In The New Republic, Simon Lazarus, counsel for the Constitutional Accountability Center, issues a lengthy warning to Obamacare’s supporters: If backers of the health law aren’t prepared, conservative “rejectionists” who oppose the law will employ a “textualist algorithm” designed to “skew” the interpretation of the law, and shut it down. Critics of the law, Lazarus says, now have “an upside-down core contention,” which is that Congress, in passing the health law, “actually ‘intended’ to deny benefits necessary for millions of low-income Americans to afford health insurance.” To his fellow liberals, he warns that “the truth won’t prevail, if it isn’t told.”
Yet Lazarus manages to avoid telling a number of important truths himself. For example, he misstates the argument that the law’s challengers are making. The core contention of the cases that concern Lazarus is that the plain text of Obamacare prohibits the Internal Revenue Service from applying premium subsidies to individuals who sign up through federally run exchanges. The law gives states a choice whether or not to set up their own exchanges. Obamacare’s authors both assumed that states would run their own exchanges and gave them an incentive to do so by limiting premium subsidies to those run by states.
Indeed, this is explicit in the text of the law. It’s explicit in the only relevant statement about the legislative text in the congressional record. And it’s explicit in pre-Obamacare liberal policy work considering how to create incentives for states to build and run exchanges.
But you wouldn’t know it from reading the article, because those are among the truths Lazarus leaves out. Yet they seem relevant, so let’s go over them here.
First, the legislative text. As Cato Health Policy Director Michael Cannon and Case Western Reserve Law Professor Jonathan Adler point out in their paper on the subject, the text of the law is quite clear on the matter. Section 1311 of the law directs states to create a health insurance exchanges. Section 1321 of the law directs the Health and Human Services Secretary to “establish and operate” an exchange in any state that chooses not to create its own. The law also says that premium tax credits are available through “an Exchange established by the State under section 1311.” That’s it. Subsidies are available in states that create their own exchanges. The plain language of the law does not provide for subsidies to insurance purchased in federally run exchanges created under section 1321 of the law.
Second, the intent of Congress. Only a single relevant discussion of the provision has been found in the congressional record. In it, Sen. John Ensign (R-Nevada) asks Sen. Max Baucus (D-Montana), who through his staff has claimed authorship of the committee bill that became Obamacare, how the federal government will have jurisdiction over states regarding health coverage. In response, as Cannon and Adler note...
The bill conditions the availability of tax credits on states complying with those directives. Specifically, Senator Baucus explained that the requirements Ensign mentioned are among the “conditions to participate in the Exchange,” and that “an Exchange . . . essentially is tax credits,” which “are in the jurisdiction of this committee.” In other words, the reason the Finance Committee could impose requirements on state-run Exchanges was because tax credits were conditional on state compliance.
Third, the history of the idea. The notion that the law’s premium subsidies should only be available through state-run exchanges did not pop up out of the blue during the drafting of the legislation. In early 2009, Professor Timothy Jost, an influential liberal health law scholar, wrote a brief on legal issues surrounding the health exchanges for the Georgetown University Legal Center that openly argued for encouraging states to build their own exchanges by making the law’s premium subsidies available only in those exchanges.
“Congress cannot require the states to participate in a federal insurance exchange program by simple fiat,” Jost wrote. “This limitation, however, would not necessarily block Congress from establishing insurance exchanges. Congress could invite state participation in a federal program, and provide a federal fallback program to administer exchanges in states that refused to establish complying exchanges. Alternatively it could exercise its Constitutional authority to spend money for the public welfare…by offering tax subsidies for insurance only in states that complied with federal requirements…” (More recently, Jost has argued that the clear language of the law should be ignored because it must be a mistake. But his earlier writing provides evidence that the condition was intentional.)
None of this appears in Lazarus’s article. But it should have. Because this is the core of the “textualist algorithm” that Lazarus worries Obamacare opponents will use to upend the law: the clear and unambiguous legislative text, the only statement of congressional intent in the record, and the explicit suggestion by a prominent liberal legal scholar that Congress could do exactly what the rejectionists say the health law’s authors have done.