The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Our Constitution Continues to Dissolve

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


On Thursday, June 25, the Constitution and our tripartite system of government took a major hit.  The Supreme Court, in a 6 to 3 opinion, ruled against the plaintiffs in King v Burwell, a lawsuit concerning who was entitled to taxpayer-funded subsidies in the Affordable Care Act (ACA) better known as ObamaCare.  You may recall this lawsuit was discussed in a prior SwineLine blog.

The plaintiffs had argued that the IRS was not following the plain language of the ACA, which asserts subsidies could only be made available through “an Exchange established by the State.”  Because the plaintiffs lived in Virginia, a state that did not establish an Exchange, they argued they were being harmed by an illegal subsidy, forcing them to either purchase insurance or pay a tax.  On the other hand, if the IRS followed the letter of the law, there would be no subsidy and thus the plaintiffs would be exempt from purchasing health insurance because the cheapest insurance plan was more than 8% of their income.  This is called the affordability exemption.

It should be stressed that King v Burwell was not about repealing ObamaCare, it was about following the law.  After all, if any federal agency can interpret the law anyway it chooses, especially the IRS, what does that hold for the future of the Constitution, our three branches of government, and all of us?

Chief Justice John Roberts wrote the majority opinion stating, “If the statutory language is plain, the Court must enforce it according to its terms.  But oftentimes the meaning – or ambiguity – of certain words or phrases may only become evident when placed in context.  So when deciding whether the language is plain, the Court must read the words ‘in their context and with a view to their place in the overall statutory scheme.’”

Roberts wrote a great deal about why the law was created in his opinion.   He said it “grew out of a long history of failed health insurance reform,” that it adopted “a version of the three key reforms that made the Massachusetts system successful,” and that the subsidies are among the Act’s key reforms.  [Many would disagree that Massachusetts reform was successful; it has the highest health insurance premiums in the nation.]

As a result, the Court ignored that plain language of the law, arguing that surely Congress did not really mean what was written in the Affordable Care Act and that the subsidies should go to everyone.

But those arguing for the plaintiffs in King v Burwell and similar lawsuits (Pruitt v. Burwell, Halbig v. Burwell, and Indiana v Burwell) had been pointing out that the words “an Exchange established by the State” were what Congress intended.  First, much of the final bill was written and crafted by Senate and White House staff in former Majority Leader Harry Reid’s office, away from other senators and the glaring lights of the press.  In their haughtiness, the authors could not imagine a scenario that a majority of states would reject their Utopian healthcare reform law and would certainly want to create their own state-based Exchange.

But they miscalculated.  A funny thing happened on the way to creating healthcare “reform.”  A majority of states had a mini-revolution and said, “No, thank you.”  They wanted no part of a multi-billion dollar scheme that they would have to pay for and ultimately have little control over.

Michael Cannon, the director of health policy studies at the CATO Institute, points out there is plenty of evidence that the authors of the law meant to restrict subsidies to “an Exchange established by the state.”  The purpose of providing subsides was to incentivize states to create an Exchange, something Congress does often when writing legislation.  But when the law ended up being very unpopular, administration political appointees and government officials scrambled to change the meaning of the law.

Even MIT economist Jonathan Gruber, the often-called “architect of ObamaCare,” admitted as much.  In a presentation on the healthcare law at Noblis, a nonprofit scientific research and engineering corporation, he said [@ 31.25], “What’s important to remember politically about this is if you're a state and you don’t set up an exchange, that means your citizens don't get their tax credit, but your citizens still pay the taxes that support this bill. So you’re essentially saying your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that's a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.”

It is very unlikely Gruber could have simply made up this policy up out of thin air.  In fact, the June 21 Wall Street Journal pointed out how uncovered emails have shown he was much more involved in crafting the law than was admitted by the Obama administration.  As the Journal reported, the administration “sought to distance itself from the economist in the wake of his controversial statements in a 2013 video, where he said the health law passed because of the ‘huge political advantage’ of the legislation’s lacking transparency.  He also referred to the ‘stupidity of the American voter.’”

Associate Justice Antonin Scalia, joined by Justices Clarence Thomas and Samuel Alito, Jr., wrote the dissenting opinion.  As usual, Scalia looks to the future, not expediency or current political correctness, when writing opinions for the Court.  Scalia wrote, “The Court holds that when the Patient Protection and Affordable Care Act (ACA) says ‘Exchange established by the State’ it means ‘Exchange established by the State or the Federal Government.’ That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”

He agreed that when interpretation comes into play that context does matter.  He states it is important to pay “attention to the whole law, not homing in on isolated words or even isolated sections.  Context always matters.  Let us not forget, however, why context matters:  It is a tool for understanding the terms of the law, not an excuse for rewriting the law.”  He points to other sections of the law, which completely separate the functions and operations of the state-run Exchanges from the federally-run Exchange.

Scalia argues “Rather than rewriting the law under the pretense of interpreting it, the Court should have left it to Congress to decide what to do about the Act’s limitation of tax credits to state Exchanges.”  And pointing out how the Court’s decision diminishes Congress’s power and increases that of the Executive and the Court, he further writes, “Just ponder the significance of the Court’s decision to take matters into its own hands.  The Court’s revision of the law authorizes the Internal Revenue Service to spend tens of billions of dollars every year in tax credits on federal Exchanges.  It affects the price of insurance for millions of Americans.  It diminishes the participation of the States in the implementation of the Act.  It vastly expands the reach of the Act’s individual mandate, whose scope depends in part on the availability of credits.  What a parody today’s decision makes of Hamilton’s assurances to the people of New York:  ‘The legislature not only commands the purse but prescribes the rules by which the duties and rights of every citizen are to be regulated.  The judiciary, on the contrary, has no influence over . . . the purse; no direction . . . of the wealth of society, and can take no active resolution whatever.  It may truly be said to have neither FORCE nor WILL but merely judgment.’”*

Scalia perfectly sums up the problems with this decision and other faulty decisions the Court has made with ObamaCare:
Perhaps the Patient Protection and Affordable Care Act will attain the enduring status of the Social Security Act or the Taft-Hartley Act; perhaps not. But this Court’s two decisions on the Act will surely be remembered through the years.  The somersaults of statutory interpretation they have performed (“penalty” means tax, “further [Medicaid] payments to the State” means only incremental Medicaid payments to the State, “established by the State” means not established by the State) will be cited by litigants endlessly, to the confusion of honest jurisprudence.  And the cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.
 

*Federalist Paper No. 78

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