July 23, 2014

MEGAN MCARDLE: ObamaCare Takes A Body Blow.

The case, Halbig v. Burwell, involved the availability of subsidies on federally operated insurance marketplaces. The language of the Affordable Care Act plainly says that subsidies are only available on exchanges established by states. The plaintiff argued this meant that, well, subsidies could only be available on exchanges established by states. Since he lives in a state with a federally operated exchange, his exchange was illegally handing out subsidies.

The government argued that this was ridiculous; when you consider the law in its totality, it said, the federal government obviously never meant to exclude federally operated exchanges from the subsidy pool, because that would gut the whole law. The appeals court disagreed with the government, 2-1. Somewhere in the neighborhood of 5 million people may lose their subsidies as a result.

This result isn’t entirely shocking. As Jonathan Adler, one of the architects of the legal strategy behind Halbig, noted today on a conference call, the government was unable to come up with any contemporaneous congressional statements that supported its view of congressional intent, and the statutory language is pretty clear. Members of Congress have subsequently stated that this wasn’t their intent, but my understanding is that courts are specifically barred from considering post-facto statements about intent.

When you read through the ruling, it’s easy to see the many ways in which the law’s architects brought this on themselves. The law was highly complex, badly drafted and highly controversial. When a Republican won a special election for the Senate in Massachusetts (!), the Democrats had to push it through on a straight party-line vote with some adroit parliamentary maneuvering — which gave them a health-care law, but one that was badly put together and couldn’t be substantially amended. The gaping holes were patched with administrative fixes, like an Internal Revenue Service ruling that held federally established exchanges to be equivalent to an exchange established by the state. But the vast scale of the law meant that the administrative gymnastics that held it together might not be sustainable.

To cobble together a win, the Obama/Reid/Pelosi folks broke a lot of rules. That has risks.

Here’s more from Jonathan Adler.

Also, related: Fourth Circuit upholds IRS tax credit rule.