When the latest post from Michael Cannon–he who seeks to sink the subsidies attached to the Federal exchange–hit my inbox, I wondered, “Why don’t his opponents stop arguing the specifics, and instead explain what the Supreme Court ought to do. I also don’t see why Mark Andreeseen (@pmarca) should have all the fun with long Twitter essays. So in only 5 tweets complete with misspellings and other contortions to get my thoughts into 140 characters, this is what I sent back
“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).
Today’s 2-1 decision by the DC Court of Appeals striking down federal premium subsidies, in at least the 27 states that opted for the feds to run their Obamacare insurance exchanges, has the potential to strike a devastating blow to the new health law.The law says that individuals can get subsidies to buy health insurance in the states that set up insurance exchanges. That appears to exclude the states that do not set up exchanges––at least the 27 states that completely opted out of Obamacare. Another nine states set up partnership exchanges with the feds and the impact on those states is not clear.The response by supporters of the law, and the IRS regulation that has enabled subsidies to be paid in the states not setting up exchanges, hinges on the argument that the language is at worst ambiguous and the Congress never intended to withhold the subsidies in the federal exchange states.
But in the DC Court ruling one of the majority judges said, “The fact is that the legislative record provides little indication one way or the other of the Congressional intent, but the statutory text does. Section 36B plainly makes subsidies only available only on Exchanges established by states.”
My own observation, having closely watched the original Obamacare Congressional debate, is that this issue never came up because about everybody believed about all of the states would establish their own exchange. I think it is fair to say about everyone also believed a few states would not establish their own exchanges. Smaller states, for example, might opt out because they just didn’t have the scale needed to make the program work. I don’t recall a single member of Congress, Republican or Democrat, who believed that if this happened those states would lose their subsidies.