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Why ACA Trooferism Is Obviously Wrong


Ian Millhiser has a terrific explanation for why the Halbig argument is such terrible statutory construction.  The most obvious problem with focusing on the phrase “Exchange established by the State” in isolation is that the statute has defined “Exchange established by the State” as exchanges established by either the state or the federal government.  This may sound odd, but it’s not at all unusual for the U.S. Code:

That brings us to the plaintiffs’ argument in King. The plaintiffs rest their case on a provision of the Affordable Care Act which suggests that subsidies shall only be available to people who are enrolled in a health plan purchased “through an Exchange established by the State.” And, indeed, when this passage is read in isolation, it seems obvious that their argument must be correct. As two judges who sided with the plaintiffs explained, “a federal Exchange is not an ‘Exchange established by the State,’” and, at first glance, that looks like all you need to know in order to decide this case.

The reality, however, is that Congress can define the phrase “Exchange established by the State” to also include exchanges established by the federal government — just like they can define the word “dog” to mean “cat” — and that is exactly what Congress did in the Affordable Care Act.

Two provisions of the law accomplish this task. The first provides that “[a]n Exchange shall be a governmental agency or nonprofit entity that is established by a State.” Read in isolation, this passage can be read in one of two ways. One way to read it is as a passage limiting who can set up exchanges. If an Exchange “shall be” an “entity that is established by a State,” that seems to mean that no other kind of “Exchange” can exist. If the passage is read this way, federally run exchanges would be illegal, because they are not an “entity that is established by a State.”

The other plausible interpretation of this provision, however, is that it is meant to define the term “Exchange.” Under this second possible reading, the word “Exchange” is defined so that any Exchange is deemed to be “established by a State,” even if it was actually established by the federal government.

Read in isolation, there is no way to decide which one of these two possible readings of this provision is correct. A third provision of the law clarifies this ambiguity, however. That third passage provides that if a state elects not to set up its own exchange, “the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.” This is an explicit provision authorizing the federal government to establish Exchanges. Thus the ambiguous passage cannot be read to require all “Exchanges” to be “established by a State.” The only remaining possibility is that any “Exchange,” whether state or federally run, shall be deemed an “Exchange established by the State.”

And, of course, that’s not all. As the noted Obamabot Antonin Scalia recently observed, “reasonable statutory interpretation must account for both ‘the specific context in which . . . language is used’ and ‘the broader context of the statute as a whole.’” And in context, it’s even more obvious that Congress intended the subsidies to be made available on the federally established state exchanges:

  • The subtitle of the Affordable Care Act which contains the provision plaintiffs rely upon is titled “Affordable Coverage Choices for All Americans.” It is not entitled, “Affordable Coverage Choices for Americans Who Live In States That Elect To Set Up Their Own Exchanges.”
  • The act predicts that it will “achieve[] near-universal coverage.” This prediction would be wildly inaccurate if the plaintiffs’ reading of the law were correct.
  • An amendment to the Affordable Care Act requires the federally-run exchanges to report various information that they would only be able to report if they were providing subsidies, such as whether taxpayers received an “advance payment of such credit”; information needed to determine individuals’ “eligibility for, and the amount of, such credit”; and “[i]nformation necessary to determine whether a taxpayer has received excess advance payments.” These reporting requirements make no sense if federally-run exchanges were not intended to offer subsidies.
  • The law also provides that the only people who are qualified to purchase insurance at all on a federally-run exchange are people who “reside[] in the State that established the Exchange.” Thus, if federally-run exchanges are not deemed to be “established by the State,” no one at all is allowed to purchase health insurance on those exchanges, and there would be no purpose whatsoever to their existence. As one federal judge explained, this interpretation makes no sense, because “courts presume that Congress has used its scarce legislative time to enact statutes that have some legal consequence.”

And so on. The fact that nobody involved in the legislation, or who followed the debates contemporaneously, accepts the interpretation that Congress intended to set up a federal backstop that would fail is relevant, but it’s also superfluous. The Halbig reading of the statute is simply nonsensical. And the argument that Congress clearly established that subsidies would not be available on the state exchanges — the standard that the law requires — is farcical.

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