When
Obamacare goes back to the Supreme Court next year, the nine
justices on the court will be hearing a case built in large part by
Cato Institute Health Policy Director Michael
Cannon.
For the last three years, Cannon has been working on a
challenge, not to Obamacare, but to the way it has been implemented
by the Obama administration, which has allowed insurance subsidies
to be offered through exchanges run by the federal government
despite clear legislative language saying that those subsidies are
meant only for state-established exchanges. Cannon’s 2012 paper on
the IRS rule authorizing subsidies in federal exchanges, co-written
with Case Western Reserve Law Professor Jonathan Adler, is the
foundation of the legal argument the court will be
hearing.
Sarah Kliff of Vox.com
interviewed Cannon about the challenge. It’s worth reading in
full, but I want to highlight two sections in
full.
In the first, Cannon explains why the section of the law in
question is not just a minor typo, as several
not-very-well-informed commenters have suggested:
Sarah Kliff: You and Adler initially thought that this was
a glitch or a typo, that it was a drafting error where legislators
were sloppy and forgot a word. But you’ve since become convinced
that it was the intention of Congress to withhold subsidies from
states that don’t build exchanges. How did your viewpoint change on
that?Michael Cannon: We first thought that it was a mistake,
that it was a drafting error. And it is still a glitch in the sense
that it’s a snag or something that complicates implementation. The
reason I didn’t initially think they wrote it this way was it would
give states a lot of power to block the law.But we started doing a lot of research into this, the most
research that I think anyone has done. And if you look at the
tax-credit eligibility rules, they are very tightly worded. It’s
not in one place, but in two places, it says that the credits are
only available “through an Exchange established by the State.” Then
there are seven different cross-references to that language. They
never mentioned any other type of exchange. They never mentioned
exchanges generally. It’s all very tightly worded to refer only to
exchanges “established by the State.”Then if you look at the legislative history, you’ll find that
that was the language in the Finance Committee’s bill and when it
passed the Finance Committee. But that bill only had one of those
explicit “Exchanges established by the State” phrases. They added
the other one in Harry Reid’s office while it was being merged with
the HELP bill under the direction of the Senate leadership and
White House staff — Peter Orszag and Valerie Jarrett and Nancy-Ann
DeParle, and everyone else who was going in and out of that room.
So this restriction was added to the statute in multiple places at
multiple points in the drafting process.
The history and the repetition make it hard to argue that the
language was just a fat-finger oopsy. I would also add
that the law doesn’t just say that subsidies are allowed in
exchanges “established by the State.” It also explicitly defines
“State” as being one of the fifty states or the District of
Columbia (conspicuously leaving out the federal government), and it
also extends that phrase to say “established by the State under
[Section] 1311 of the Patient Protection and Affordable Care Act.”
It refers to this section twice. Section 1311, notably, is the
section that deals with state-run exchanges. There’s a whole
different section—1321—for federal exchanges, and that section
isn’t mentioned.
This was no mere typo, no careless wording error. It is how the
law was purposefully and intentionally written. And this is the
language that Congress voted to pass.
In the interview, Cannon also addresses the question of whether
he’s to “blame” if the Supreme Court agrees with the challengers
that the subsidies in the federal exchanges are illegal:
Sarah Kliff: What do you think of the people who put the
blame on you? There are people who are going to say, if your case
wins, “Why did you guys take away health coverage from millions of
people?”Michael Cannon: The first thing I’d say in response is, “If
those subsidies are illegal, would you favor or oppose ending
them?” So far, no one has said they would favor allowing the
president to subsidize people illegally.Then the question becomes, “Are they legal or are they not?”
That’s what we’ve been debating all this time. I’m convinced that
they’re illegal.Then I ask, “If you were convinced the president was doing
something illegal, what would you do?” Well, this is what I would
do. This is what I’m doing. Any dislocation, any disruption, any
harm that is caused by those people losing those subsidies, the
responsibility for that falls at the feet of the president
himself.
The question that matters here is whether or not the law is
being implemented in a way that is legal under the statute. If the
administration’s implementation is illegal, then it needs to be
stopped.
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