A pair of federal Appeals Court rulings have sown further confusion regarding ObamaCare, even as they illuminate stark differences in ideologically-inspired interpretations of the law. First, a three-judge panel from the D.C. Circuit Court of Appeals ruled 2-1 that Americans are not entitled to subsidies for their healthcare premiums if they live in a state where the federal government set up a healthcare exchange. Shortly thereafter, a three-judge panel from U.S. Court of Appeals for the Fourth Circuit in Richmond, VA unanimously determined exactly the opposite. The survival of ObamaCare may depend on which decision ultimately prevails.
Both rulings hinge on the wording of the statute. In order to entice the states to set up their own marketplaces, the law used clear language noting that premiums subsidies for low- and middle-income purchasers of health insurance would only be available on exchanges “established by the State.” Democrats and the Obama administration erroneously believed that the threat of withholding subsidies would force the states’ hands. When it didn’t, and only 14 states and the District of Columbia set up their own exchanges, the Obama administration employed an IRS rule to stretch the meaning of the law to include every state in the country, contending that Congress “meant” the law to work that way.
In Halbig v. Burwell (previously known as Halbig v. Sebelius) the D.C. Circuit Court of Appeals rejected that argument. "Section 36B plainly makes subsidies available in the Exchanges established by states," wrote Senior Circuit Judge Raymond Randolph in his majority opinion, where he was joined by Judge Thomas Griffith. "We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up their own Exchanges, our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly.” Dissenting Judge Harry Edwards, who characterized the case as a "not-so-veiled attempt to gut” the healthcare bill, wrote that the judgment of the majority "portends disastrous consequences.”
If the ruling stands its effects would indeed be dramatic. The federal government’s HealthCare.gov website serves residents of the 36 states that refused to set up their own exchanges. In those states 86 percent, or approximately 4.7 million Americans, currently receive subsidies to offset the cost of their health insurance. Without those subsidies many enrollees will no longer be able to afford such coverage. And since those policies would no longer be “affordable" as defined by the healthcare bill, those affected will no longer be required to have health insurance this year, or pay a fine for lack of coverage next year.
The resultant exodus would more than likely produce a cascading effect of raising premiums for non-subsidized enrollees who remain on those plans. As a group those who remain are also likely be less healthy, which in turn could drive up premium costs even further.
An additional aspect of the ruling concerns the twice-delayed business mandate. The plaintiffs, who were from states that did not set up their own exchanges, also argued that since the subsidies weren't valid, neither was a rule requiring companies with 50 or more full-time employees to offer those employees health insurance or pay a fine. That’s because the business mandate is triggered by those employees who purchase subsidized health insurance on a healthcare exchange.
No subsidies, no business mandate.
The Obama administration argued that Congress always “meant” for the Department of Health and Human Services to “stand in the shoes” of states without their own marketplaces, and a lower court reached the conclusion that the law's text, structure, purpose, and legislative history made it "clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges.” The D.C. Circuit Court of Appeals panel saw such clarity differently, contending that ObamaCare "unambiguously restricts” premium subsidies to policies sold on state-run exchanges.
Proponents of the ruling argued that the IRS was never intended to have the kind of power that allowed it to ignore the law as written. "It is implausible to believe that Congress gave the IRS discretion to authorize $150 billion per year in federal spending, particularly when Congress had directly spoken to this issue," the challengers said in a court filing. "Major economic decisions like these--indeed, any decisions granting tax credits--must be made unambiguously by Congress itself."
Laurence Tribe, who taught law to both President Obama and Supreme Court Chief Justice John Roberts at Harvard, had cautioned that such a ruling could be a death blow for the law. “I don’t have a crystal ball,” Tribe told the Fiscal Times during an interview discussing the law’s chances should it reach the Supreme Court for another review. “But I wouldn’t bet the family farm on this coming out in a way that preserves Obamacare.” Tribe also alluded to the arrogance of the Obama administration and the Democratic Party, noting that they “assumed that state exchanges would be the norm and federal exchanges would be a marginal, fallback position.”
He then strained to reach a conclusion that favored the administration’s position. “You could argue that as long as a state triggers it by asking the federal government to come in [and establish insurance exchanges] that it’s a state-established exchange, even though it’s a federally run exchange,” he contended, further insisting that judges who were not strict constitutional constructionists might find some “leeway” allowing them to look beyond the law’s specific language.
Enter the United States Court of Appeals for the Fourth Circuit. In the case known as King v. Burwell, the three-judge panel unanimously found that leeway, contending the law was ambiguous and that the aforementioned rule issued by the IRS was “a permissible exercise of the agency’s discretion.” Judges Roger Gregory, Stephanie Thacker and Senior Judge Andre Davis based their decision on a two-step analysis arising from a 1984 Supreme Court ruling in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. First, the court determines if the language of the statute in question is clear and unambiguous. If not, the Court can defer to an agency’s interpretation of law, assuming it is based on a permissible reading of it.
That’s exactly what the U.S. Court of Appeals for the Fourth Circuit did. "Having examined the plain language and context of the most relevant statutory sections, the context and structure of related provisions, and the legislative history of the act, we are unable to say definitively that Congress limited the premium tax credits to individuals living in states with state-run exchanges," wrote Gregory, referring to the first step.
Hence the second step. "The Supreme Court has recognized the broad policy goals of the act: 'to increase the number of Americans covered by health insurance and decrease the cost of health care,'" Gregory wrote. "It is therefore clear that widely available tax credits are essential to fulfilling the act’s primary goals and that Congress was aware of their importance when drafting the bill.” Davis concurred, adding that the challenger’s reading of the law is "not literal; it's cramped," adding that it "bespeaks a deeply flawed effort to squeeze the proverbial elephant into the proverbial mousehole."
Supporters of ObamaCare predict the ruling by the D.C. Circuit Court of Appeals panel would be overturned by the full 11-member Court, because Democrat appointees outnumber Republican appointees by a 7 to 4 margin. This is due to the reality that Obama added four judges to that Court in the last year, giving Democrats a majority for the first time since the 1980s. Obama also nominated Judges Thacker and Davis to serve on the Fourth Circuit Court. Judge Gregory was nominated by President Clinton.
White House Press Secretary Josh Earnest said the DC decision would have "no practical impact” as the Obama administration immediately announced that the premium subsidies would continue, while they pursue a review of the ruling. He also stated the administration’s position. “You don’t need a fancy legal degree to understand that Congress intended for every eligible American to have access to tax credits that would lower their health care costs, regardless of whether it was state officials or federal officials who were running the marketplace,” he said. “I think that is a pretty clear intent of the congressional law.”
And therein lies the rub: the actual language of the law versus its “intent.” If there is a better fault line illuminating the ideological divide between Americans, one is hard-pressed to imagine what it is. In one camp are the people who believe in the Constitution, whose authors argued over every word contained in the document, should be viewed through a "constructionist” lens restricting judicial interpretation. In other camp, are those who believe in a “living” Constitution and its “evolving” language that vests far more power in the judicial branch tasked with interpreting it.
There are additional lawsuits targeting the tax credits and other subsidies contained in ObamaCare, all of which derive from the original 5-4 Supreme Court ruling that validated the statute—even as that same Court ruled 7-2 that States were not required to expand Medicaid coverage that was part of the impetus behind creating state-run exchanges. It remains to be seen whether the Supreme Court will once again be brought into the mix. “It’s sort of phase two of the constitutional battle that a lot of people thought Roberts settled in phase one,” said Tribe.
The latest rulings makes it clear that nothing is settled. Furthermore, it becomes clear that one of the more important issues in the mid-term election will be the composition of the Senate, as it relates to the appointment of additional jurists. If the Democrats hold the chamber, Americans can expect the appointment of more judges who believe in a living Constitution. If Republicans gain control, much of President Obama’s inclination to stack the court with leftist ideologues will be tempered.
Americans who can’t decide which course is better for the nation might wish to consider the words of David Klemencic, one of the plaintiffs in the DC case. He owns retail carpet store in Ellenboro, WVA. “If I have to start paying out for health insurance, it will put me out of business,” he warns. "As Americans, we should be able to make our own decisions in matters like this.” Only if liberty still mattered.
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