The most significant legal
challenge to Obamacare right now involves a somewhat complex debate
about statutory interpretation, the legal validity of the insurance
subsidies offered through federal exchanges, and multiple
simultaneous waves of court challenges across the
country.
But at its heart is a single question: Should the text of
the legislation be interpreted literally, according to its plain
and unambiguous meaning, or, as the administration would prefer,
should it not?
The administration and its supporters hae argued that the
challenge is frivolous and cynical, a legal ploy designed to gut
the law, but it took another loss in court yesterday, suggesting
once again that the argument from the challengers is not without
merit.
The challengers argue that Internal Revenue Service (IRS) and
the administration acted illegally by interpeting the legislative
language, which says only that subsidies may granted to insurance
plans purchased in exchanges established by a state (defined as the
50 states plus the District of Columbia), to mean that subsidies
may be granted for plans purchased on exchanges established by the
state as well as the federal government, which last year set up and
operated exchanges in 36 states. The final outcome of this dispute
is potentially very significant: If the challengers win, then that
means the subsidies offered in those 36 federally run exchanges
will no longer be legally available.
Several versions of this challenge are now making their way
through the court system: In Virginia, a panel of judges from the
Fourth Circuit decided
in July that, even though “a literal reading of the statute
undoubtedly accords more closely with [the challengers’] position,”
the administration had the better case overall, after giving
“deference” to the IRS interpretation. On the same day, a panel of
judges in the D.C. Circuit ruled in favor of the challengers,
agreeing that the legislation “plainly makes
subsidies available only on Exchanges established by
states.” That decision was later vacated when the full
D.C. circuit has agreed to rehear the case; most observers believe
that the full circuit decision is likely to favor the
administration.
In the meantime, the challengers have scored another
victory, this time from in a lower court in Oklahoma, who, much
like the three-judge panel in the D.C. Circuit, ruled that the
plain language of the legislation is clear, and that absent
ambiguity in the plain language, its meaning cannot be ignored or
conveniently interpreted away.
“The court holds that the IRS rule is arbitrary,
capricious, an abuse of discretion or otherwise not in
accordance with law,”
writes District Judge Ronald White.
“This is a case of statutory interpretation. ‘The text is
what it is, no matter which side benefits’,” he says, quoting
Bormes v. United States. “Such a case…does not ‘gut’ or
‘destroy’ anything. On the contrary, the court is upholding the Act
as written.”
How much will this matter? In the short term, not much.
White stayed his decision, pending the resolution of any potential
appeal, and with the full D.C. Circuit rehearing the other case
decided in favor of the challengers, its likely that there will be
no circuit split, at least for the moment. The question is how the
Supreme Court will treat the case. It’s rare for the High Court to
take a case without a circuit split, but if the Oklahoma case is
decided in favor of the challengers, it could result in a circuit
clash. And it’s at least possible, though not in any way certain,
that the ruling could help convince the Supreme Court to take the
case even without a circuit split.
“It’s a judicious opinion,”
writes Cato Institute Health Policy Direct Michael Cannon, who
helped conceive the underlying legal challenge, “and now that we
(once again) have different courts in different jurisdictions that
have issued opposing rulings, Pruitt greatly
strengthens the case for the Supreme Court to
review King.
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