Law by other means — a response to Rob Weiner on Halbig

August 18

Rob Weiner is at it again over at Balkinization. This time alleging he’s found some smoking gun to prove that the Halbig litigation is “anti-democratic” and rests on a flawed legal theory. As with his posts on the D.C. Circuit’s en banc procedures, Weiner’s diatribe is long on bluster, but short on meaningful claims. And, as before, he says some things that are false, irrelevant, or both.

Weiner starts with the supposed discovery of a video that shows the theory underlying Halbig was illegitimate from the start. The video is of a December 2010 conference at the American Enterprise Institute at which Vanderbilt law professor James Blumstein and health law attorney Tom Christina discussed pending and potential legal challenges to the PPACA. It was this presentation – though the slides posted on the AEI website, not the video as Weiner claims – that first alerted me to the fact Section 1401 of the PPACA only authorizes tax credits in health insurance exchanges “established by the State,” and not in federal exchanges. It was also where Michael Greve urged listeners to find a way to upend the PPACA. This, in Weiner’s telling, shows the unholy origins of the Halbig litigation.

Set aside the silly suggestion that the merits of a legal claim can be judged by the subjective motivations of its supporters – a premise that, if operationalized, would up end much of administrative law. (You mean NEPA plaintiffs care more about stopping federal projects than getting the government to conduct environmental impact statements?!? Perish the thought!) None of what Weiner reports is a revelation. I’ve blogged about it, as has Greve.  So much for the revelation.

What is new in Weiner’s post is the curious spin he places on what was said by Christina at the AEI conference. Indeed, it seems that Weiner (and his source) either didn’t listen to the whole presentation or chose to be selective. Yes, Christina was one of the first people to publicly point out the language of Section 1401 limiting tax credits to state-established exchanges. Yet what Christina took from this at the time was not that states could hamper PPACA implementation by cutting off subsidies and the employer mandate. Rather, he saw this provision as a clear example of Congress seeking to pressure states into cooperating — setting up yet another offer states would be loathe to refuse — wondered whether this inducement could be challenged as unduly coercive. My initial read, offered long before the IRS had proposed its rule and long before anyone thought state resistance was likely, let alone a threat to PPACA implementation, was much the same. Yet by Weiner’s telling, this interpretation was a “belated ‘discovery’” that only occurred much later.

Weiner notes that I became aware of Christina’s presentation in early 2011, but he omits the context. As I have noted time and again, I reviewed Christina’s presentation not to identify potential challenges to the PPACA or its implementation, but for the purpose of a paper and presentation at a University of Kansas Law School symposium on federalism and health care reform. In my presentation in February 2011, to a room full of health law experts and government officials, I pointed out the very same language and its implications, and no one suggested this was a problem. Why? Because most everyone in the room assumed, as did the PPACA’s authors, that Kansas (and most other states) would go ahead and create their own exchanges. As documented in this recent article from the Journal of Health Politics, Policy and Law (written by Halbig critics), opposition to state creation of exchanges did not begin in earnest until after the 2010 elections, long after the PPACA had been enacted in to law.

Weiner writes:

The Act requires each state to establish an Exchange, but if the state does not, the Secretary of HHS must do so on the state’s behalf. The anti-ACA argument rests on a section, of the more than 900 in the Act, dealing with the tax subsidies that enable low income families to buy insurance on an Exchange. The first provision of the section at issue makes almost everyone with income less than 400 percent of the federal poverty level eligible for a subsidy. But the ACA opponents focus on another subsection of the same section, setting out the formula for determining the amount of the subsidy. That formula turns on the price of health insurance purchased on an “Exchange established by the State.” Based on this phrase, the ACA opponents contend that low income families in states with a federal Exchange forfeit the tax subsidies the Act would otherwise grant them. Indisputably, when the Secretary steps into the state’s shoes and sets up the Exchange, the Exchange is established for the state. And it clearly is established in the state. But the ACA opponents assert that it is not established by the state.

Of course the Halbig claim is based on one of the more than 900 sections of the PPACA. It is focused on the provision that defines eligibility for subsidies. Weiner thinks this language is “buried,” but it’s in the same place (the definition of an eligible covereage month) that Congress has used before. And of course the claim focuses on a key phrase in the statute, as that phrase is clear, explicit and repeated. Where Congress sought to reference both federal and state exchanges it either mentioned both (as in the HCERA reporting provisions) or it used the more generic (and potentially ambiguous) word “exchange,” without limitation. Here, however, Congress included “established by the State under Section 1311,” and yet Weiner wants us to believe the IRS can authorize tax credits in exchanges that were not established by the states, rendering this repeated and cross-referenced language to be surplusage.

Weiner claims the Halbig plaintiffs are casing aside the “fundamental rules of statutory construction,” yet it is Weiner who offers an interpretation that would allow an agency to disregard plain statutory text. Of course statutory language must be read in context, which is why it’s relevant that the statute defines “state” (as one of the 50 states or the District of Columbia), doesn’t always refer to exchanges as those “established by the State,” and elsewhere seeks to induce state cooperation with the promise of benefits for state citizens. Still, Weiner protests, words don’t mean what they mean. In Weiner’s arguments I hear echoes of the Bush Administration’s claim that it shouldn’t have to set daily pollutant limits under the TMDL provisions of the Clean Water Act even though the “D” in TMDL stood for daily. After all, what’s one word? Unsurprisingly, the D.C. Circuit did not agree.

Weiner claims legislative history is on his side yet he, like the government and other Halbig critics, has yet to identify a single contemporaneous statement by anyone stating that tax credits would be available on federal exchanges under the PPACA. That is, there is not a single contemporaneous statement to be found contradicting the plain text of the act. Weiner finds folks saying tax credits would be available in all fifty states, but we also know that PPACA supporters believed all fifty states would create their own exchanges, as many repeatedly said. Further, as some of the government-side amici have acknowledged, other draft health reform bills conditioned subsidies on state cooperation, and prominent health care reform advocates proposed the use of this mechanism too. That pundits and reporters failed to note this fact is immaterial. Other issues – abortion, the public option, the mandate – were the primary subjects under debate and, as we know, many pundits ignored the exchange provisions (thinking they’d be modified in a House-Senate conference bill that never came to be) or did not think it was important to read the bill. It’s interesting that in late 2011, after the IRS proposed its rule, many states assumed that tax credits were not contingent on creating their own exchange, but all that tells us is that states trusted the IRS. It tells us nothing about what the statute actually means.

Weiner simply errs when he claims that the relevant provisions make “almost everyone with income less than 400 percent of the federal poverty level eligible for a subsidy.” This is not true.  The PPACA expressly denies subsidies to those who are eligible for various government-sponsored programs, including Medicare, Medicaid, TRICARE, and veterans health programs, among others.  Moreover, the PPACA cuts off subsidies to those with income below 100 percent of the FPL. In other words, under the PPACA, the poorest of the working poor are denied subsidies on insurance exchanges. There is no dispute on this point, though perhaps Weiner missed it because these limits are “buried” in the same part of the law that only limits tax credits and cost-sharing subsidies to state-established exchanges.

Why would Congress cut off subsidies to those under the FPL? Because it assumed those affected would be covered by the Medicaid expansion. And why did Congress assume that? Because it assumed all states would accept the Medicaid expansion. But Congress assumed wrong, and left open the possibility that the poorest of the poor would be left unprotected. Yes the Supreme Court’s NFIB v. Sebelius decision made it easier to say no. But NFIB did not alter the fundamental operation of the Medicaid expansion, it only pared down the consequences of a state refusal to cooperate. In other words, the PPACA, as written, undisputably did what Weiner suggests is unthinkable: It gave states the ability to frustrate the expansion of health insurance coverage by refusing to cooperate with federal plans.

Weiner’s post is framed as an effort to show that the plaintiffs in Halbig and its companion cases are “anti-democratic — an effort by the losing side in a legislative battle to induce credulous or partisan judges to overturn the policy choices of our elected representatives.” Weiner’s arguments may be consistent with this narrative, but they do not demonstrate that his narrative is the correct one. Like so many other arguments made against the Halbig decision, they presume the conclusion and reinforce the prejudices of those already committed to one side of the argument.

While Weiner thinks he’s proven his point, there’s nothing in his post that contradicts the narrative that Michael Cannon and I laid out over two years ago: That the IRS rule is an effort to achieve, through administrative fiat, what was not accomplished through legislation.  And so, as before, Weiner has provided us with substantial bluster signifying very little.

In related news, today the Halbig plaintiffs filed their brief in opposition to the government’s petition for en banc reconsideration of the D.C. Circuit’s ruling.

 

Jonathan H. Adler teaches courses in constitutional, administrative, and environmental law at the Case Western University School of Law, where he is the inaugural Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation.
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