D.C. Circuit Old Guard Strikes Down Key Obamacare Subsidies Provision

A divided panel of the D.C. Circuit this morning struck down a key provision of the Affordable Care Act that allows subsidies for millions of people purchasing health insurance on government-run exchanges. The case is one of four cases on the same issue, strategically planted in various places around the country (Washington DC, Virginia, Oklahoma, and Indiana). The intent is apparently to get a split in circuit court opinions, so the Supreme Court will be more likely to take the case and, the proponents hope, deliver a crippling blow to Obamacare. (Unlike the millions of Americans who would be the real victims if this scheme succeeds, its proponents presumably have access to health insurance.) Today's ruling is the first among the four circuits.

Opponents of healthcare have an argument that might look appealing on the surface but doesn't pass the smell test. Section 1311 of the ACA says states should set up insurance exchanges. Section 1321 of the Act says the federal government can set one up if a state doesn't. The statute also says how to calculate the amount of a subsidy available for less well-off people getting health insurance through an exchange. It's based on the amount the person pays for the insurance s/he is enrolled in through an exchange "established by the state under [section] 1311" of the ACA. It's on the "by the state" language that the ACA's opponents hang their hat.

The anti-ACA people say the text is clear: The subsidy is unavailable to those who are getting their insurance in states where the federal government has set up the exchange. Judge Thomas Griffith and Senior Judge Raymond Randolph (nominated by Bush-43 and Bush-41, respectively) grabbed on to this argument, striking down subsidies for Americans living in states where politicians have chosen not to set up their own state exchanges.

Senior Judge Harry Edwards (a Carter nominee) dissented, pointing out that this was clearly not the intent of Congress. He explained the case quite plainly:

This case is about Appellants' not-so-veiled attempt to gut the Patient Protection and Affordable Care Act ("ACA").

...

Appellants' proffered construction of the statute would permit States to exempt many people from the individual mandate and thereby thwart a central element of the ACA. As Appellants' amici candidly acknowledge, if subsidies are unavailable to taxpayers in States with HHS-created Exchanges, "the structure of the ACA will crumble." It is inconceivable that Congress intended to give States the power to cause the ACA to "crumble." [emphasis added, internal citation removed]

Judge Edwards continues, shattering the majority's argument that their interpretation fits with congressional intent:

Apparently recognizing the weakness of a claim that rests solely on [one particular section of the Affordable Care Act], divorced from the rest of the ACA, Appellants attempt to fortify their position with the extraordinary argument that Congress tied the availability of subsidies to the existence of State-established Exchanges [rather than federal ones] to encourage States to establish their own Exchanges. This claim is nonsense, made up out of whole cloth. There is no credible evidence in the record that Congress intended to condition subsidies on whether a State, as opposed to HHS, established the Exchange. Nor is there credible evidence that any State even considered the possibility that its taxpayers would be denied subsidies if the State opted to allow HHS to establish an Exchange on its behalf.

The majority opinion ignores the obvious ambiguity in the statute and claims to rest on plain meaning where there is none to be found. In so doing, the majority misapplies the applicable standard of review, refuses to give deference to the IRS's and HHS's permissible constructions of the ACA, and issues a judgment that portends disastrous consequences.

Those disastrous consequences are not the intent of Congress, but they are the intent of far right zealots.

The Justice Department has already said it will seek an en banc review by all eleven judges of the D.C. Circuit, where President Obama's opponents have less likelihood of winning than would have been the case a year ago. In case you were wondering why Senate Republicans pulled out all the stops last year and declared they would not allow President Obama to fill any of the three then-existing vacancies on the D.C. Circuit, cases like this are why. The last thing they wanted was a balanced, non-ideological court.

For anyone who cares about healthcare, courts matter.

PFAW