D.C. Circuit Court of Appeals Decides IRS Rule Permitting Subsidies for Federal Exchanges Is Not Permitted Under the ACA

[dismal]

He misspoke full coherent paragraphs in relevant context?

In his prepared remarks?

shit happens

Yes, inconceivable and implausible things just come flying out of our highly paid experts' mouths, in full paragraphs, in proper context, as if they completely believe them.

In prepared remarks.

I'd love to be arguing that in the Supreme Court.

 

[ksen]

What the D.C. Circuit Got Wrong About Obamacare



But maybe Scalia, Thomas, and Alito also don't know how to properly rule on a law.

You understand they had not heard the evidence in Halbig at this point in time? It was not the issue before them?

This is really pathetic grasping at straws.

We'll see.

 

[James Madison]

This isn't an instance of "Creative readings." The statutory language supports and is consistent with the decision of the D.C. Circuit Court of Appeals, and the position, espoused by some in this thread, the statute did not authorize subsidies for exchanges established by the federal government. No "Creative readings" is necessary to reach the conclusion the statutory language does not support subsidies for federal exchanges.

I see you subscribe to the Javert school of law rather than the Valjean school.

To a very large extent, yes. But, there is a reason, a very good reason why I predominantly, maybe even exclusively, adhere to the "Javert school of law," at least in this situation. Our system of government was established upon the principle the law exists in writing. The written law protects the peoples' life, liberty, and property. Written law facilitates people in knowing what their rights are, their obligations, what is proscribed, what is permitted, and so forth. Our society is built upon the assurance provided by written law, and this assurance is the law is in writing and the law says what the law says, there isn't some other meaning other than the meaning of the law as it is written down and recorded. People can act confidently and engage in certain behavior with the understanding they know what the law says because they can read it, their attorney can read it, it is written for them to read.

The law, once it leaves the legislature and is signed by the executive, shouldn't be rewritten, or a meaning imposed upon its text, or a meaning not supported by the text, by mere judicial decree. A judicial power of this sort is dangerous, perhaps this danger is exacerbated when the judiciary is not directly answerable to the people, as the judicial branch then possesses the rightful and lawful authority to not adhere to the text of the law but instead pervert, change, alter, amend, and rewrite a law(s) by mere judicial decision. The people, who after all are governed by laws, are left with little recourse when the judiciary issue a decision which is not consistent with the text of the law as the judiciary is not elected by the people. In effect, the judiciary becomes a sort of legislature, a quasi-legislature, but a quasi-legislature not answerable to the people for the law it created by judicial decree rather than followed the law.

The legislature can make mistakes, the legislature can pass bad laws, unwise laws but it is for the legislature to rectify them and not the judiciary.

 

[ksen]

Our system of government was established upon the principle the law exists in writing.

No it wasn't.

The Common Law and Civil Law Traditions

Most nations today follow one of two major legal traditions: common law or civil law. The common law tradition emerged in England during the Middle Ages and was applied within British colonies across continents. The civil law tradition developed in continental Europe at the same time and was applied in the colonies of European imperial powers such as Spain and Portugal. Civil law was also adopted in the nineteenth and twentieth centuries by countries formerly possessing distinctive legal traditions, such as Russia and Japan, that sought to reform their legal systems in order to gain economic and political power comparable to that of Western European nation-states.

To an American familiar with the terminology and process of our legal system, which is based on English common law, civil law systems can be unfamiliar and confusing. Even though England had many profound cultural ties to the rest of Europe in the Middle Ages, its legal tradition developed differently from that of the continent for a number of historical reasons, and one of the most fundamental ways in which they diverged was in the establishment of judicial decisions as the basis of common law and legislative decisions as the basis of civil law.

Unless you mean something different than civil or common law when you say, "the principle the law exists in writing."

 

[James Madison]

No it wasn't.

The Common Law and Civil Law Traditions

Most nations today follow one of two major legal traditions: common law or civil law. The common law tradition emerged in England during the Middle Ages and was applied within British colonies across continents. The civil law tradition developed in continental Europe at the same time and was applied in the colonies of European imperial powers such as Spain and Portugal. Civil law was also adopted in the nineteenth and twentieth centuries by countries formerly possessing distinctive legal traditions, such as Russia and Japan, that sought to reform their legal systems in order to gain economic and political power comparable to that of Western European nation-states.

To an American familiar with the terminology and process of our legal system, which is based on English common law, civil law systems can be unfamiliar and confusing. Even though England had many profound cultural ties to the rest of Europe in the Middle Ages, its legal tradition developed differently from that of the continent for a number of historical reasons, and one of the most fundamental ways in which they diverged was in the establishment of judicial decisions as the basis of common law and legislative decisions as the basis of civil law.

Unless you mean something different than civil or common law when you say, "the principle the law exists in writing."

No it wasn't.

To the contrary, the common law was "in writing." The common law existed, not in some ether, but in writing. The common law was, in some areas, predicated upon other sources of law existing in written form, such as the Magna Charta, the Declaration of Rights of 1689, a 1350 English statute using the phrase "due process," and so forth. Then the U.S. Constitution was ratified and the tradition of the law in writing, and existing in writing, persisted as the words "bill" and "legislation" in the U.S. Constitution had the meaning of a written law, a law in writing.

Under the U.S. system of government, the judiciary wasn't vested with any lawmaking authority, or the authority to rewrite a law, revise a law, etcetera, but each was given to the legislature as a power to be exercised solely and exclusively by the legislature. This process, of the legislative branch making the law and not the judicial branch, was a gradual one, one which evolved over many centuries in Europe and to some extent in England, and was fully embraced in the U.S. Constitution.

 

[Emily Lake]

You really don't understand this argument because your opinion is based on personal feelings and assumptions about PPACA intentions made in ignorance. For example, you assumed your view of Obamacare's intentions was universally accepted based on what? Most likely not on reading the ACT, nor in reviewing expert papers or in reading legal briefs....

Actually, maxparrish, I've read significant portions of the law dealing with subsidies, as well as summaries prepared by several organizations. I've been involved with a handful of organizations over the past few years focused on actually implementing the individual and small group marketplaces. While I don't claim to be an expert on every aspect of ACA, I am fairly certain that I have considerably more exposure than most.

This is a lesson is "assuming" making an "ass" out of ...well, you know the rest.

PS: So might it be that you trusted politicians, peers, and propagandists that you should not have?

On the contrary, I suspect that you've made an ass of yourself, by presuming to know more of me than you actually do .


As I mentioned...

• Given that all of the 36 states who stood up exchanges assumed that their participants would receive subsidies, and
• Given that the regulators in those states expected subsidies to be a part of the structure of their exchanges, and
• Given that the CBO expected subsidies flowing to those exchanges as part of their projections, and
• Given that the IRS anticipated subsidies when they developed all of their interactions with the exchanges, and
• Given that nobody questioned the existence of subsidies in federally run exchanges until several months AFTER they were implemented instead of during the 3 years that they were being developed...

Then I think it is quite reasonable to deduce (not assume) that the intention is clear.

 

[dismal]

• Given that all of the 36 states who stood up exchanges assumed that their participants would receive subsidies, and
• Given that the regulators in those states expected subsidies to be a part of the structure of their exchanges, and
• Given that the CBO expected subsidies flowing to those exchanges as part of their projections, and
• Given that the IRS anticipated subsidies when they developed all of their interactions with the exchanges, and
• Given that nobody questioned the existence of subsidies in federally run exchanges until several months AFTER they were implemented instead of during the 3 years that they were being developed...

Then I think it is quite reasonable to deduce (not assume) that the intention is clear.

I think the main reason people believed everyone would get the credits is that 1) at first everyone believed the states would set up exchanges; 2) after it started to look like many states wouldn't due to the unanticipated (if not inconceivable and implausible) unpopularity of the law the IRS stepped in and issued a rule that the credits would be available on the federal exchange; 3) when people challenged that ruling everyone treated them as if they were making ridiculous arguments (you can almost see the point where Gruber changes his tune.)

We are now hitting the point where as the facts come out in court and we observe the challenge is not that ridiculous. So you can't really fall back on "no one ever thought for the last 3 years this was the way it was".

 

[Emily Lake]

dismal, do you honestly and fully believe that the intention of the lawmakers was that if your state set up a federal exchange instead of the state setting up their own, then any poor people in that state were just out of luck, they can go pound sand, no help for them, screw them because your state didn't play along?

Do you honestly believe that to be the truth of the matter?

 

[ksen]

This may be a good place to post this:

Powerful and Coldhearted

 

[dismal]

dismal, do you honestly and fully believe that the intention of the lawmakers was that if your state set up a federal exchange instead of the state setting up their own, then any poor people in that state were just out of luck, they can go pound sand, no help for them, screw them because your state didn't play along?

Do you honestly believe that to be the truth of the matter?

I believe most of the lawmakers didn't read and/or understand the bill.

I believe the people who did write it assumed the states would go along with it in large part because they did not anticipate the unpopularity of the law.

 

[Emily Lake]

dismal, do you honestly and fully believe that the intention of the lawmakers was that if your state set up a federal exchange instead of the state setting up their own, then any poor people in that state were just out of luck, they can go pound sand, no help for them, screw them because your state didn't play along?

Do you honestly believe that to be the truth of the matter?

I believe most of the lawmakers didn't read and/or understand the bill.

I believe the people who did write it assumed the states would go along with it in large part because they did not anticipate the unpopularity of the law.

Hmm. That's really not an answer the the question that I asked.

 

[ksen]

Yeah, but it's an answer to the question he figured you should have asked which is good enough for dismal.

 

[Emily Lake]

This may be a good place to post this:

Powerful and Coldhearted

Interesting. I'm not sure what the correlation with this topic is, but interesting nonetheless.

 

[ksen]

The correlation is that those beaming over the DC court ruling don't seem to give a shit about the implications of that ruling which is that millions of people will no longer be able to afford insurance if they get their way and the ruling stands.

But hey, they got theirs and that's what's important.

 

[Emily Lake]

Ah, I see.

 

[Jimmy Higgins]

As an aside, I was in a meeting with the corporate lawyers to discuss language in our reports due to lawsuits that always happen in major jobs (and in the case of the project at hand, usually the fault of the contractor). One thing I've learned about lawyers (that represent idiots) is that being right is no where near as important as winning. And that is what we have here. The Republicans are trying to find any way, any way at all to kill the ACA. And not because they give a fuck about Obama alledgedly usurping power, but because they want to destroy Obama. They'll parse through every little detail to find the key, like lawyers that represent contractors. An entire report points to one absolute conclusion, but a sentence here or a sentence there is taken out of gross context and the lawyers win. No wonder lawyers were and are a hated profession.

If these assholes really cared about the Constitution, they would be impeaching Obama over the universal surveillance of American citizens.

dismal, do you honestly and fully believe that the intention of the lawmakers was that if your state set up a federal exchange instead of the state setting up their own, then any poor people in that state were just out of luck, they can go pound sand, no help for them, screw them because your state didn't play along?

Do you honestly believe that to be the truth of the matter?

I believe most of the lawmakers didn't read and/or understand the bill.

I believe the people who did write it assumed the states would go along with it in large part because they did not anticipate the unpopularity of the law. uber partisan lengths Republicans would go to sabotage Obama.

Minor nitpick. FIFY.

 

[maxparrish]

What the D.C. Circuit Got Wrong About Obamacare

As all Congress-watchers know, the ACA went through an unusual legislative process, forgoing the usual textual “clean up” most major laws receive at the conference committee stage or at other subsequent amendment stages. Sophisticated textual analysis of complex laws like this one requires attention to the statutory text as a whole, in context, and not in isolation. That’s how the Virginia appeals court read the ACA today, and the Supreme Court itself offered the same admonition last month, through an opinion by Justice Antonin Scalia in the EPA case.

In fact, it was Justice Scalia himself, together with Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito, who interpreted the health reform statute precisely this way in the 2012 health reform case—holistically, and assuming the statutory text makes subsidies available on state and federal exchanges alike. In their joint dissent, they wrote: “Congress provided a backup scheme; if a State declines to participate in the operation of an exchange, the Federal Government will step in and operate an exchange in that State.” And then: “In the absence of federal subsidies to purchasers, insur*ance companies will have little incentive to sell insurance on the exchanges. … That system of incentives collapses if the federal subsidies are invalidated.” 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.

But maybe Scalia, Thomas, and Alito also don't know how to properly rule on a law.

First, regarding the policomag's author's holistic readings; if the author means we ought to read the words in context, no one disagrees. But words have only a limited range of meanings, especially when they defined and used in a consistent manner. If PPACA defines “States” as the 50 US states (and DC) then that is what they mean.

Second, if she means we ought to read to understand the structures, purposes, and history of the text of the law, no one objects to that either. In fact if you read my prior Cannon/Alder links, in particular the Health Matrix law journal article you would discover an exhaustive review of both the structure, purposes and history behind the law.

Finally, maybe an author who wishes to properly rule on the law ought "holistically" and honestly present the dissents before using them as evidence anything other than the blog writer's bias filter.

http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf

The dissent recognized a backup scheme (without addressing what powers it has or does not have). However it recognizes that if the individual mandate and medicaid expansion (which has no backup) is not compliant with the law (the Constitution) then they must be invalidated. If they are invalidated, then community rating won't work and subsidies must be invalidated. In other words, their argument is that individual and medicaid expansion is critical to PPACA working - but if they are invalid then the whole cannot be separated and still work; therefore, the whole law ought to be declared invalid.

So how might this "holistic" reading apply regarding the current dispute? Simple - if subsidizes to federal exchanges are not within the statue's law then either they will say the law must work without them or they will find that without them the law may not work and PPACA will need to be invalidated.

Holistic reading may be a case of being careful about what you wish for, no?

 

[maxparrish]

Nice try dismal

The weirdest Obamacare theory yet

The result is perverse: in recent days, Gruber's comments are getting more attention than testimony from the Democratic and Republican congressional aides who wrote the bill. They're getting more attention than what the Congressional Budget Office (which Gruber advised) was told by Congress. They're getting more attention than the recollections of the very best reporters who covered Obamacare — notably Sarah Kliff and Julie Rovner. They're getting more attention than the debate in every state that chose to use a federal exchange. They're getting more attention than the way the Obama administration understood (and implemented) the law. They're getting more attention than the way the Supreme Court interpreted the law in 2012.

What seems really weird to me is that one of Obamacare's well known and self-appointed cheerleaders at Vox would try to try using mock incredulity and barren links to pretend that folks are ignoring important counter-factuals. I've already pointed out the pinched (non-holistic) reading of the 2012 dissent, and the resulting lame claim advanced in the PoliticoMag article. And the "CBO" gambit has already been deconstructed and debunked in Halbig and in the Cannon/Alder journal article. And after a look at the largely uncited claims of mostly unnamed "staffers" by another VOX journalist and Obamacare cheerleader, Sarah Kliff, her "story" is just another gossamer and "after the fact" lame claim by mostly anonymous sources with a conflict of interest.

Apparently Klein thinks it is safer to infer their is substantive stories of equal import being ignored, without bothering to provide us exactly what they claim - its an old tactic, use incredulity and bluster to sho links without demonstrating they show anything.

They're getting more attention, in fact, than everything else Gruber has ever said or written about the law. This is a guy who cared so deeply about Obamacare's success that he literally published a comic book about it. His most important contribution to the Obamacare debate — technical simulations used by HHS that modeled how many people would get insurance under different scenarios — always assumed subsidies reached into every state. No journalist who interviewed Gruber (myself included) ever heard him mention that states that don't set up exchanges don't receive subsidies. He himself says he never believed that and the off-the-cuff comments were "speak-os".

Klein is a bit of shameless trickster, he says "No journalist who interviewed Gruber (myself included) ever heard him mention that states that don't set up exchanges don't receive subsidies." But even if literally true, that is NOT the same as saying the Klein said the federal exchanges DO provide subsidies, is it? Having commented little on it, it is likely he assumed, like most of early originators of Obamacare assumed, that the 50 states would all set up exchanges and modeled accordingly. They "mandated" the States do so, and thought they offered subsidies and tax credits that could not be refused. But when he did comment on it, in two Q and A's he confirmed what Obamacare critics have noted.

This is like uncovering tape of Michael Bay saying there's nothing he hates seeing more in a movie than an explosion. It requires us to throw out pretty much everything Gruber has done publicly and instead believe that he thought dozens of states would be implementing Obamacare without subsidies — a nightmare of a policy outcome that would have given him a nervous breakdown — but the only times he ever mentioned it were at two Q&A sessions in 2012.

More blustering. Everything Gruber has done publicly is confirm that he had no serious fear that "dozens of states" would reject Obamacare and forego tax credits and subsidies (as well as reject Medicaid expansion, which was impossible to refuse because the Feds would cut off 100 percent of Medicaid funding). But guess what, the only time he mentions the consequences were on TWO separate sessions in which he confirms (as a chief architect) what critics have warned since 2011.

Sorry Ksen, another dog that don't hunt.

 

[ZiprHead]

The Smoking Gun That Wasn't

 

[maxparrish]

Actually, maxparrish, I've read significant portions of the law dealing with subsidies, as well as summaries prepared by several organizations. I've been involved with a handful of organizations over the past few years focused on actually implementing the individual and small group marketplaces. While I don't claim to be an expert on every aspect of ACA, I am fairly certain that I have considerably more exposure than most. ...

As I mentioned...

• "Given that all of the 36 states who stood up exchanges assumed that their participants would receive subsidies
• "Given that the regulators in those states expected subsidies to be a part of the structure of their exchanges, and...

But expectations on how the law will be implemented says nothing about the actual intentions of the law's authors/approvers, nor does it tell us what the State's thought the law's original intentions were. However after passage States were well aware of what the administration and HHS intended to implement as law, and expected it in the pending HHS and IRS regulations. In other words, they "expected" the law would be implemented a certain way, just as the administration (and then IRS) said it would be implemented. To the degree that some, many, or all states expected anything says little about what they think the law intentions actually were.

• Given that the CBO expected subsidies flowing to those exchanges as part of their projections, and
• Given that the IRS anticipated subsidies when they developed all of their interactions with the exchanges, and

First, several prior quotes and links established that the CBO did not base its projections on "those exchanges".

http://object.cato.org/sites/cato.org/files/articles/cannon-adler-health-matrix-23.pdf (page 186-188)

The JCT and CBO produced revenue and spending estimates that assumed tax credits would be available in all fifty states. But this is not the same as ‘‘assum[ing] that the tax credits will be available through the federal exchange,’’ and neither the CBO nor JCT stated such an assumption when conducting their analysis. Indeed, the CBO has acknowledged it did not conduct a legal analysis of whether the statute authorizes tax credits through federal Exchanges.250 Thus its cost projections can hardly be considered authoritative. Like many of the PPACA’s supporters, it appears the CBO and JCT simply assumed that every state would create its own Exchange and
incorporated that miscalculation into their projections. Further evidence for this interpretation, if more were needed, is that the CBO made no mention of the hundreds of millions of dollars it would take to establish
and operate federally run Exchanges (just as Congress didn’t authorize those funds).251 The CBO simply assumed every state would establish own Exchange and did not even consider the question of what would
happen if they did not. There is no basis for relying upon CBO or JCT budget projections to overturn or alter the plain meaning of the PPACA’s text.

Also from the same link:

249. Robert Pear, U.S. Officials Brace for Huge Task of Operating Health
Exchanges, N.Y. Times, Aug. 5, 2012, at A17 (‘‘When Congress passed
legislation to expand coverage two years ago, Mr. Obama and lawmakers
assumed that every state would set up its own exchange . . . .’’).

As far as the IRS "anticipated" subsidies telling us anything, well, the background story of the credibility their "anticipation" on subsidies is too choice to ignore:

http://online.wsj.com/articles/kim-strassel-the-obamacare-irs-nexus-1406244677

We know this thanks to a largely overlooked joint investigation and February report by the House Oversight and Ways and Means committees into the history of the IRS subsidy rule. We know that in the late summer of 2010, after ObamaCare was signed into law, the IRS assembled a working group—made up of career IRS and Treasury employees—to develop regulations around ObamaCare subsidies. And we know that this working group initially decided to follow the text of the law. An early draft of its rule about subsidies explained that they were for "Exchanges established by the State."

Yet in March 2011, Emily McMahon, the acting assistant secretary for tax policy at the Treasury Department (a political hire), saw a news article that noted a growing legal focus on the meaning of that text. She forwarded it to the working group, which in turn decided to elevate the issue—according to Congress's report—to "senior IRS and Treasury officials." The office of the IRS chief counsel—one of two positions appointed by the president—drafted a memo telling the group that it should read the text to mean that everyone, in every exchange, got subsidies. At some point between March 10 and March 15, 2011, the reference to "Exchanges established by the State" disappeared from the draft rule.

Emails viewed by congressional investigators nonetheless showed that Treasury and the IRS remained worried they were breaking the law. An email exchange between Treasury employees in the spring of 2011 expressed concern that they had no statutory authority to deem a federally run exchange the equivalent of a state-run exchange.

Yet rather than engage in a basic legal analysis—a core duty of an agency charged with tax laws—the IRS instead set about obtaining cover for its predetermined political goal. A March 27, 2011, email has IRS employees asking HHS political hires to cover the tax agency's backside by issuing its own rule deeming HHS-run exchanges to be state-run exchanges. HHS did so in July 2011. One month later the IRS rushed out its own rule—providing subsidies for all.

That proposed rule was criticized by dozens of scholars and congressional members, all telling the IRS it had a big legal problem. Yet again, the IRS did no legal analysis. It instead brought in a former aide to Democratic Rep. Lloyd Doggett, whose job appeared to be to gin up an after-the-fact defense of the IRS's actions. The agency formalized its rule in May 2012.

The IRS did what its political task masters directed it to do.

• Given that nobody questioned the existence of subsidies in federally run exchanges until several months AFTER they were implemented instead of during the 3 years that they were being developed...

Except that your three year timeline and historical rendition is rather odd and surely wrong. The law(s) were crafted in 2009 and 2010, a period when nobody questioned that States would be mandated to provide exchanges and assumed almost all or all states would comply. In mid 2010 it was passed. In late summer the IRS working group started on the regulations, initially issuing a draft that conformed to the plain text of the law. By March 2011 political elements noticed some increasing focus on language by (I assume) critics so under political pressure, they changed their internal drafts and by summer the President's HHS helped by issuing its own conforming rule. By late 2011 the critics were active in noting the plain text, although dismissed by Obamacare supporters. Over-riding concerns expressed by critics, the IRS issued its own final rule in the summer of 2012.

In other words, no one questioned the law until AFTER it was clear that the administration was going to ignore it. Even Gruber was touting the old version, forgetting that the HHS had effectively granted federal exchanges subsidies not authorized in the law.

Then I think it is quite reasonable to deduce (not assume) that the intention is clear.

Leaving aside the question of whether or not it was a reasonable deduction if the facts were as you stated, I think it pretty clear that your assumptions were based on either misunderstandings, or false information provided by others. Not everybody understood or agreed with the implications of the law, nor were the laws intentions universally understood. In fact, the original intentions on tax and out-of-pocket subsidies were different than claimed by current Obamacare supporters.