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

[ksen]

Tim Jost, hack Obamacare apologist of 2014:



Meet Tim Jost, Obamacare architect of 2009:

The Constitution has been interpreted to preclude Congress from
passing laws that “commandeer” the authority of the states for
federal regulatory purposes. That is, Congress cannot require the
states to participate in a federal insurance exchange program by
simple fiat. This limitation, however, would not necessarily block
Congress from establishing insurance exchanges. Congress could
invite state participation in a federal program, and provide a
federal fallback program to administer exchanges in states that
refused to establish complying exchanges. Alternatively it could
exercise its Constitutional authority to spend money for the public
welfare (the “spending power”), either by offering tax subsidies for
insurance only in states that complied with federal requirements
(as it has done with respect to tax subsidies for health savings
accounts) or by offering explicit payments to states that establish
exchanges conforming to federal requirements.

http://www.cnbc.com/id/101865044
http://object.cato.org/sites/cato.org/files/pubs/pdf/king_adler_cannon_amicus_brief.pdf

Congress did the latter. They offered explicit payments to the states that established exchanges conforming to federal requirements. There according to the plain reading of the word "or" congress did not do the former.

 

[dismal]

Congress did the latter. They offered explicit payments to the states that established exchanges conforming to federal requirements. There according to the plain reading of the word "or" congress did not do the former.

They did both. They offered tax credits on state exchanges and they budgeted funds to help states build exchanges. What they did not do was offer credits on federal exchanges or budget funds to build federal exhanges.

In any case it takes real chutzpah for Jost to say no one contemplated this when he in fact contemplated it himself.

He just may be the guy who the progressive powershaming mobs should be going after over this.

 

[maxparrish]

Ksen, I'm just trying to understand your position here. Why is intent needed in regards to this precise issue with the ACA? Is it because you believe the statute is ambiguous? Is it because you believe the plain language results in an undesirous outcome for those obtaining insurance through a federally established exchange? I'm just trying to understand your position here.

My position is that if the 9th Circuit's ruling wins out then it will cause painful suffering for millions of citizens whose only fault is to live in a state that didn't want to establish its own exchange. It's clear to me from reading the amicus brief, statements from others closely involved in crafting the bill and seeing the nonreaction of congress to the IRS interpretation of that rule that congress' intent was to have subsidies apply to state and federal established exchanges.

And it's clear that that idiot from Cato that's pursuing this doesn't care at all about the damage that might happen to millions of americans just because he wants to try and prove a point. It's ridiculous and is just another example of how dangerous true believers in libertarianism can be.

But that's, like, just my opinion man.

So, viewed soberly without hair-pulling, your position is that if the DC Circuit court ruling stands then for those states that turned down an Obamacare exchange it will return to the insurance market as it existed prior to January of 2014, and you don't like their choice to keep the prior system.

In addition you are convinced, due to your perception of relative Congressional calm over the IRS regulation, and the claim of 7 (of 533 Congresspersons) who are relentless hawkers of universal Obama care, and a single staffer, that Congress must have intended to extend credits and subsidies to the Federal Exchange(s).

As someone who might qualify, in your view, as one of the "disingenuous or complete idiots" I suggest that you note that just because a law has a policy outcome you loath does not mean the court's ruling legally was wrong - it may be morally wrong not to support Obamacare, in your view, but that is a different argument. And you might also note a recent post at Volokh by an "agnostic" on Halbig points out that part of the problem is that the supporters and critics are talking past one another using three forms of discourse. http://www.washingtonpost.com/news/...4/07/24/different-ways-of-criticizing-halbig/

In the course of reading criticisms of the decision, I have noticed several different forms of legal argument, and I think it’s important to distinguish them, since they have different roles in different theories of statutory interpretation:

Mode 1: That’s not what the text says, at least if you read the whole text carefully.

Mode 2: That’s not what Congress actually intended.

Mode 3: That result is absurd — i.e., nobody who supported the statute could have intended that.

Obviously these are non-exhaustive and also overlapping, and one can advance two or all three of them at the same time. But it is still important to keep track of which modes are involved.

For example, Ilya’s previous post is a response to a mode 3 argument (cooperative federalism programs aren’t absurd). Abbe Gluck’s rejoinder is a mode 2 argument (this wasn’t intended to be a cooperative federalism program). I understand Neil Siegel to be making largely a mode 1 argument...

Specifically, without an appreciation of the primacy of the plainly written text (Mode 1) over seller's 'do-over' regrets, your claims will continue to confuse. If the plain text of the ACA law only authorizes credits and subsidies for individuals who purchase through State and Territorial 'American Heal Benefit Exchanges' (section 3011) then that's the law and it was, apparently, its intent. The plain meaning of a statute's language can only be rendered inoperative if it is due to glaring clerical/technical error (such as an error in transcription) OR if the result of the language is so absurd that it is impossible that Congress could have intended it.

Consider, from the opinion:

"The fact is that the legislative record provides little indication one way or the other of congressional intent, but the statutory text does. Section 36B plainly makes subsidies available only on Exchanges established by states. And in the absence of any contrary indications, that text is conclusive evidence of Congress’s intent. Cf. Ethyl Corp. v. EPA, 51 F.3d 1053, 1063 (D.C. Cir. 1995) (“At best, the legislative history is cryptic, and this surely is not enough to overcome the plain meaning of the statute.”). To hold otherwise would be to say that enacted legislation, on its own, does not command our respect—an utterly untenable proposition. Accordingly, applying the statute’s plain meaning, we find that section 36B unambiguously forecloses the interpretation embodied in the IRS Rule and instead limits the availability of premium tax credits to state-established Exchanges."

In other words, absent an absurd result, if the text of the statute is clear, intent doesn't matter and the clear wording prevails. As a Justice Brandeis’ opinion once observed: “What the government asks is not a construction of a statute, but, in effect, an enlargement of it by the court, so that what was omitted, presumably by inadvertence, may be included within its scope."

From a legal standpoint, merely noting that the failure to extend a welfare benefit causes pain for some is NOT a legal argument. And as the result was not absurd, the court was correct in its finding.

 

[dismal]

Obamacare hack apologist Jonathan Gruber 2014:

It’s a “screwy interpretation” of Obamacare, alleged Gruber in an interview with Erika Eichelberger of Mother Jones in an article published on January 24, 2013. “It’s nutty. It’s stupid…it’s essentially unprecedented in our democracy. This was law democratically enacted, challenged in the Supreme Court, and passed the test, and now [Republicans] are trying again. They’re desperate.”

Meet Obamacare architect Jonathan Gruber 2012:

“What’s important to remember politically about [Obamacare] is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.”

This one may be game over. This guy is regarded by many as Obamacare's principal architect. Probably one of the few people who even read the bill.

http://www.forbes.com/sites/theapot...low-through-state-exchanges/?partner=yahootix

 

[ksen]

As someone who might qualify, in your view, as one of the "disingenuous or complete idiots"

wat? I don't think I called anyone a "disingenuous or complete idiot."

 

[ksen]

Obamacare hack apologist Jonathan Gruber 2014:



Meet Obamacare architect Jonathan Gruber 2012:

“What’s important to remember politically about [Obamacare] is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.”

This one may be game over. This guy is regarded by many as Obamacare's principal architect. Probably one of the few people who even read the bill.

http://www.forbes.com/sites/theapot...low-through-state-exchanges/?partner=yahootix

Yeah, that sounds pretty bad.

 

[dismal]

Another problem for the deniers:

Career staff at IRS originally drafted regs according to the law as written (credits only available on state exchanges). They were changed after political staff got involved.

The White House viewed it as imperative, therefore, that IRS bureaucrats ignore the law’s text and come up with a politically helpful rule. The evidence shows that career officials at the IRS did indeed do as Treasury Department and Health and Human Services Department officials told them. This, despite the fact that the IRS is supposed to be insulated from political meddling.

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.

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

 

[Nice Squirrel]

As someone who might qualify, in your view, as one of the "disingenuous or complete idiots"

wat? I don't think I called anyone a "disingenuous or complete idiot."

No that was me. The whole law and mechanics behind it was discussed and set up for federal funded exchanges. Even the conservative lawyers in this case argued that specific point in another case. We also have the people who drafted and voted on the legislation to ask as well. For anyone who thinks that the intended language is different than that is being disingenuous or a simply complete idiot. (I can also argue that they are blinded by ideology)

But no let's ignore all the actual facts and intent of the legislation and argue that the word "state" means something different all together from the obvious intended language. This way we can destroy the lives of millions of people by withdrawing their medical care.

 

[dismal]

wat? I don't think I called anyone a "disingenuous or complete idiot."

No that was me. The whole law and mechanics behind it was discussed and set up for federal funded exchanges. Even the conservative lawyers in this case argued that specific point in another case. We also have the people who drafted and voted on the legislation to ask as well. For anyone who thinks that the intended language is different than that is being disingenuous or a simply complete idiot. (I can also argue that they are blinded by ideology)

But no let's ignore all the actual facts and intent of the legislation and argue that the word "state" means something different all together from the obvious intended language. This way we can destroy the lives of millions of people by withdrawing their medical care.

I can't believe you're still talking about the definition of the word "state". The case is not about that at all. The government is not arguing this. The word "state" is literally defined in the statute. I have provided the definition from the statute here already.

 

[Playball40]

Obamacare hack apologist Jonathan Gruber 2014:



Meet Obamacare architect Jonathan Gruber 2012:



This one may be game over. This guy is regarded by many as Obamacare's principal architect. Probably one of the few people who even read the bill.

http://www.forbes.com/sites/theapot...low-through-state-exchanges/?partner=yahootix

Yeah, that sounds pretty bad.

http://www.newrepublic.com/article/118851/jonathan-gruber-halbig-says-quote-exchanges-was-mistake

And yet, the subsidies were included in all the financial models, including states that did not create their own exchanges. I don't think one statement is going to change things. I think the entire picture/history will be taken into account.

 

[Playball40]

I suspect Gruber was referring to this provision of the law, not consumer subsidies.

The Danger in States Opting Out of Creating a State Run Health Insurance Exchange

With only 17 State's Creating Health Insurance Exchanges Federal Taxpayers are Responsible for Millions of other State's Constituents.

Right now many states are opting out of running exchanges leaving the Federal Government responsible for providing subsidies to their employees and low-middle income constituents. These are essentially the same states opting out of Medicaid expansion. These actions shift their responsibility to provide for millions of their constituents onto the federal tax payer.

On the site we have talked about the dangers of letting individual states Opt-Out of Medicaid Expansion. There is a good reason for this, states Opting-out of Medicaid expansion will leave their poorest uninsured and will cause an extra financial burden on the exchanges. Those who are not covered by Medicaid Expansion will in many cases be eligible for maximum cost assistance when purchasing insurance on the exchange. States that defer their exchanges to the Federal Government and reject expansion pass considerable costs onto tax paying Americans who have to subsidize these State's poorest.

A New Fee Set in Motion By States Opting out of the State Run Insurance Exchanges

ObamaCare is using a provision in the bill that allows them to charge insurers a 3.5% fee to sell insurance on the Federal Run Health Insurance Exchange.

This is a response to the GOP standing lock step against setting up state run exchanges, which along with opting-out of Medicaid expansion is part of a plan to "break" ObamaCare. (this is widely talked about in conservative blogs and publications).

About ObamaCare's 3.5% Fee for Selling Insurance Option

ObamaCare gives states and the federal government the option of charging insurance companies a 3.5% fee, on the cost of the premium, to sell insurance on the exchange. States also have the option of using grants and other forms of assistance from the federal government; however, states that refuse setting up a state run exchange will not get the subsides, therefore their constituents will purchase insurance at what will most likely be a higher rate.

Insurance companies have a big incentive to sell their plans on the exchange regardless of the cost since it gives them access to millions of Americans who will only be able to use their tax credits and subsidies (along with other forms of cost assistance) on the exchanges.

 

[dismal]

I suspect Gruber was referring to this provision of the law, not consumer subsidies.

The Danger in States Opting Out of Creating a State Run Health Insurance Exchange

With only 17 State's Creating Health Insurance Exchanges Federal Taxpayers are Responsible for Millions of other State's Constituents.

Right now many states are opting out of running exchanges leaving the Federal Government responsible for providing subsidies to their employees and low-middle income constituents. These are essentially the same states opting out of Medicaid expansion. These actions shift their responsibility to provide for millions of their constituents onto the federal tax payer.

On the site we have talked about the dangers of letting individual states Opt-Out of Medicaid Expansion. There is a good reason for this, states Opting-out of Medicaid expansion will leave their poorest uninsured and will cause an extra financial burden on the exchanges. Those who are not covered by Medicaid Expansion will in many cases be eligible for maximum cost assistance when purchasing insurance on the exchange. States that defer their exchanges to the Federal Government and reject expansion pass considerable costs onto tax paying Americans who have to subsidize these State's poorest.

A New Fee Set in Motion By States Opting out of the State Run Insurance Exchanges

ObamaCare is using a provision in the bill that allows them to charge insurers a 3.5% fee to sell insurance on the Federal Run Health Insurance Exchange.

This is a response to the GOP standing lock step against setting up state run exchanges, which along with opting-out of Medicaid expansion is part of a plan to "break" ObamaCare. (this is widely talked about in conservative blogs and publications).

About ObamaCare's 3.5% Fee for Selling Insurance Option

ObamaCare gives states and the federal government the option of charging insurance companies a 3.5% fee, on the cost of the premium, to sell insurance on the exchange. States also have the option of using grants and other forms of assistance from the federal government; however, states that refuse setting up a state run exchange will not get the subsides, therefore their constituents will purchase insurance at what will most likely be a higher rate.

Insurance companies have a big incentive to sell their plans on the exchange regardless of the cost since it gives them access to millions of Americans who will only be able to use their tax credits and subsidies (along with other forms of cost assistance) on the exchanges.

You must be joking.

He literally says "if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits". Which also happens to be what the law literally says.

 

[maxparrish]

Yep. Even within the context of Playball40's quote it is fairly clear that the reference is to individual subsidies.

 

[Jimmy Higgins]

What is confusing is that there appears to be a strong disconnect between what the WSJ put out regarding the IRS formulation of the Exchange subsidies in early 2011 and what Gruber said in 2012. If Obama was conspiring to change the law, why in the world would someone be talking about something else more than a year after the policy had been set?

Yep. Even within the context of Playball40's quote it is fairly clear that the reference is to individual subsidies.

Playball40's quote implies credits at the State level, not individual tax credits.

 

[Nice Squirrel]

What is confusing is that there appears to be a strong disconnect between what the WSJ put out regarding

The Wall Street Journal put out a partisan misinformation? I'm shocked. Somebody call Peggy Noonan!

 

[maxparrish]

Yeah, that sounds pretty bad.

http://www.newrepublic.com/article/118851/jonathan-gruber-halbig-says-quote-exchanges-was-mistake

And yet, the subsidies were included in all the financial models, including states that did not create their own exchanges. I don't think one statement is going to change things. I think the entire picture/history will be taken into account.

Sorry, that dog don't hunt. From an article by Cannon/Alder in the journal Health Matrix discusses, and deconstructs, this novel legal gambit:

http://object.cato.org/sites/cato.org/files/articles/cannon-adler-health-matrix-23.pdf (page 187 and 188):

The CBO score of the PPACA’s
Exchange provisions is entirely consistent with the plain text of the
statute and the prevailing assumptions about how these provisions
would operate in practice.249 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
its 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.

 

[maxparrish]

What is confusing is that there appears to be a strong disconnect between what the WSJ put out regarding the IRS formulation of the Exchange subsidies in early 2011 and what Gruber said in 2012. If Obama was conspiring to change the law, why in the world would someone be talking about something else more than a year after the policy had been set?

Yep. Even within the context of Playball40's quote it is fairly clear that the reference is to individual subsidies.

Playball40's quote implies credits at the State level, not individual tax credits.

No point in wasting time disputing a point over, as I discovered, an irrelevant source - as it turns out Playball's quote is not quoting or citing a provision of the law, it is merely the opinion of a private website developer whose "Obamacare Facts" website dressed up to look like a 'semi-official' government consumer site. However, in its disclaimer it turns out it is privately owned by "Dog Solutions Media", an unknown "business" entity that has nothing more than a single, content free placeholder page on it's own website address. Reputedly Obamacare Facts is run by someone named "Walt Whibley" for his partisan, unattributed, propaganda laden 'facts'.

In short, Playball was not referring to a provision of the law, but some private fellow's dubious, undated, uncited, unquoted characterizations of the effects of Obamacare...i.e., not helpful in discussing what Gruber or the law actually says.

 

[dismal]

A second Gruber recording has now emerged saying essentially the same thing with more detail. Since this guy is an Obamacare architect, on the payroll of the administration, a brainy MIT health care professor, and a staunch defender of the law the old "nobody was talking about this, nobody understood it this way and it's truly bizarre that anyone would" argument is now officially in shambles.

http://www.breitbart.com/InstaBlog/...Again-Ties-Subsidies-to-State-Based-Exchanges

 

[Nice Squirrel]

OOh Cato, New Republic, Breitbart... You got some strong ethical and unbiased sources there.

 

[dismal]

OOh Cato, New Republic, Breitbart... You got some strong ethical and unbiased sources there.

The guy is on video saying these things. he doesn't deny saying them.

Hence your "rebuttal" is almost unbelievably silly.

I will leave others to judge what it says about your desire to have an honest discussion about this issue.