Back in December I wrote about the lawsuits challenging the Affordable Care Act on the grounds that it was being misused to hand out subsidies. Plaintiffs, everyone from business owners to state attorneys general, argued that a line in the law that directed subsidies to plans in "state" exchanges clearly meant that states without exchanges could not join the party. The argument, which no one made in 2009–2010, was that the subsidies, clearly, were meant to induce states to set up exchanges; they'd be withheld if they didn't.
"The plain text of the statute contradicts the way the Obama administration has implemented it," Ted Cruz told me. "The law is clear that the individual mandate and the accompanying subsidies only apply if a state sets up an exchange. The Obama administration simply said, 'We’re not following that part of the law. We’re going to apply it without a state exchange.' "
The lawsuit that's gotten the furthest, Halbig v. Sebelius, lost in court after this story ran. The government's argument was that, elsewhere in the law, it's clear that the subsidies are meant for all the state plans. This did nothing to stop the doubters. A month later George Will was telling his many syndicated readers that Obama and his "lawless" IRS were violating the text of the ACA. And now I see that Cruz has joined some fellow Republicans in an amicus brief, making the same argument—no exchange, no subsidies. The whole brief is here, but I'm not sure that it will persuade the court. Take this argument, for example.
[T]he district court erred in assuming that every provision of the sweeping, complex 2700-page ACA must fit together in a seamless, unified whole. The ACA’s unusual legislative history makes that assumption patently false in this case. Most of the statutory text at issue was originally part of a bill that, when it passed the Senate, was expected to be extensively revised prior to enactment. But amending provisions of the bill (unrelated to budgetary items)became impossible when the election of Senator Scott Brown cost Democratic supporters of the Senate bill their filibuster-proof majority.
The bill’s supporters then decided to enact the Senate bill as is, making only those few changes that could be made by a simple majority vote through the budget reconciliation process. Under the circumstances, it is hardly surprising that the ACA is disjointed, confusing, and often internally inconsistent. Again, section 36B(c)’s text is unambiguous: the health insurance exchange established by the federal government is not an exchange “established by [a] State.”
Follow that? The senators acknowledge that the law was finished hurriedly and some sloppy language was left in. That's exactly what the defenders are the law are saying—that the "states" phrasing is basically a typo, contradicted elsewhere in the law. And nothing in the brief suggests the carrot-stick theory that Republicans have come around to was in existence during the 2009–2010 debate. If the intent of the legislators was not to make subsidies conditional on state exchanges, there's no case.
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