Only hours after Obamacare opponents celebrated the D.C Circuit Court’s decision invalidating subsidies to those on the federal exchange, the Fourth Circuit Court has now weighed in with precisely the opposite decision, upholding the IRS rule extending those subsidies.
That was a short party wasn’t it? Now the story is no longer “crushing blow” — the first decision would have invalidated subsidies in three dozen states, taking subsidies from millions — but “split decision.”
The law’s opponents like to say they merely want to enforce the law “as written.” Their basic presumption is that their argument is grounded in a “literal” reading of the Affordable Care Act, and that any departure from that literal reading — one that seeks to divine the meaning of statutory language by looking at the intent of Congress in passing a law — is less pure in legal terms.
But this elides an inconvenient fact: Courts have, in fact, frequently looked at the intent of Congress in passing laws when they have decided that a “literal reading” does not actually settle the dispute in question.
This particular dispute, then, turns on whether you think a “literal reading” of the disputed phrase in the Affordable Care Act definitively settles the question of whether the statute makes subsidies available to those on the federal exchanges.
Law professor Nicholas Bagley has previously written skeptically about the legality of the employer mandate, and his views have been widely cited by the law’s foes. But Bagley tells me in an interview that in this case, he does not think that a “literal reading” of the phrase settles the key question here — which means the court should properly evaluate the intent of Congress, as reflected in the whole statute, in settling it.
The text of the law says subsidies go to those who get insurance through an “exchange established by the state.” Opponents say that means an IRS rule providing subsides to those on the federal exchange is invalid.
The D.C. Circuit ruling siding with opponents dismisses the argument that Congress’ overall goal overrides that one phrase, claiming the government “comes up short in its efforts to overcome the statutory intent. Its appeals to the ACA’s broad aims do not demonstrate that Congress manifestly meant something other than what [that phrase] says.”
But the problem with that construction is its premise: That the phrase “says” something clear. That presumes that the phrase itself settles the core question at the heart of these legal challenges. To believe that, you have to believe that the literal meaning of the phrase is that subsidies should only go to those on state exchanges, and not on the federal one. But the phrase does not literally say that subsidies should not go to people who get subsidies from the federal exchange, which under the law must be established in states that decline to set up their own exchanges. In fairness, opponents are right — the phrase also does not literally say that subsidies should go to those on the federal exchange.
But all of that is precisely what makes the statutory language in question ambiguous.
Once you accept this point — that the meaning of the phrase is not clear — then there is ample precedent for the courts evaluating the intent of Congress as expressed in the whole statute.
As Bagley explains it to me, the core distinction is whether you are arguing that “Congress didn’t really mean what the statute said,” or whether you are arguing that “what the statute says doesn’t actually mean what you think it means.” The former, Bagley says, is a losing argument. But that is not what proponents of the law are arguing. As noted above, the statute does not clearly say that those on the federal exchange don’t get subsidies. Therefore, the question is not, “what does the statute say” — that is not actually clear — but “what does the statute mean.”
“The winning argument is that if you look at the broader statute, Congress did not restrict tax credits,” Bagley says. “Yes, the best indication of meaning is the text itself. But we should look to legislative intent when the text runs out. Trying to understand what Congress was driving at has always been a core part of statutory analysis. You’re always trying to figure out what Congress as an institution meant by the words it chose.”
This approach has been upheld by a conservative Supreme Court, Bagley notes. He points to a case in 2000, in which a conservative SCOTUS ruled against a plain reading of a “particular statutory provision in isolation” in a statute that would have allowed the FDA to regulate nicotine as a drug. Instead, SCOTUS insisted that the real “meaning” of it only became “evident when placed in context.”
That’s what today’s Fourth Circuit decision upholding the subsidies essentially found, too. It said that the language in question is “ambiguous and subject to multiple interpretations,” which requires the court to evaluate Congress’ “intent,” which a full reading of the statute demonstrates beyond doubt was to “make the tax credits available nationwide.”
The broader point here is that opponents’ claims to a “literal” reading of the statute are themselves dubious. Their reading is not “literal” at all. Does that mean SCOTUS won’t eventually rule in their favor? No, not necessarily. I think an eventual ruling against the law is unlikely. But it could happen. If it does, SCOTUS will not be reading the statute literally. It will be pretending a literal reading of the one phrase actually settles the core question, and breaking with precedent in which courts have, in fact, tried to divine Congressional intent when actual statutory language is ambiguous, as is plainly the case here.