Skip to comments.A stinging defeat for the government (Obamacare and Halbig v. Sebelius)
Posted on 07/22/2014 8:27:58 PM PDT by 2ndDivisionVet
In a major setback for the Affordable Care Act, the D.C. Circuit just released a fractured opinion invalidating the IRSs rule extending tax credits to federally facilitated exchanges.
The case, Halbig v. Sebelius, centers on the portion of the ACA governing the calculation of tax credits. The statute specifies that tax credits are available to most people who purchase a health plan through an Exchange established by the State under 1311. (See my earlier posts for a more detailed recap.) About two-thirds of the states, however, declined to establish exchanges. In those states, the federal government stepped in and established the exchanges on the states behalf.
In todays opinion, the D.C. Circuit held that a federally facilitated exchange isnt established by the State under 1311. As a result, the IRS cant offer tax credits to those who purchase plans on such exchanges. Since the average estimated tax credit in 2014 is $4,700, the ruling threatens to deprive tens of thousands of people in Texas, Florida, Ohio, Michigan, and many other states of the means to buy health insurance.
In his opinion for the Court, Judge Griffith starts with the text of the statute. He first acknowledges that a federal exchange is a 1311 exchange, even if its established by the Secretary of HHS under 1321 of the ACA. After all, section 1321 instructs the Secretary to establish such exchange if a state fails to do so. In context, such exchange clearly refers to a 1311 exchange.
But thats not enough. As Griffith sees it, [t]he problem confronting the IRS Rule is that subsidies also turn on who established them. The statutory text requires the exchangeseven those established under 1311to be established by the State. Because federal exchanges arent established by a state, but by the federal government, individuals who purchase a plan on federally established exchanges are ineligible for tax credits.
Griffith then turns to the larger statutory context, and to the governments claim that a cramped construction of the statute would render several other provisions of the ACA absurd. What about the ACA requirement that federally established exchanges report on who receives tax credits? Wouldnt that be superfluous if no one received any such credits? Not so, says Griffith. Even if credits are unavailable on federal Exchanges, reporting by [federally established] Exchanges still serves the purpose of enforcing the individual mandate.
What about the ACA provision stating that qualified individuals can buy plans on an exchange? Since a qualified individual is defined in the statute to mean someone who resides in the States that established the Exchange, Griffith acknowledges that giving this provision its plain meaning would mean that the 36 states with federal Exchanges have no qualified individuals. Even so, he says, [t]he government tilts at windmills. In Griffiths view, [t]he obvious flaw in this interpretation is that the word only does not appear in the provision. People in states with federally facilitated exchanges should be allowed on those exchanges, even if the statute might at first glance appear to preclude them from doing so.
Finally, Griffith addresses the legislative history of the ACA and concludes that it sheds little light on the precise question on the availability of subsidies on federal Exchanges. In Griffiths view, that silence about whether Congress intended the odd result of depriving individuals on federal exchanges of subsidies is not enough. [T]here must be evidence that Congress meant something other than what it literally said.
Griffith concludes his opinion with the following remarkable statement:
We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges.
In a lengthy and passionate dissent, Judge Edwards notes his disagreement at every turn with the majority:
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 IRSs and HHSs permissible constructions of the ACA, and issues a judgment that portends disastrous consequences. I therefore dissent.
What happens now? Instead of taking the case right to the Supreme Court, the government will probably ask the whole D.C. Circuit to review it. (The government has until September 5 to file its petition.) The court is very likely to review the case en banc: its undeniably of exceptional importance and the decision is, in my view, quite wrong. It also wont hurt that, after filibuster reform, the courts seven Democratic appointees outnumber its four Republican appointees.
In all likelihood, the case would be heard en banc in the late fall or winter. If the government loses againwhich is unlikely, in my viewthe Supreme Court would almost certainly take the case. If the government wins, its more difficult to hazard a prediction. Much will depend on how the other pending cases presenting the same question develop, especially King v. Sebelius, which was recently argued before the Fourth Circuit.
This is by no means is this the final word on the exchange litigation. But thats not to minimize the significance of the courts decision today. It lends plausibility to the challengers arguments, gives momentum to the litigationand increases the odds that millions of Americans wont be able to afford health insurance.
Nothing is final, and even if SCOTUS holds this up, why would Obama or the IRS comply fully?
Comment? Sure. This is a panel that is going to be overturned. The 4th Cir ruled the other way. There will not even be a conflict in the Circuits which means SCOTUS may not take it. There is a fundamental axiom in judicial review set by SCOTUS ... even THIS SCOTUS that establishes that full deference is to be given the Executive Branch where there is a conflict in statutory language. Furthermore, there is a fundamental axiom that portions of the statute are not to be read alone. That the entire statute is to be considered. Once considered along with Congressional intent it is CLEAR what Congress meant and that this is, essentially, a typo.
Judicial analysis goes WAY beyond politics. What is ruled upon in one case effects so so so many other. They will not change these fundamentals.
What I find so utterly frustrating is that these pundits, these politicians, that are supposed to be on conservative and supposed to be on our side are not honest about this. They cheer what they KNOW to be, at best, an interim and, probably, flawed decision. And it has zero to do with ODimwit care.
Why is this a problem? Because it keeps our eye off the prize ... a Conservative government. Furthermore, it is easy fodder to make Conservatives look like fools. We are trying to win converts not the spirit award at a cheerleading camp.
Those are my thoughts with 25 years of Prosecuting, arguing before SCOTUS, and working for the Nixon campaign (among others) to back em up.
If it is a typo, as you claim, then how should the act read in the contested section?
They can afford health insurance if they
get a job with health insurance or if
they could pay for one of the bare
minimum plans that have been
The reality is that the provision in question was put there with malice aforethought to coerce the states, which otherwise (according to the majority, at least) could not be forced to do so, to create exchanges of their own.
It was a surprise to Obama that any states at all - never mind a wide majority of them - declined to do so. Thus, the infamous web site lash up when the state incompetents allowed the problem to default to the federal incompetents.
This basically says that the DC Circuit won't uphold the 3 panel ruling, and that will mean that it won't necessarily go before the Supreme Court.
How is it a stinging defeat if another court, the same day, ruled an opposite position...is that also a stinging victory? I get tired of the hype from the right as well as the left. They had us believing Romney was actually going to win, didn’t they? Rove, Morris and all the rest if the hypers. I’m not one who believes in “Hope.” The reality here is that that two opposing rulings are headed for the John Roberts Supreme Court. So much for a “stinging conservative victory.”
You are absolutely correct. The Full court will make the dishonest conclusion that “States” equals “Federal Government” and uphold the dishonest decision of the IRS to provide subsidies to those individuals in states without an exchange and the Supreme court will punt on the issue.
After the Federal Government implements the subsidies for all states, then they will simply declare the “State” exchanges as irrelevant and simply make a single “Federal” exchange and just close out the state exchanges and then you will have NATIONAL HEALTH CARE. Then when all the insurance companies go belly up or decide not to participate, then the IRS will create a SINGLE PAYER SYSTEM.
Just because the government asks for an en banc decision from the DC Appeals Court, does it necessarily follow that the government is guaranteed exactly that outcome, precluding the possibility of any other? In particular, what is the plaintiff strategy? With respect, this reporting sounds a bit one sided.
As dscussed in this article, the more likely possibility seems that the plaintiffs will claim a federal appellate level split , claim urgency outweighs the delay that would be incurred for a full DC Fed Appellate en banc decision, and push it to the USSC.
The Obama admin would then have to argue against urgency which hardly seems credible given the circumstances. And by that same reasoning, the USSC would have a difficult time justifying declining to grant cert.
Thus, at least to me, the main question becomes how would a USSC decision go once it is before them?
If the previous ACA decision is any guide (and I would contend that it should be), Roberts argued for the majority based on a hyper-literal interpretation of the act, exactly the polar opposite of what you appear to be contending will win the day.
Disclaimer- IANAL nor do I play one on TV or film.
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