and as a number have told me they will figure out whether it is good or bad when the checks come in, but good or bad for the physician is not necessarily good or bad for the patient or the country.

    We have heard a lot of vocal physicians, but we have to also note that the news media is pro Obama and pro ObamaCare so the news media can greatly attenuate the voice of the physician in the trenches.

    With regard to trade-offs. In my mind the positives of ObamaCare are tremendously outweighed by the negatives. For a bill of such magnitude to pass the reverse should be true and public opinion should be knowledgeable and substantially behind it (far more than 50%).

  12. Greg Mogel makes an interesting point about The Silence of the Physicians.

    But there is another silence, a collective silence. It is a silence of acknowledgment, that is acknowledgment that there are trade-offs.

    There are no solutions in healthcare. Just trade-offs. That’s one thing I think the entire political spectrum can agree on.

  13. @Bob “I am in fact unwilling to worry about health care as a share of GDP.

    1) The citation you provided is incorrect.

    2) We are talking about rates of growth, not share of GDP.

    3) Excluding generalizations it is highly doubtful Professor Reinhardt would agree with your statement. Imagine if healthcare spending was 99.99% of GDP. If I am correct Professor Reinhardt would worry a lot.

    4) Nowhere in the comment presumably made by Professor Reinhardt does he indicate that one need not worry about “health care as a share of GDP.”

  14. Personal failings aside, I am in fact unwilling to worry about health care as a share of GDP.

    I take my cues from Prof Uwe Reinhardt, who comments on this frequently.
    Here is one example:

    U.S. Health Care Costs, Part V: Can Americans Afford Medicare?
    December 19, 2008 6:30 am New York Times.

    When America spends more on health care, about 99% of the spending stays in the US and creates American jobs. I do not see how that can sink the economy.

    (I do not deny a very serious transition issue. The workers who are laid off from home construction cannot snap their fingers and earn similar wages as nurses.)

    Now as to my point about the cost of health care.

    There are many instances in Canada and the US where government holds the price constant for a given procedure, but spending goes up anyways.
    In the US, the prices paid by Medicare for dialysis have been virtually frozen for years, but our total spending on dialysis has increased regularly because more and more patients are in the program (and they live longer)

    That does not mean dialysis now costs more. It means that medicine does not seem to have economies of scale in many instances. It means that we have to use rationing to control costs.

  15. “To me, 25 year horizons are not meaningful for discussion”

    Bob, thanks for your comments, but I don’t know what to say. I am sorry, but IMO that statement is perhaps the worst statement I have seen made on this blog. I hope in your personal affairs you thought about 25 year horizons (retirement, goals etc.). Take note that your lifespan is a lot shorter than the lifespan of a nation. Even the extended family has to consider these things. You grandparents had to think about your grandchildren that you might worry about today. At the low 20 year interval that alone is 80 years.

    I wonder when you started or will start to worry about retirement. Did you start 25 years earlier or did you start (or will start) when the notices came in that you would soon be receiving Medicare?

    You describe “cost of…” in a way that makes little sense to me as there are so many ways of calculating it, but if the statement is the cost of healthcare is unsustainable, bankrupting a nation, impeding the growth of a nation then at least one understands what the discussion is all about. Lack of sustainability based upon a clear number of metrics can easily be seen in the simplest form by drawing lines that represent the GDP and healthcare costs. If those lines intersect where healthcare costs exceed GDP then one can clearly say that healthcare costs are unsustainable. In many countries those lines are seen in the not so distant future.

  16. Thanks Allan.

    2 quick points:

    a. To me, 25 year horizons are not meaningful for discussion, either in Canada or the USA. It is like sitting around in 1989 and speculating what the 2014 defense budget would be. There are so many decisions between now and 25 years from now.

    b. It may not be a big deal, but I do quibble about the phrase ‘the cost of health care.”

    Is the cost of a broken arm going up? I doubt it (especially not in Canada, where the govt sets most prices.)

    What is happening is new procedures that do not wipe out old procedures, but instead add to them.

    If I go to the grocery store one day and buy bread and milk for $8, and then the next day I buy bread, milk and eggs for $10, the cost of food has not gone up. I am just buying more of it.

  17. @Greg M. ” ‘big medicine’s” response was silence”

    By big medicine I assume you mean the AMA. I don’t believe the AMA represents practicing physicians or patients. Take note of how low the membership is and how that membership is largely students and academics along with physicians that are politically inclined. I think membership is around 15%.

    I also have to say that I like your honesty even if might damage something you believe in.

  18. As an unabashed supporter of what I consider the net ‘good’ of ACA, I must admit I do believe this language was not an oversight. I think it was a hubristic miscalculation of the carrot and the stick. That said, to paraphrase Fleetwood Mac: “Halbigs, they will come and they will go.” Likewise, funny/sad/Orwellian responses to intent in reports and reimbursements will be with us for a long time and, as a practicing physician, they vex me hourly as well. I believe they are a response–inelegant and ungainly–to an unsustainable system of healthcare in our nation. It’s painful but a course correction was inevitable; ‘big medicine’s” response was silence (well ok, not silence but mostly comprised by demanding tort reform and little else) so let’s not be too shocked that our lamentations are falling on the same ears that were strained deaf
    waiting for our ideas.

  19. What you believe about sustainability is unimportant. It is a problem for every western nation. You are now limiting the number of nations to 6 so one must assume you believe the other western nations are unsustainable.

    In the 6 you mentioned Canada so I will take that one as an example. Is Canada’s healthcare system sustainable? I did the quickest of searches for proof.


    Canada’s Current Health Care System is Not Sustainable; Action Needed to Maintain the System’s Survival
    Actuarial Research Shows Just How Fast Action is Needed

    OTTAWA, Sept. 17, 2013 /CNW/ – Actuarial analysis of the Canadian health care system concludes that, at current growth rates, costs will eventually be at levels such that provinces and territories will be required to spend the major part of their budgets on health care – at the expense of other programs such as education, social welfare and infrastructure. Using the current Canada Health Transfer (CHT), health care expenditures will equal 97 percent of total revenues available to provinces and territories at the end of 25 years, compared to 44 percent in 2012.

    Proposed changes to the CHT, effective April 2014, will exacerbate the problem. Canada’s current health care system is not sustainable over a 25-year horizon unless significant actions are taken, including changes which substantially reduce the increase in the costs of health care, boosting GDP growth and raising taxes/fees or investing in preventative approaches.

    Released today by the Society of Actuaries and Canadian Institute of Actuaries, “Sustainability of the Canadian Health Care System and Impact of the 2014 Revision to the Canada Health Transfer,” takes an actuarial look at the current state of the Canadian health care system. Factoring in expected changes in Canadian population demographics, the study predicts that provincial and territorial governments’ annual spending on health care will increase by nearly 133 percent, from $135 billion in 2012 to more than $315 billion. The expenditures will represent close to 86 percent of those governments’ own source revenues by 2037, even after assuming some governmental action. …

    Then Take a look at the report from the Canadian institute of actuaries.

    “The findings indicate that, without significant government intervention, the Canadian health care system
    in its current form is not sustainable. Key findings from the analysis show that:” …

    Bob, this is not the first time that your facts have been shown to be erroneous.

  20. Allan, I cannot agree that the health plans of Germany, Canada, Japan, Sweden, France, and Australia are not sustainable. They have been rolling along for decades now with (I believe) minor tinkering and wide popularity.

    Even England has a very messy system, with all the faults you cite, but i am not sure I would call England un-sustainable.

    Of course these are all rich countries. Having said that, I wonder if a rich country can sustain any plan it wants, and a collapsing country like Greece cannot sustain any plan.

  21. Bob, you do realize that these other systems are all different and none of them are sustainable?

    Why should we copy them just because you think they represent a consensus? Consensus acts as a brake to innovation.

    Should we copy the lack of initiative many of these countries show? We are a leader and always have been. We are innovative. Our only problem is that sometimes we are stupid and vote for Presidents and legislators that have no idea of how to run a business or a country.

    You call the attacks “reactionary”. They are not reactionary rather the attacks represent sanity and a movement away from the lunacy we have been seeing.

  22. i appreciate all the comments, but here is some more perspective:

    a. The national health insurance plans in Europe, Israel, Japan, et al, were installed because strong labor parties (and even Communist parties) demanded them.

    Germany has had national health insurance since 1870. Japan got national health insurance because a bunch of American liberals working for MacArthur put it into the postwar constitution. Britain and France got national health insurance with great support from America, because it took an important issue away from the Communists.

    OK, fast forward to 2009. Obama brings up a plan with marginal support from liberals.

    He cannot sustain it against reactionary attacks. I say, let him hold out for as much as he can.

    Bob Hertz, The Health Care Crusade

  23. “The law would be easy to fix if Democrats still had majorities.”

    hmm. maybe, Democrats would be easier to fix if we removed their “majorities” . . .

  24. Bob, the law would be even easier to fix if there was a fascist dictator in charge. But, who knows, maybe one is brewing right now at the WH.

  25. The ACA was passed by the narrowest of margins in 2009, with the Democrats controlling both Houses (barely) and a popular President.

    The law would be easy to fix if Democrats still had majorities.

    By comparison, both Social Security and Medicare were passed when Democrats had huge and stable majorities.

  26. If laws are interpreted literally and implemented literally as written, then the politicians are forced to correct them. But as it is, all the ambiguity lets the politicians off the hook so they can fund raise off of the discontent.
    In this case, if the law was implemented as written – no subsidies for states that didn’t participate, the discontent would turn into a hew and cry from the public who would see the injustice of it all and that would be enough to get the politicians off of their collective behinds and fix it.

  27. Yes, I too agree with your sentiment because like all things this can cut two ways so we have to be careful.

    But there are some simple solutions. Reduce the number of laws. Buyer beware exists whether or not laws surrounding the purchase exist so don’t overcomplicate it. When making a new law get rid of the old ones.

    Remember, a lot of problems occur because of advertising which sets up a scenario where the product doesn’t live up to the advertisement.

    “I’m not sure victory for Halbig is defeat for the regulatory state.”

    At least defeat means that the rules and regulations will have to be structured more carefully.

  28. I agree with the basic sentiment of what you are saying. The trouble is that granularity creates its own problems.

    If nothing is left to interpretation then it means that the way we conduct our businesses will become mightily inconvenient. Streams of useless disclaimers will abound and confuse.

    I’m not sure victory for Halbig is defeat for the regulatory state.

  29. I agree, but we can’t get on with the healing until this issue is settled so let me make one more try.

    ‘If you sign up for a free book we will send you one and sign you up for our blog site, but if you don’t sign up you won’t get the free book.’

    Should everyone get the book, not just those that sign up? That decision affects everything and that is the argument that remains unsettled and a thorn in our side. Pointing out this argument is not nit picking. Healing occurs when laws are clear and unbiased. That is why we generally interpret a law to mean what it said. As you said in your title “Many More Halbigs to Come”. That is not good for the nation, but neither is sloppy writing and sloppy interpretation of the laws.

    When I am sued because of sloppy writing of a contract the judge doesn’t try to interpret my intention. He simply says next time you write a contract do a better job.

  30. You have a point, Jay.

    I think we need a more sensible, common sense approach, to healthcare. I don’t think this can be achieved by writing more and more statutes.

  31. Saurabh- consider a much more relevant analogy than works of fiction…

    You get sued — the court looks at what is in the medical record — and the actual language…

    You say, but of course my INTENT was to document that I did/checked X! Look at all of my other patient charts where I did so!

    And, now, of course, I am checking X on this patient!

    Which side would you want to be on? plaintiff or defense?

    Either words matter, the rule of law matters, documentation matters — and if that standard holds true in health care delivery — ought it also apply to the foundational policies upon which we are allowed to deliver care?

  32. I knew this was going to happen!

    allan, my chief point is let’s get on with healing! Not nitpicking!

    PS: I’m a libertarian (pragmatic, I think)

  33. Coercion:

    “Why would the Democrats conspire to jeopardize their own healthcare law, “

    “What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill.”

    That is known as coercion.

    GRUBER V. GRUBER (one of the architects of the ACA)
    Jonathan Gruber speech, January 2012:
    “What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.”
    Mother Jones, January 2013
    If these benefits aren’t available in states with federally run exchanges, the argument goes, then other key components of the law, like the requirement that employers offer health insurance, and that most people must buy insurance, also fall apart in those states.
    Jonathan Gruber, who helped write former presidential candidate Mitt Romney’s Massachusetts health care law as well as the Affordable Care Act, calls this theory a “screwy interpretation” of the law. “It’s nutty. It’s stupid,” he says. And beyond that, “it’s essentially unprecedented in our democracy. This was law democratically enacted, challenged in the Supreme Court, and passed the test, and now [Republicans] are trying again. They’re desperate.”

    I took note of your addendum, but the actual quotes I believe are helpful.