A Festivus Airing of Grievances: Petitioners’ Brief in King v. Burwell

Happy Festivus everyone! As you know, a traditional Festivus celebration includes the “Airing of Grievances.”

Today, I’ll be celebrating that tradition with a list of grievances against the Petitioners’ brief in King v. Burwell, in no particular order.  Feats of Strength to follow!

1. Gruber! The brief includes two citations to the Gruber YouTube video. As others have already demonstrated, the “gotcha” video isn’t really much of a gotcha. But in any event, for a case that should turn on the text of the statute, an internet clip of a policy wonk has as many page cites (two) as all but five statutory provisions, and as many or more than all other secondary sources. (It’s tied with the President’s own remarks!)

2. A “national exchange” vs. federal exchanges. The brief muddies the difference between two separate paths the ACA could have taken. In an alternative universe, the ACA might have included a single national healthcare exchange, perhaps with a national public option. Petitioners argue that resistance to that possibility necessitated the strong incentive of making subsidies available only on state-established exchanges. But while some (including Senator Nelson) objected to a single national exchange, the brief does not support the claim Petitioners are trying to make: strong incentives were necessary to avoid separate and distinct federally run exchanges in individual states that declined to establish their own exchanges. These separate federalism-friendly exchanges might have drawn the relevant ire of some legislators, but the Petitioners’ brief doesn’t demonstrate that.

3. Framing as advocacy. As every lawyer knows, if you want to get the answer you want, you first need to ask the right question. Here, the Petitioners put the question this way: Are “HHS-established Exchanges under [section 1321] state-established Exchanges under § 1311”? (Pet’r Br. 12.) That’s a nice move, and if I were the Petitioners I might frame the question the same way. It definitionally forecloses the government’s argument. Pretty clever!

But I think it’s too clever by half. By putting the issue this way, I think the Petitioners have made their job a bit too easy. One hopes that even the Petitioners could imagine a world in which the ACA was drafted with a baseline presumption that the states would be the ones establishing and running the exchanges. In such a world, the definition of an “Exchange” might explicitly refer to the section of the ACA in which states create exchanges, and another section of the ACA might declare (perhaps aspirationally) that each state “shall” establish an exchange. But anyway, in that world, one could also imagine that a separate section of the ACA would permit fallback federal exchanges that, for all intents and purposes, stand in the shoes of the state exchanges. That world might well include situations where references to “state exchanges” would not disqualify these fallback federal exchanges.

For example, let’s say section 1321 included some extra-clear, no-possible-way-anyone-could-miss-it language like this:

This federal fallback exchange will stand in the shoes of the state exchange, and so anywhere that this Act refers to a ‘state exchange’ the substitute federal exchange can fulfill that role or meet that qualification.

In such a world, the question would not be “Does ‘established by the State under section 1311’ mean ‘established by the federal government under section 1321?'” Rather, the question is whether, given the structure of the ACA and the context of the statute as a whole, the federal exchange fills the role of the state exchange when the ACA talks about tax subsidies. Phrasing the question that way doesn’t mean the government automatically wins; the Petitioners still have arguments that we’re in the “not a full substitute” state of the world. But those arguments should be something better than facile appeals to snappy definitions. We are, after all, trying to figure out which state of the world actually exists. We can’t just assume it away.

4. Medicaid, Medicaid, Medicaid! The brief repeatedly holds up Medicaid as an example of a government “threat” to withhold funding. I somewhat understand why the Petitioners take this tack. Many of the pro-government arguments have been something along the lines of: “The ACA couldn’t possibly use tax subsidies as a conditional carrot because the ACA really wants to help people and those subsidies are important!” I’ve previously been critical of these kinds of pro-government arguments, but they’re out there. So, sure, it’s good for the Petitioners to counter with an example where the government did use important funding and services as a carrot.

But there are two problems with the Medicaid argument. First, it’s an argument against a straw man, or at least against one of the government’s weaker arguments. The best government argument is not that Congress could never condition benefits like tax subsidies, or that it would have been absurd to condition benefits like tax subsidies. Rather, the argument is that given the structure and language of the ACA that’s not what Congress actually did in this law with these subsidies.

Second, Medicaid is a bad bad bad example for the Petitioners. Sure, it provides an example showing that Congress can threaten to withhold “important” funds if states don’t play ball. But look at how Congress does that with Medicaid:

If the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of the State plan approved under this subchapter, finds–

(1) that the plan has been so changed that it no longer complies with the provisions of section 1396a of this title; or

(2) that in the administration of the plan there is a failure to comply substantially with any such provision;

the Secretary shall notify such State agency that further payments will not be made to the State (or, in his discretion, that payments will be limited to categories under or parts of the State plan not affected by such failure), until the Secretary is satisfied that there will no longer be any such failure to comply. Until he is so satisfied he shall make no further payments to such State (or shall limit payments to categories under or parts of the State plan not affected by such failure).

42 U.S.C.A. § 1396c (emphasis added).

Now that, my friends, is how you condition funding with a series of carrots and sticks. And it could not be more different from the language Congress used in the ACA.

5. Meditations on “such.” The Petitioners do, eventually, take on the relevant question: Are we dealing with a statute that permits federal exchanges to stand in the shoes of state exchanges for purposes of awarding subsidies? And to answer that question the Petitioners need to find a way around the word “such,” because section 1321 permits the federal government to establish “such Exchange” in the absence of a state exchange. That “such” does a lot of work in the government’s version of the statute. The Petitioner’s, however, don’t want to read that word out of the statute, so they need to explain it somehow. Here’s what they do:

If § 1321 had said “an Exchange,” HHS could have created any sort of Exchange; the word “such” eliminates that discretion. Thus, “such Exchange” describes what the Exchange is, not who established it. The HHS Exchange should operate just like the Exchange the state would otherwise have established.

(Pet’r Br. 22.)

I’m still not quite sure I understand how “such” limits HHS over and above the statute’s definition of an “Exchange.” After all, even in the “an Exchange” hypothetical, HHS would have to create an Exchange-with-a-capital-E, which is defined in the statute and has all sorts of limitations. But given that HHS steps in only after the state has declined to establish an Exchange, how on earth (other than by looking at the words of the statute) can HHS know what sort of Exchange “the state would otherwise have established” had it chosen not to establish anything at all? It’s not as if the state has drawn up plans for an exchange that it then turns over to HHS. We’re sort of down the “How much wood would a woodchuck chuck?” rabbit hole here.

6. An absurd amount of time on absurdity. — The brief spends a lot of time arguing that Petitioners’ proposed interpretation is not “absurd.” In fact, that’s pages 30 to 50 of the brief. Yikes! Lumped in with the “absurdity” arguments are other places in the statute where “established by the State” is used, or where federal exchanges may or may not step in, or other sorts of contextual arguments. That these arguments are treated as potential “absurdities” is, well, absurd. Or maybe it’s not absurd, but it’s certainly a mistake. As I’ve argued elsewhere, these other statutory provisions should not be treated as roadblocks where Petitioners ask “Is there any way to read this provision in a way that makes sense in light of my preferred outcome?” Rather, each provision is a data point that should, as an initial matter, help the interpreter figure out whether we’re in the “Medicaid-like threat” state of the world or the “Fully functional federal fallback” state of the world. If you’ve already picked a winner before you start looking at other related provisions, then you’re doing it wrong.

7. Severability. I’m a bit surprised (but pleasantly so!) that the brief addressed the severability argument raised here by Abbe Gluck. The severability argument is related to my previous point about “creeping constitutionalism.” In short, if the Constitution requires the invalidation of a statutory provision, and that provision is integral to other parts of the statute, then it makes sense to just throw out the whole thing, since enforcing it “in part” doesn’t work. That was the argument in NFIB v. Sebelius, the original Obamacare case. And there, everyone agreed that if the Court invalidated the individual mandate, then the community-rating and guaranteed-issue provisions should be tossed out as well. The challengers in that case went even further, arguing that the subsidies needed to go too. In other words, as a matter of legislative structure, the challengers argued that the subsidies, the exchanges, the mandate, etc., everything needed to go together or the statute didn’t work. Now, of course, the challengers argue that the federal exchange is designed to work without subsidies, while keeping the other previously non-severable provisions.

Here’s what the Petitioners have to say about that:

[T]he Government represented to this Court in NFIB that subsidies and Exchanges were “stand-alone provision[s] that independently advanc[e] in distinct ways Congress’s core goal of expanded affordable coverage,” and that either could survive on its own.

(Pet’r Br. 37 (quoting the government’s brief in NFIB).)

It’s hard to tell exactly how Petitioners are using the government’s brief, but it sounds like they are saying the government “represented” that subsidies and Exchanges work independently of each other and that either could survive in the absence of the other.

But I’m pretty sure that’s not what the government said. Here’s the full page Petitioners are quoting:

2014-12-23 05.15.40

I read that to mean that the subsidies and the Exchanges together would still work even if the mandate were struck down, not that they would work independently of each other. (And yes, that’s a screen-cap from my phone; I’m writing this post without my laptop. Sorry.) In addition to being what the government actually said, that also makes sense. Even without a mandate, individuals would still benefit from an exchange that allowed for the purchase of health insurance with government subsidies.

But that observation doesn’t help the Petitioners. They need something much stronger (and, unfortunately for them, something not true): that the exchanges would still work as intended without the subsidies, the absence of which also frustrates the individual and employer mandates. The government never “represented” that to the Court. And the challengers, along with the conservative joint-dissenters, said exactly the opposite.

*     *     *     *

Well, I think that’s probably enough for now—which brings us to the feats of strength! Festivus is not over until Jonathan Adler pins Nicholas Bagley! (Or something like that.) Happy Festivus everyone!

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One thought on “A Festivus Airing of Grievances: Petitioners’ Brief in King v. Burwell

  1. Pingback: Textualism Is Nothing Either Good or Bad, But Thinking Makes It So | Ziff Blog

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