Halbig fictions

7/22/2014 04:53:00 PM
If you haven't heard, a three-judge panel of the DC circuit court just ruled that individuals who bought health insurance on the Obamcare exchange in any of the 36 states that refused to set up their own exchanges are ineligible for subsidies. The case stems from a typo in the section of the ACA that lays out formulas for calculating subsidies, which refers to "state" exchanges rather than to both state and federally set up exchanges. Proponents argue that the typo was a deliberate: congress intended to deny subsidies to residents of states that refused to create their own exchange.

Mike Konczal points out the fundamental problem with the Halbig proponent's position. They are arguing specifically that the statutory language isn't a typo at all, and that theirs is the intended interpretation of the statute. Halbig and its proponents claim that the authors of the ACA intended to apply subsidies only to state implemented exchanges in order to coerce states into implementing exchanges so that the federal government wouldn't have to. As Konczal says, the proponents claim that it wasn't an ambiguous typo, but a secret doomsday device. The problem with that, of course, is you can't threaten people into submission if they aren't aware of your doomsday device--if this was intended to be threatening, then where is the threat?

Michael F. Cannon has done his best to dig up actual evidence of the Halbig threat:I will add the same disclaimer as Cannon did: this is the only evidence, anywhere, ever, that has been offered as support for Halbig's claim. Cannon states the proponent's case:
"Baucus’s response is hardly a model of clarity. But I can see no possible interpretation other than Baucus is admitting that (A) the statute makes tax credits conditional on states establishing an Exchange, and therefore does not authorize tax credits through federal Exchanges, and (B) that this feature was essential for the Senate’s tax-writing committee to have jurisdiction to legislate in the area of health insurance."
I want to point out that Cannon's point (B) doesn't really follow. This was an impromptu remark offering tax subsidies as one example of why the Senate Finance Committee has jurisdiction over the ACA. Indeed, the subsidies aren't even the only reason the Baucus offers--he starts by noting that the ACA is largely about medicaid regulations, which are indisputably exclusive jurisdiction of the committee. But this is a moot point--jurisdiction and parliamentary procedure are not disputed in the Halbig case.

As to point (A) I think you really have to twist the words to make them say that subsidies don't apply to federal exchanges. Here's the transcript of the video starting at 1:54 minutes in:
Ensign: "How do we have jurisdiction on changing state laws on coverage? [outside of Medicaid]"

Baucus: "there are conditions to participate in the exchange"

Ensign: "that's right"

Baucus: "for setting up an exchange"

Ensign: "these would be conditions to participate"

Baucus: "and states, an exchange is essentially is tax credits"
The last line reveals the full extent of Baucus's argument: "Senate Finance Committee because tax credits." Baucus was arguing that Senate Finance Committee can promulgate insurance regulations for plans offered on exchanges because plans on the exchanges are eligible for tax credits--at no point anywhere in the video is any contrast made between exchanges created by states versus HHS. In fact, adopting Cannon's interpretation that states can opt out of the tax subsidies actually contradicts Baucus's point because the bill does not allow states to opt out of the insurance regulations promulgated by the Senate Finance Committee (this is not disputed in Halbig). Had it been made clear, at any point during this hearing, that states opting not to set up their own exchange would be ineligible for tax subsidies, Senator Ensign would have attacked the validity of the committee's regulations on non-subsidized exchanges. He didn't do that, because it was clear to everyone in that room that non-cooperating states would still be eligible for tax subsidies. CASE CLOSED.

Besides, I don't accept this kind of evidence as valid. It gives individual congressmen way too much power. If Baucus had casually said in committee that section 1312 should be interpreted as requiring everyone to make him a sandwich, would we all be legally required to give him a sandwich? It was his intention, and there's nothing in the legislative record that says otherwise!

update: Here's an amicus brief, signed by Max Baucus, stating that
"Congress always intended that the tax credits be available to all Americans, regardless of whether they purchased their health insurance on a state-run or federally-facilitated Exchange."

update 2: Some readers I've talked to are getting too caught up in the actual argument about jurisdiction. This was always a moot point, because the committee's jurisdiction is whatever Baucus says it is. The full context of the clip above is this: the PPACA had already been assigned to Baucus's Finance Committee, and Ensign was trying to attach his medical malpractice reform bill as an amendment to the PPACA while it was still in committee, but Baucus refused to call a vote on the amendment, claiming that malpractice reform is outside the jurisdiction of the finance committee and that the amendment should be voted on separately by the full senate. In the clip above, Ensign is just trying to call out Baucus's hypocrisy, since he allowed the committee to promulgate insurance regulations that have little to do with tax law while claiming that malpractice regulations aren't in the committee's jurisdiction. As a legal matter this is irrelevant--as chairman of the committee Baucus is free to pick and choose what to hold votes on. So this entire clip is rhetoric and political posturing--actual legal disputes are settled in legal briefs drafted by outside legal experts, not impromptu exchanges between committee members. The clip above is relevant only to the extent that it is evidence of the zeitgeist in which the PPACA was passed, the actual points of contention in the video are moot.