What happens when we all stare at five words for too long? [King v Burwell, cont'd]

|The Volokh Conspiracy |

When my kids were very little, we'd play a game where one of us would pick an ordinary word or phrase ("window," or "rug," or "what's up, doc?") and repeat it quickly over and over and over again until everyone was giggling because it started to sound so weird.

As everyone knows, the central issue in the King v Burwell case is: what is an "Exchange established by the State"? Robert Weiner, over on ScotusBlog, has a pretty interesting piece focusing on the capitalizations in the statutory text—in particular, the capital "E" in "Exchange."

[The capital-S "State" is important too, though less controversially. The (uncapitalized) "state" often refers, of course, to the nation-state (and would plausibly cover the US federal government); but "State" is defined in the statute as each of the 50 States of the Union (plus DC), so there's no real ambiguity about what this means—though I sure wish that press accounts (which routinely seem to eliminate the initial capital) would pay attention to their typography here. Even Mr. Weiner's ScotusBlog posting, which is all about the significance of capitalization, mixes in his "state"s and "State"s rather too liberally]

Weiner's argument is: an "Exchange" is also a defined term (in sec 1311): "(d) An Exchange shall be a governmental agency or nonprofit entity that is established by a State." So only things "established by a State" can be an "Exchange." So far so good—and good, one would think, for the plaintiff challengers in the King case—a federal exchange isn't "established by a State" so it's not an "Exchange" and not within sec 1311's meaning.

But: Section 1321(c) directs that if the State elects not to establish an "Exchange," the Secretary of HHS shall "establish and operate such Exchange." Aha! How can HHS establish and operate an "Exchange," if an "Exchange" must be something "established by a State"? It must be that HHS is acting, in effect, on behalf of the State—otherwise, whatever it is that the Secretary of HHS establishes and operates couldn't possibly be "an Exchange," and this provision would be nonsensical. QED.

I confess that the textualist in me enjoys this sort of thing, and that I find this pretty persuasive on purely textualist grounds.

[Co-blogger Jonathan Adler is not so fond of the argument. He has this to say about 1311(d):

This provision imposes a requirement on states [DGP: States?] that qualifying exchanges be governmental or nonprofit entities. It operates to preclude a state [ditto] handing over its exchange to a for-profit entity. It does not—indeed, cannot be read—as defining all exchanges as "a governmental agency or nonprofit entity that is established by a State" without completely obliterating the that function. Indeed, read as the amici [DGP: and Mr. Weiner] suggest, it would allow a state-endorsed exchange created and operated by Amazon to qualify as a "nonprofit entity that is established by the State."

I'm not sure I follow that reasoning. An "Exchange" has to be (a) either a government agency or a nonprofit entity, and it must be (b) established by a State. An exchange operated by Amazon at Oregon's behest would not be an "Exchange," because it doesn't meet criterion (a).]