The Wall Street Journal portrayed the D.C. Circuit's radical decision nullifying tax credits for consumers on the federal exchanges of the Affordable Care Act (ACA) as a check on President Obama's “penchant for treating laws as unlimited grants of power,” all while ignoring the fact that multiple federal courts -- including the Supreme Court itself -- have upheld or acknowledged the very same tax breaks that the Journal now condemns as “illegitimate.”
On July 22, the D.C. Circuit Court of Appeals issued its split decision in Halbig v. Burwell, one of many lawsuits applauded by conservatives that have challenged the ACA since President Obama signed it into law in 2010. Three of these lawsuits are based on the same legal arguments of Halbig, and the Fourth Circuit Court of Appeals rejected a Halbig-like challenge and upheld the validity of the tax credits on the same day Halbig was decided. The plaintiffs in these cases, relying on a legal theory that has long been a favorite of right-wing media, argued that, somehow, a law drafted to make insurance affordable for all Americans actually denies crucial tax credits for the 5 million consumers who purchased insurance through the federal exchange because their home states refused to set up their own health insurance sites.
Celebrating the majority decision in Halbig by calling the case a “remedial civics lesson” for the Obama administration, the Journal misleadingly claimed that the “plain statutory language of ObamaCare repeatedly stipulates” that the tax credits are only available for state exchanges. The July 23 editorial largely ignored the contradictory ruling from the Fourth Circuit and the vast majority of experts knowledgeable with the law and the basics of statutory construction that took no issue with the administration's commonsense execution of the ACA's tax credits:
The courts usually defer to executive interpretation when statutes are ambiguous, but Mr. Obama's lawyers argued that the law unambiguously means the opposite of the words its drafters used. Judge Thomas Griffith knocked this argument away by noting in his ruling that, “After all, the federal government is not a 'State,'” and therefore “a federal Exchange is not an 'Exchange established by the State.'”
The White House also argued that the court should ignore the law's literal words because Congress intended all along to subsidize everybody, calling the contrary conclusion an “absurd result.” Yet this is merely ex post facto regret for the recklessness and improvisation of the way ObamaCare became law, when no trick was too dirty after Democrats lost their 60-vote Senate supermajority. Nancy Pelosi said we had to pass the bill to find out what's in it. Now we know.
Past and current legal analysts, the experts who designed health care reform, the staffers who wrote the law, the congresspersons who voted for it, and the journalists who covered the messy legislative process all say this counterintuitive interpretation of the ACA that right-wing media is pushing is, at best, a ridiculous misreading of the statute.
Section 1311, one of the subsections at issue in Halbig, describes how states can set up the new private health insurance marketplaces called exchanges. Section 1321 authorizes the federal government to set up “such” state exchanges in the event a state declines to do so. Although multiple other provisions refer to the availability of tax credits to make health insurance affordable in both state and federally-run exchanges, another provision describes tax credits as being available in an “Exchange established by the state under 1311.” For the plaintiffs and their enablers in the right-wing media, the only reasonable interpretation of those seven words yanked from context was to read it literally and in a vacuum -- in other words, because section 1311 doesn't explicitly mention the federal exchange, tax credits must only be available in states that set up their own exchanges. But because there is no evidence of Congress' intent to limit the availability of the tax credits to just state exchanges, and because the rest of the statute makes clear tax credits are available in both the state and federally-run exchanges under both 1311 and 1321, the IRS clarified that tax credits are available to all eligible Americans. As explained by Vice President for Health Policy at the Center on Budget and Policy Priorities Judith Solomon when this right-wing challenge first materialized, the “federal exchange is the state exchange in states not establishing their own exchange.”
Nevertheless, the two Republican-appointed judges on the three-judge panel in Halbig ultimately agreed with the plaintiffs' position, even though all other federal courts that have considered the merits of this legal theory have rejected it.
Right-wing media immediately praised the D.C. Circuit's ruling -- an outcome they had been pushing for years -- despite the fact that a contrary unanimous opinion from the Fourth Circuit was issued just hours later in King v. Burwell. That court rejected the same right-wing reasoning that the Republican judges on the D.C. Circuit embraced, with the concurring opinion noting that “appellants' 'literal reading' of the premium tax credits calculation subprovision renders the entire Congressional scheme nonsensical.”
The editorial's claim that the government's argument in Halbig is “merely ex post facto regret” glosses over the extensive evidence of Congress' intent to provide subsidies to all consumers, regardless of which exchange they purchased their insurance from. As Sarah Kliff explained in detail at Vox, drafters of the law “definitely meant to have subsidies available in all 50 states, regardless [of] who ran the marketplace,” according to numerous senior congressional staffers who worked on the ACA. One key congressional staffer who worked on the Health, Education, Labor and Pension committee while the ACA was being debated told Kliff that “the evidence of Congressional intent here is overwhelming ... There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state, regardless of exchange status.”
The Journal still argues, though, that the Halbig decision is further proof of President Obama's executive overreach because seven “literal words” in the ACA supposedly conflict with the rest of the text and the IRS's clarification of the law. But as health care law expert Timothy Jost has pointed out, when the federal fallback option for “such” exchanges is exercised, 1311 encompasses federally-run state exchanges and “courts do not read statutes by cherry-picking single phrases to defeat the entire purpose of laws.” Jost continued:
As Supreme Court Justice Antonin Scalia noted in an opinion issued last month, courts must bear in mind the “fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” If one views the totality of the ACA -- its purpose and its other provisions -- it's clear that tax credits are available in the federal exchange.
The Affordable Care Act was meant to “provide affordable ... coverage choices for all Americans.” A key section says, “Each state shall ... establish an ... Exchange,” but another section provides that if a state “elects” not to establish the “required Exchange,” the secretary of health and human services must “establish and operate such Exchange.” These sections both require states to establish exchanges and allow them not to do so.
Indeed, if the Journal is relying on the Court's conservatives to eventually uphold the D.C. Circuit panel's ruling in Halbig (assuming that the full D.C. Circuit doesn't overrule the panel, as many are predicting), it may be out of luck. Not only did Chief Justice Roberts uphold the individual mandate of the ACA in 2012, even the conservative dissenters appeared to accept the idea that tax credits for the federal exchange were valid. As Yale Law School professor Abbe Gluck recently noted in Politico, arch-conservative Justice Antonin Scalia's dissent in that case explained that Congress' “backup scheme” was to allow “the Federal Government [to] operate an exchange” in states that “decline[d] to participate.”
Moreover, writes Gluck, “the dissenters also assumed: 'By 2019, 20 million of the 24 million people who will obtain insurance through an exchange are expected to receive an average federal subsidy of $6,460 per person' -- numbers that only make sense if the federal exchanges are included.”