So - what happens if these lawsuits succeed?

Great Debates
141

Let’s look at those words, shall we?

So the language that the lawsuit relies on has nothing to do with eligibility for subsidies. It merely sets out the method of calculation. Eligibility is governed by completely different language:

None of the following language has anything to do with whether the “applicable taxpayer” is covered through a 1311 exchange or a 1321 exchange.

In any event, as Richard Parker points out, the language of 1321 indicates that a non-state exchange is exactly equivalent to a state exchange.

Section 1311 defines the term “exchange”.

Section 1321 does not. There is no equivalent term for a non-state exchange.

142

And that’s not the only linguistic hook. Contrary to jtgain’s characterization, it is not the case that the IRS argument relies entirely on intent to trump actual words, which I agree would be a legally incorrect argument.

I haven’t bothered to set it all out here, in part because I’ve just been popping in and out of this thread. But the IRS brief in opposition to the motion for preliminary injunction lays out the other relevant language, including the requirement that the federal exchanges submit information about subsidies (which would obviously be surplusage if they provided no subsidies).

143

If you’re right, then the subsidy ought to be avaliable to any “applicable taxpayer” (which is defined as a matter of income level), whether or not that person is enrolled through an exchange, employer provided insurance, or does not have insurance at all. That is, everyone at 100% to 400% of the proverty line gets a tax credit. I’m not sure that’s the way it works.

But if you read “applicable taxpayer” in connection with the amount calculation, it requires that the taxpayer and dependents, etc. “were enrolled in” an exchange “established by the State under 1311.” So, at worst, anyone who is “applicable” but not enrolled gets a tax credit, but it’s $0.

Assume that you’re right (and I think you are). 1311 defines the exchange. 1311 authorizes the state to set it up. 1321 authorizes the Secretary to establish 1311 exchanges. 1401 provides subsidies for exchanges “established by the State under 1311.”

Whether you read that language as applying to exchanges from which the authority to establish came directly from 1311 (i.e. not from 1321) or you read it as 1311 exchanges established “by the State” (and not by the Secretary), I’m not sure that any of your textual analysis advances your position.

144

I did read them. An “applicable taxpayer” does the following calculation:

[QUOTE=1411]
‘‘(2) PREMIUM ASSISTANCE AMOUNT.—The premium assistance amount determined under this subsection with respect to any coverage month is the amount equal to the lesser of—
‘‘(A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act, or
‘‘(B) the excess (if any) of—
‘‘(i) the adjusted monthly premium for such month for the applicable second lowest cost silver plan with respect to the taxpayer, over H. R. 3590—96
‘‘(ii) an amount equal to 1/12 of the product of the applicable percentage and the taxpayer’s household income for the taxable year.
[/QUOTE]

The “lesser” of A or B, right? I’m a taxpayer with a policy on the federal exchange.

I do calculation A: I am not enrolled in a plan “established by the State.” A=$0

I do calculation B: It comes to $9600.

The lesser of $9600 and $0, is $0. I get no subsidy. If I did the calculation any other way, I would be breaking the law (or at least should be breaking the law).

[QUOTE=RNATB]
In any event, as Richard Parker points out, the language of 1321 indicates that a non-state exchange is exactly equivalent to a state exchange.
[/QUOTE]

They might be identical, but one is established by a State and the other is established by the Secretary. If even carbon copies, by the plain language only the one “established by a State” qualifies for a subsidy.

[QUOTE=Richard Parker]
But the IRS brief in opposition to the motion for preliminary injunction lays out the other relevant language, including the requirement that the federal exchanges submit information about subsidies (which would obviously be surplusage if they provided no subsidies).

[/QUOTE]

Submitting information could be for any number of reasons. It could be part of hardball politics to coerce states into establishing plans by having voters see that they could have saved $X last year if only their state would establish an exchange. Max Baucus alluded to that at one point. It could be because the government wants to collect statistics about how much could be saved by having 50 state exchanges.

That might not be the most likely interpretation, but you don’t do interpretation when the words are unambiguous. Further saying that the government wanted to collect useless data or coerce states is not absurd at all.

145

That’s kind of the point, though. I’m not saying the language of the ACA specifically indicates that 1321 exchanges are to be treated identically. I’m saying it’s ambiguous, because all these provisions are contradictory. The phrase “established by the state under 1311” appears a half dozen times throughout the act and in several cases is tied to things which obviously are not supposed to be dependent on whether the state set up its own exchange (like coordination with SCHIP and DHHS certification of state pediatric coverage plans.)

ETA: that was in response to Falchion.

146

For the record, I hope these lawsuits succeed, because it will force my state to set up a goddamn exchange.

147

Single-payer.

148

Established by the UN as part of their takeover and paid for with the proceeds from selling all the confiscated guns.

149

…to gays, lesbians and illegal aliens.

150

Your position is that having the federal exchanges submit the number “0” each year in an official report that is prepared by the federal government and sent to itself–a number that is known a priori since it must be 0 as a matter of law–is “hardball politics to coerce states into establishing plans by having voters see that they could have saved $X last year if only their state would establish an exchange”?

Perhaps I should offer to contract out for the government the valuable goal of “collecting statistics” for them on federal subsidies under your view of the statute? Why, I think I could write such a report for a mere $1000. What a deal!

I submit that this is the very definition of rendering a provision nonsensical. And, of course, this isn’t the only provision in tension with your in-a-vacuum reading of “established by the State.”

This is incorrect as a matter of law. Let’s walk through some simple examples.

Example #1: The statute indirectly defines a term

Example #2: The statute is internally contradictory

Example #3: The statutory term is contextually defined

In this statute, we have a little bit of each of these examples going on.

151

Two more points worth making:

(1) Under the theory that “established by the State” means “not established by the Secretary in the place of the state,” no one in a federal exchange would be able to enroll in *any *qualified plan. That’s because a “qualified individual may enroll in any qualified health plan available to such individual and for which such individual is eligible,” but a “qualified individual” is an individual “who resides in the State that established the Exchange.” 42 U.S.C. § 18032(f)(1)(A)(ii).

(2) Using the “established by a State” language to mean “no subsidies for federal exchanges” would have been a remarkably confusing and indirect way to say it. Let’s not forget that this provision appears in a section of law setting the ceiling for subsidies, calculating the subsidies as the amount of premiums for the plan “enrolled in through an Exchange established by the State…” That’s an incredibly indirect way of saying “no subsidies for federal exchanges.”

152

You may be on to something there and I am close to agreeing with you. It does seem absurd to require so much of exchanges “established by a state” that clearly applies equally to federal exchanges. But even if I concede that there is an ambiguity or a contradiction, how do we get from “established by a state” to “established by a state or by the Secretary if a state decides to be a poopy pants and not establish an exchange.”

I’m not throwing in the towel yet, but I’ve pulled it out of the linen closet. :slight_smile:

153

I see a few possibilities, in descending order of plausibility in my eyes:

(1) You read the other provisions to be saying, collectively, that an exchange established by the Secretary counts for all purposes as “an exchange established by the State.” Not that they aren’t different things, that is, but that the second thing is defined as getting all the rights and benefits that have been laid out for the first thing.

(2) You simply find that this language conflicts with the meaning of other parts of the statute, and then resolve the conflict using extra-textual means (e.g., intent).

(3) You read “established by the State” to mean “established by Obamacare as distinct from separate private exchanges or pre-existing state and federal exchanges.”

Or, I suppose, some combination of the above.

Out of sheer nerdery, I’m looking now at the drafting history to see if earlier versions suggest that the federal stuff was grafted (inelegantly) onto a version that only mentioned state exchanges. That would make a lot of sense, I think, and explain the grafted-on feeling of the federal stuff.

154

“State” is separately, explicitly and unambiguously defined by the statute as one of the fifty states or DC.

155

That was an interesting adventure. I can report, dear readers, that the language about the subsidy calculation at issue in this thread “established by the State…” first appears in the October 19, 2009 Chairman’s Mark (i.e., draft) bill submitted for the consideration of the Senate Finance Committee, S. 1796. That bill does not contain the provision empowering the Secretary to establish an exchange.

So the federally-established exchange idea was indeed grafted onto an earlier version of the bill that simply did not contemplate federal exchanges. That idea either came out of the HELP Committee (and I can’t seem to find their draft bill) or was added some time before PPACA as we know it was proposed to the Senate as a whole on November 19, 2009.

Not that any of this especially matters legally, but between us dopes, I think this supports the theory that the federally-established exchange was inelegantly grafted into the existing proposal featuring only state exchanges, which explains the seemingly conflicting language.

I’ll see if I can find the HELP proposal later.

156

Aha!

The HELPbill is indeed where the federal exchanges come from, and it is quite enlightening. It calls exchanges “Gateways” and of the federally-established “Gateway” (which uses nearly identical language to the final bill) it says:

Again, drafting history is unlikely to be very important here. But I think you can see pretty clearly looking at the HELP and Finance bill how the final product came into being and the intent with respect to the federal exchange.

Notably, however, the HELP version seems to make credits for the federal exchanges contingent on the state making itself subject to the employer mandate, so nullification might have worked even more directly with this language.

157

I’m convinced. Towel thrown. I go with your #1 above. The term “established by a State” is a term of art throughout the bill/law referring to all ACA exchange plans. Those “established by the Secretary” are functionally equivalent in all respects, step into the shoes of state plans when a state fails to act, and my previous reading was too hyper-literal. To get to my result the language should have said, “established by a State, and only by a State” or some such qualifier.

The plain text creates an absurdity and the law must be read in pari materia to make the statute harmonious. My quick draw legal advice without full research was worth every penny you all paid for it. :slight_smile:

158

Somewhat amusingly, I am somewhat closer to your (original) side of the debate than I was when we began. To me, the fact that the earlier versions of the bill did not contain the federal substitute provision at all suggests that the federal exchanges should not be treated as functionally equivalent. Having said that, I still think the IRS interpretation will be upheld on the merits.

159

Yeah, you must specify which one of my conflicting stances you are referring to. :slight_smile: But why do the early drafts matter? The final one that established the federal exchanges control, even if early on Congress was going to stay out of the exchange business.

160

Because I think the plain language of the statute (when read as a whole) is ambiguous- hence the need for deference- so resort to other references like legislative history would be necessary to determine if the IRS’ construction is reasonable.