The two contradictory appeals court decisions that cast the future of Obamacare into uncertainty Tuesday morning largely center on a question of intent: When the Affordable Care Act was conceived and drafted, did its creators mean to withhold health care subsidies from people living in states that refused to set up their own exchanges?
This latest legal challenge focuses on four words in the mammoth law authorizing tax credits for individuals who buy insurance through exchanges "established by the States." Thiry-six states declined to set up their own exchanges — far more than the law's backers anticipated — and in those states, consumers have been shopping for health care on exchanges run instead by the federal government. Now the D.C. Circuit Court of Appeals has ruled that these consumers are not eligible for subsidies because, well, they bought their insurance on exchanges not "established by the States."
This is a tremendously literal interpretation of a small but crucial part of the law, and it's one that was arguably never intended by its creators. The plaintiffs in these challenges have argued that the ACA always meant to exclude noncooperative states from subsidies as a way of incentivizing those states to create their own exchanges. Supporters of the law — including the Obama Administration — counter that such intent would never have made any sense in the larger context of a law aiming to expand health insurance to as many people as possible.
The challenge of sorting out original intent here is not like trying to divine the druthers of the men who drafted the Constitution. The ACA's authors are alive and well. They're still talking about the law today. They filed an amicus brief with the D.C. Circuit Court of Appeals in the case telling us exactly what they meant — and that this most definitely was not it.
The brief was filed by seven Democratic members of Congress involved in writing the law, including Sen. Max Baucus (Mont.), House Minority Leader Nancy Pelosi (Calif.) and Senate Majority Leader Harry Reid (Nev.), as well as dozens of state legislators in positions of interpreting and implementing the law. Here's their own description of their intent:
Congress never intended the subsidies to be available only to individuals in state-run exchanges.
Congressional amici know from their own experience that it was never Congress’s intention that tax credits only be available to individuals who purchased insurance on state-run Exchanges. Rather, the tax credits were included in the statute to help realize the statute’s goal of affordable health insurance for all Americans and thus Congress always intended that the tax credits be available to all Americans, regardless of whether they purchased their health insurance on a state-run or federally-facilitated Exchange.
Such a provision would be illogical because it would have undermined the rest of the law.
Amici well understand, as they well understood when the legislation was under consideration in Congress and state capitals, that, without premium assistance tax credits and subsidies, the Exchanges themselves would be rendered inoperable, and, indeed, the effectiveness of other major components of the law, such as guarantees of affordable insurance for people with pre-existing health conditions and the “individual mandate” to carry insurance or pay a penalty, could be gravely jeopardized.
And it would have given the law's critics more ammo to try to destabilize it from the start.
Indeed, making the tax credits conditional on state establishment of the Exchanges would have empowered hostile state officials to undermine the core purpose of the ACA, a result that amici and the other architects of the ACA wanted to avoid, not encourage.
If Congress had meant to threaten states by withholding subsidies, states darn well would have understood that message from the beginning.
It makes no sense to think that Congress would have hidden this condition in the formula provision if it were trying to send a message to state legislators that the tax credit would not be available if their State failed to set up its own Exchange.
And state legislators would have behaved differently — which they didn't.
Indeed, some amici served in States that declined to set up their own Exchanges; had amici thought there was even a possibility that their constituents would lose access to these tax credits unless the State established its own Exchange, they would have vigorously advocated for a state-run Exchange citing this potential consequence.
Sure, the law had implementation problems. But no one at the state level thought this was one of them.
The National Governors Association (“NGA”), too, identified numerous issues associated with implementing the Exchanges, but (again) the prospect that a State’s citizens might be denied the benefits of the tax credits if the State failed to set up its own Exchange was never one of them. For example, within days of the Act’s passage, the NGA circulated an eight page, single-spaced document identifying key implementation issues for its members. Nowhere in this lengthy document was there any suggestion that the tax credits would not be available if States did not set up their own Exchanges.
That's because Congress was always clear that qualification for subsidies was dependent on income, not who on was running the exchange.
In fact, during the debates over the ACA, no one suggested, let alone explicitly stated, that a State’s citizens would lose access to the tax credits if the State failed to establish its own Exchange.
And even lawmakers who opposed the ACA recognized this during its drafting.
Finally, even ACA opponents in Congress recognized that that the only criterion that determined eligibility for the tax credits would be income. Congressman Paul Ryan, for example, asserted on March 15, 2010 that the tax credits were a “new open-ended entitlement that basically says that just about everybody in this country—people making less than $100,000, you know what, if your health care expenses exceed anywhere from 2 to 9.8 percent of your adjusted gross income, don’t worry about it, taxpayers got you covered, the government is going to subsidize the rest.”