Tuesday, March 03, 2015

Text All The Way Down: Why the Government Should Prevail in King v. Burwell

By Eric Segall

I had the pleasure of debating Professor Jonathan Adler of Case Western Reserve at the University of Pennsylvania on Monday afternoon on the issue of King v. Burwell and the legality of federal subsidies on federal exchanges (because of weather he had to appear via Skype). As usual Jonathan was civil and classy and I thoroughly enjoyed the back and forth. The debate was sponsored by the American Constitution Society and the Federalist Society as well as the law review. Our dueling essays can be found here.

There has been so much written about the case, by so many talented people, that I just want to add emphasis to one point that has not received nearly enough attention. Many scholars who believe the government should win the case have repeatedly emphasized that Professor Adler and the plaintiffs are focusing too much on the phrase “established by the state” in Section 1311 of the Act and not enough on the rest of the law and its myriad provisions making clear that the iconic “three-legged stool” was supposed to be the hallmark of the insurance exchanges regardless of whether the websites were run by the state or federal governments. I agree with all that but the case, properly analyzed, is actually much simpler and resort to overall context is unnecessary.

Professor Adler and the plaintiffs have somehow convinced lower courts and even many academics that there is a provision in the ACA that says federal subsidies are only available on state exchanges and it is up to the government to prove otherwise by reference to other provisions in the statute or the context of the law. But, there is no such provision and, ironically, there is part of the law that says exactly the opposite—that subsidies are in fact available on federal exchanges. Properly analyzed, the case should start and end there, unless it creates absurd results to allow such subsidies on federal exchanges (which no one is arguing).

Section 1321 of the ACA requires the Secretary of HHS to create health exchanges in states which refuse to create their own exchanges. This is not debated by anyone. Thus, the inquiry must start with Section 1321. Throughout my debate with Professor Adler, and for that matter, in social media, in law reviews, and in blogs, Professor Adler has tried to focus attention on Section 1311 as the place to start. But, looking at the law in the proper order shows why the government should win.

What kind of exchange does HHS have to create under Section 1321? The answer, found in the same section, is an exchange “such” as the one mentioned in 1311. Are federal subsidies available on Section 1311 exchanges? Yes. Does HHS have to create that kind of exchange? Yes. Case over.

Professor Adler’s response to this argument during our debate was that a 1321 exchange is established by the federal government not a state and subsidies are only available on exchanges “established by a state.” But the law does not say that. It does say “qualified” consumers may obtain federal subsidies on an “exchange established by the state” but nowhere does it say subsidies are only available on such exchanges. 

What the law does say, however, with startling clarity, is that, if a state chooses not to create an exchange (where subsidies would be available), HHS must create that (or such) exchange. It is only by looking at Section 1311 first, which is inappropriate, that anyone could reasonably think subsidies aren’t available on the exchanges created by HHS.

If we do turn to context, Professor Adler’s and the plaintiffs’ theory of the case requires the belief that Congress required the federal government to set up health insurance exchanges that have nothing to do with the entire point of the ACA (to make health insurance more, not less, affordable). Normally thoughtful people like my former professor James Blumstein of Vanderbilt, have written entire pieces ignoring this anomaly on the basis that the law explicitly says subsidies are either 1) only available on state exchanges or 2) are prohibited on federal exchanges. But the law says neither and thus Blumstein’s essay, like so many others written about the case, is based on an entirely false premise.  

If applying the law as written is truly important to the Justices, the Court will find that Section 1321 of the ACA explicitly requires the Secretary of HHS to create a federal health insurance exchange just like the one mentioned in Section 1311 (where federal subsidies are required for qualified consumers). Any other interpretation of Section 1321 changes the plain meaning of the ACA beyond recognition.

30 comments:

Neil H. Buchanan said...

I'm very glad that Eric has written this excellent post. I've been confused from the very first reports of what became King v. Burwell by the anti-ACA people's deliberately ignoring the clear meaning of the word "such." It's such a good point, and it is such a shame that such time and such effort has been wasted on such a groundless suit.

Eric Segall said...

Thanks Neil!!

Hashim said...

There's a good reason why neither the Govt nor most academic defenders of the Govt have made this argument. It doesn't work.

You reason that: 1) 1321 directs HHS to establish "such Exchange"; 2) "such" Exchange is a 1311 State Exchange; and 3) "subsidies are in fact available on Section 1311 exchanges."

But the flaw is the third step. Subsidies are available on 1311 exchanges *only* because of, and as authorized by, Section 36B of Title 26. Put differently, when 1321 directs HHS to establish "such [1311] Exchange," the *most* that's directing is for HHS to establish a 1311 Exchange with subsidies available as would have been authorized for a 1311 Exchange -- i.e, pursuant to the terms of Section 36B.

The problem, of course, is that 36B expressly and unambiguously says that the amount of the subsidy turns on whether the Exchange is "established by the State." And, to belabor the obvious, a 1321 Exchange is not established by the State, but by HHS. In other words, because a 1321 Exchange is "such [a 1311] Exchange," the *same statutory formula* for calculating subsidies applies to both exchanges; that, however, doesn't mean that the *amount must be the same* under the formula, because the relevant factual inputs are different.

This is why the Govt and most academic defenders have recognized that there's no end-running 36B. The only way for the Govt to prevail is to conclude that a 1321 Exchange established by HHS is somehow a 1311 Exchange established by the State for purposes of 36B.

Hashim said...

Here's another way of showing why your argument doesn't work: even under the current IRS Rule, the Govt can *never* guarantee that the *amount* of the subsidy for the HHS Exchange is *the same* as the amount that would have been available for "such Exchange" if established by the State.

The reason is that the amount of the subsidy under 36B turns on the premiums charged by the "second lowest cost silver plan" on the Exchange. But it's entirely possible -- indeed, quite likely -- that that benchmark premium *would be different* depending on whether the Exchange was established by HHS or the State: different insurers could choose to join or not join depending on how good a job the relevant govt did in running the exchange.

Accordingly, even under the IRS Rule, if the subsidy on an Exchange established by HHS is $X, it could well have been $2X if the Exchange had been established by the State instead. Yet no one thinks that this difference in amount under 36B's formula violates 1321's requirement that HHS establish "such" Exchange.

And if 1321 doesn't foreclose a difference of $2X and $X under 36B as interpreted by the IRS, then it also doesn't foreclose a difference of $2X and $0 under 36B as interpreted by the pltfs.

Eric Segall said...

Hashim, subsidies are available on 1321 exchanges because through out the law (like the notification provisions) the exchanges are treated the same way. A 1321 exchange is a 1311 exchange for 36(B) purposes and other purposes as well. It is as if 1321 said this expressly which would have been a bit better but "such" means "such." I don't understand your second point.

Joe said...

"pleasure of debating Professor Jonathan Adler of Case Western Reserve at the University of Pennsylvania on Monday afternoon on the issue of King v. Burwell"

Respectful debate is very important. I wish he used his talents in a less destructive & shoddy argument sort of way.

Paul Scott said...

So here is my problem with the purely textual argument, though I find my concerns irrelevant because I completely buy the Government should win on you pick - context/purposivism/absurd results.

My issue with a purely textual argument is the first step to me is to explain why "created by the States" is there at all. That phrase has to mean something. So to me we are left with three possibilities:

1. Exchanges are created by the States.

2. Exchanges are created by HHS

3. Exchanges are created by some entity other than by the States or HHS.

If #3 is impossible under the statute as a whole (and as far as I know, it is), then "created by the States" can only plausibly mean to distinguish those exchanges from ones created by HHS.

To me the *reason* we are here is obvious - the Democrats were lazy and very stupid in just assuming a Dem would replace Kennedy after his death. This caused a voluminous bill to be rushed through without proper legislative vetting. Now, the GOP has been so feverish over this law that there would likely have been several minor textual drafting errors like this one left in anyway, but proper attention to MA would have solved several problems in the law, maybe including this one.

Joe said...

"the Democrats were lazy and very stupid in just assuming a Dem would replace Kennedy after his death"

Or, his death was ill-timed, the primary resulted in a poor candidate, the opponent was a good pick for the Rs & since MA already has a better health system than most states, borderline voters were less concerned about this issue?

This all resulted in a perfect storm of bad & the result was the 60th vote was lost, so the final bill could not be cleaned up except in limited ways in conference as it should be possible to do if Republicans cared about good government.

I don't think a few words here refutes Abbe Gluck et. al. at Balkanization explaining in detail how the government reading of the text even standing alone can work. True enough at the end of the day it really doesn't matter since taking things as a whole, the gov't clearly wins.

But, I'm so very tired at this simplistic bashing of Dems by some around here.

Unknown said...

I have to side with Hashim on this point. The argument in the article only works if there is ambiguity in the law but "under [section] 1311" is not ambiguous; it is explicit. J. Kennedy may have been concerned about the consequences of reading the statute in the way Challengers want but, as J. Scalia alluded to, consequence is not as important as it would otherwise be when there is no ambiguity in the law. Could congress write a non-sensical law? Sure. Could congress write a bad law? Sure. Could congress write a good law poorly? Sure. Is it the responsibility of the judiciary to save the legislature from its own carelessness? Absolutely not.

Eric Segall said...

I don't understand the point of Unknown. There is no ambiguity. Section 1321 says create a 1311 exchange. A 1311 exchange has subsidies. What is ambiguous? 1321 could have said create an exchange with subsidies just like 1311. That is what "such" means.In any event it is not 36(B) that matters it is 1321 that matters (assuming subsidies are available on 1311 exchanges which they clearly are). Here is same take by someone else: https://ziffblog.wordpress.com/2015/03/03/textualism-is-nothing-either-good-or-bad-but-thinking-makes-it-so/ …

Unknown said...

No, 1311 exchanges are those created by states. 1321 exchanges are those created by the federal government. 1321 does NOT say the federal government creates a 1311 exchange.

Eric Segall said...

Unknown, read the statute. What does "such" refer to? If I tell my son to draw a red pony and then tell my daughter to draw "such" a pony, it has to be red. Feds create "such" exchange. What exchange? The 1311 one referred to in 1321 (Black's: "what was mentioned before"). This is the last time I will say this here. Breyer said it well today as well.

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Otis Darko said...

Hello To The World At Large,

I am Miss Wacks.,From united states of America.I will start by saying to all that have experience heart break and also cant do with out there lover should please stop here and read up my story, So as you will know how to go solving or getting your ex back from this spell caster..AND AGAIN I WILL WANT TO ALSO TELL ALL THAT THIS SPELL CASTER I WILL WANT TO TELL THE WHOLE WORLD ABOUT IS HARMLESS AND DO NOT HAVE ANY SIDE EFFECT, BUT TO RESTORE AND GIVE YOU BACK WHAT YOU DESERVE, COS WHEN I MEET WITH THIS SPELL CASTER THAT WAS INTRODUCED TO ME BY THE WIFE OF MY BOSS IN MY WORKING PLACE, HE MADE IT CLEAR THAT HE CAN CAST SPELL ON SO MANY OTHER PROBLEMS EXCEPT IN GETTING YOUR EX OR MAKING YOUR LOVER TO LOVE YOU MORE THAT WILL SUITE YOU. Last year December, My lover was cheating on me and was not also give me the attention that a man should give to a woman,And really that was troubling my mind and tearing my heart apart to the extent that i was not concentrating in the office the way i use to before the break up by my lover.And before that incident,I always see how my boss use to love his wife so much. I was binging to think that i was not doing the right thing to him that will make him love me forever,So i really gathered my courage and went to my boss wife office to ask her the secret that made her husband love her so dearly,In the first place she refused in telling me,She asked me why i am asking her such a question,That if is it not normal for every man to love his wife.I told her the reason that made me ask her about this question,That my lover started cheating on me lately,When i knelt down before her for her to see my seriousness in this issue that i went to ask her,She opened up to me by telling me that i should not tell anybody about what she want to tell me,The wife to my boss started to say to me that she used a very powerful spell on his husband to love her,And the spell that she used is harmless, But the spell is just to make him love her and never to look for any other woman except her. I QUICKLY ASK HER HOW DID SHE GET TO KNOW THIS GREAT,POWER,DURABLE AND PERFECT WORK SPELL CASTER,she said that a friend of hers also introduce her to him. Then i also ask her how i can meet with this spell caster.SHE SAID EVERYTHING TO ME,THAT THE NAME OF THIS SPELL CASTER IS DR OTIS DARKO ORACLE TEMPLE. My next question to her was how can i get this wonderful spell caster,She said she is going to give me the email of the spell caster for me to contact him for my problem,Really she gave to me this spell caster email and i contacted him and explained all to him,And after every thing that needed to be done by the spell caster, In the next two days, My lover that hated me so much came to house begging for forgiveness and i was so glad that i have finally gotten my heart desire..I was so grateful to this spell caster for what he has done for my life.. So i made a promise to him that i will always continue telling the world about his wonderful work towards me and also to other that came to you before and also the people that will also get to you from my story that i narrated online now..I will want to say to the entire world that you should not cry over noting again, That there is a great man that has been helping individuals to restore there Joy and smile in there faces !! The direct email to get this man is : otisdarko60@yahoo.com ,This is what i want to tell you all out there,That is thinking that all hope is lost ok. CONTACT OTIS DARKO TODAY: otisdarko60@yahoo.com. Thanks

Regards,

Miss Wacks.

Kate Mark said...

Am here to testify what this great spell caster done for me. i never believe in spell casting, until when i was was tempted to try it. i and my husband have been having a lot of problem living together, he will always not make me happy because he have fallen in love with another lady outside our relationship, i tried my best to make sure that my husband leave this woman but the more i talk to him the more he makes me fell sad, so my marriage is now leading to divorce because he no longer gives me attention. so with all this pain and agony, i decided to contact this spell caster to see if things can work out between me and my husband again. this spell caster who was a woman told me that my husband is really under a great spell that he have been charm by some magic, so she told me that she was going to make all things normal back. she did the spell on my husband and after 5 days my husband changed completely he even apologize with the way he treated me that he was not him self, i really thank this woman her name is Dr Aluta she have bring back my husband back to me i want you all to contact her who are having any problem related to marriage issue and relationship problem she will solve it for you. her email is traditionalspellhospital@gmail.com she is a woman and she is great. wish you good time.
He cast spells for different purposes like
(1) If you want your ex back.
(2) if you always have bad dream
(3) You want to be promoted in your office.
(4) You want women/men to run after you.
(5) If you want a child.
(6) You want to be rich.
(7) You want to tie your husband/wife to be yours forever.
(8) If you need financial assistance.
(9) HIV/AIDS CURE
(10) is the only answer to that your problem of winning the lottery

Contact him today on: traditionalspellhospital@gmail.com

Luca Perry said...

I read some testimonies about a love spell caster by Dr.Trust on how he has helped lots of people in bringing back their ex lovers within 48hours, Sincerely I was just thinking if that was real and if this man could really help bring back my lover whom I love so much. I decided to contact him because I love my boyfriend very much and we have been apart for a couple of months I really missed him so much, I have tried all other means to get him back but couldn’t.I contacted Dr.Trust and he told me that my ex will come back to me in the next 48 hours,Dr.Trust released him up to know how much i loved and wanted him. And opened his eyes to picture how much we have share together. My ex is now back to me aagain.As I`m writing this testimony right now I`m the most happiest girl on earth and me and my boyfriend is living a happy life and our love is now stronger than how it were even before our break up.All thanks goes to Dr.Trust for the excessive work that he has done for me by helping me to get back with my ex boyfriend. I would like to drop Dr.Trust mail address and hope you see this testimony and contact him if you have a lover that you really want back so badly, His mail: Ultimatespellcast@gmail.com or Ultimatespellcast@yahoo.com all call him +2348156885231

Luca Perry said...

I read some testimonies about a love spell caster by Dr.Trust on how he has helped lots of people in bringing back their ex lovers within 48hours, Sincerely I was just thinking if that was real and if this man could really help bring back my lover whom I love so much. I decided to contact him because I love my boyfriend very much and we have been apart for a couple of months I really missed him so much, I have tried all other means to get him back but couldn’t.I contacted Dr.Trust and he told me that my ex will come back to me in the next 48 hours,Dr.Trust released him up to know how much i loved and wanted him. And opened his eyes to picture how much we have share together. My ex is now back to me aagain.As I`m writing this testimony right now I`m the most happiest girl on earth and me and my boyfriend is living a happy life and our love is now stronger than how it were even before our break up.All thanks goes to Dr.Trust for the excessive work that he has done for me by helping me to get back with my ex boyfriend. I would like to drop Dr.Trust mail address and hope you see this testimony and contact him if you have a lover that you really want back so badly, His mail: Ultimatespellcast@gmail.com or Ultimatespellcast@yahoo.com all call him +2348156885231