The latest legal assault on the Affordable Care Act, which the Supreme Court will be considering in March, is based on the most obtuse of premises. The plaintiffs argue that Congress did not intend for subsidies to be available to individuals who purchase insurance on the exchanges established by the federal government. This is the equivalent of including a big red self-destruct button in the legislation — with many Republican-led states refusing to build their own exchanges, this would leave millions of Americans without the subsidies they need to afford health insurance.
Normally, one would expect a lawsuit purportedly upholding the will of Congress to have at least some support from the legislators who drafted and voted for the law — but this one has literally none. For this reason, supporters of the lawsuit have embarked on a desperate search for evidence that bolsters their position. Two of the primary architects of the suit, Jonathan Adler and Michael Cannon, have submitted a brief that attempts to do just this. This "evidence," however, manages to make their argument even less plausible.
One way that the ACA's opponents could have gone about destroying the law is to simply to forget about the political context and focus exclusively on the language. Perhaps the people responsible for the ACA intended for the federally established exchanges to provide tax credits, but messed up when writing the statute: "The card says Moops," as George Costanza declared when rejecting a Trivial Pursuit answer about the Moors in a famous Seinfeld episode.
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There are, however, important limitations to this argument. First of all, when read properly, the legislation is pretty clear. The statute's definition of "an Exchange established by the State" clearly encompasses the exchanges established by the federal government on the state's behalf. And unlike the Adler-Cannon interpretation, reading the statute this way has the crucial advantage of being consistent with the structure and purpose of the ACA, which is to provide more people with health insurance.
Perhaps recognizing that the argument that millions of people should lose their health insurance because of a drafting error would not be politically attractive, Adler and Cannon have conjured up an entirely new congressional context. Their assertion is that Congress fully intended to deny subsidies to the federally established state exchanges. Cannon told Sarah Kliff of Vox that he was "100 percent convinced" that both those who drafted the ACA and those who voted for it wanted it this way.
The rather obvious problem with this claim is that it would be easier to find evidence that Spain was actually invaded by the Moops. It's nearly impossible to overstate how overwhelming the evidence against the Adler-Cannon thesis is. The congressional leadership that passed the ACA has rejected the idea. Former Sen. Ben Nelson (D-Neb.), the person probably most responsible for the design of the exchanges in the final bill, has written, "I always believed that tax credits should be available in all 50 states regardless of who built the exchange, and the final law also reflects that belief as well."
Republican members of Congress also assumed the same, even after it was clear that not all states would establish their own exchanges. Numerous Republican state officials have said that they expected subsidies to be made available. (Indeed, the Cannon-Adler interpretation may be unconstitutional, since states have to be given fair notice before a federal benefit is taken away.) And as the government's brief observes, the conservative dissenters in NFIB v. Sebelius — the landmark Supreme Court case that upheld ObamaCare in 2012 — were also on board with this interpretation.
Against this mountain of evidence, Cannon first tried to use Jonathan Gruber, the consultant who in some stray comments found on YouTube seemed to suggest that the subsidies would not be made available on the federally established state exchanges. But given that Gruber himself repudiated these views both before and after the fact, this doesn't even rise to the level of cherry-picking. It's like spotting a single cherry stem in a 20,000-acre grove of orange trees and declaring that the property produces nothing but cherries.
While a different brief for the ACA's opponents continues to beat the Gruber dead horse, he is mercifully absent from the Adler-Cannon brief. Instead, the lawsuit's architects cite a letter sent by 11 Texas House Democrats, which they say constitutes evidence for the assertion that "[m]any House members disapproved of the Senate passed PPACA, some because they recognized it conditioned subsidies on states creating Exchanges."
Adler and Cannon's characterization of the letter is blatantly dishonest. It says absolutely nothing about subsidies being unavailable on federally established exchanges. The letter's argument that under the Senate bill "millions of people will be left no better off than before Congress acted" — which Adler and Cannon quote — is preceded by a discussion of how some conservative states have cut or failed to expand benefits under Medicaid and CHIPRA.
In other words, the concern of the Texas Democrats is not that federally established exchanges would not provide subsidies to insurance purchasers. Rather, their concern is that if conservative states established exchanges they would do so badly, and hence make it impossible for some residents to obtain affordable insurance. Adler and Cannon stand the meaning of the letter on its head.
Tacitly recognizing that the argument they attribute to the House Democrats is not remotely supported by the text, Adler and Cannon attempt to conscript one of the country's foremost health-care reporters into their crusade, citing an NPR report by Julie Rovner to buttress their misreading of the letter's meaning. But, again, nothing in Rovner's story says that the Senate bill would not provide subsidies on federally established exchanges. I contacted Rovner by email, and she confirmed that "there was never any discussion about only state exchanges offering subsidies that I was party to. I never meant to imply it in my story."
Wait — it gets even worse for Adler and Cannon. The letter not only fails to lend a shred of support for their argument, it also destroys another of their key claims. One of the many problems with their approach is that it nonsensically assumes that Congress established a federal backstop that was intended to fail. Responding to this obvious objection, Adler and Cannon have suggested that Congress "reasonably expected that states" would establish exchanges, which explains why they didn't bother to provide the subsidies. The letter cited by Adler and Cannon in this brief, however, makes clear that this assumption is erroneous. "A number of states opposed to health reform have already expressed an interest in obstruction," the Texas Democrats correctly observe.
The federal backstop was not created by accident — it was in the bill because it was well understood that not every state would establish an exchange before the deadline, and because failing to create a workable federal exchange would provide strong incentives for conservative state governments to obstruct the ACA.
In other words, the Occam's Razor interpretation of the law is correct. The ACA did not establish a federal backstop that was intended not to work, either because the law's drafters didn't think it would be necessary or because they wanted to coerce the states. They created a federal backstop that was supposed to work, and the evidence on this point is crystal clear. Only fanatical opponents of the ACA arguing in bad faith could believe otherwise.
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