Topic: Law and Civil Liberties

Statement on D.C. Circuit’s Ruling In Halbig v. Burwell

In August 2011, the Internal Revenue Service proposed offering subsidies through health insurance Exchanges established by the federal government, even though the Patient Protection and Affordable Care Act clearly and repeatedly provides those subsidies are available only “through an Exchange established by the State.” Due to the PPACA’s interrelated provisions, the decision to offer unauthorized subsidies in federal Exchanges also triggers unauthorized taxes against millions of individuals and employers in the 36 states that ultimately opted not to establish Exchanges. When the IRS finalized this proposal in May 2012, it cited no authority for its decision to depart from the clear language of federal law.

Jonathan Adler and I were the first to criticize this decision in August 2011, and have continued to show how it is contrary to federal law and the PPACA’s legislative history.

Today, a panel of the U.S. Court of Appeals for the D.C. Circuit – known as the second-highest court in the land – ruled in Halbig v. Burwell that the Obama administration is indeed imposing taxes and spending funds through those 36 federal Exchanges without statutory authority, and indeed contrary to the plain language of the PPACA.

Simply put, the President is violating the law.

Unlike other courts who have examined Halbig and related cases, the D.C. Circuit looked at the totality of the evidence, reached the only conclusion the law and the evidence permit, and struck down the IRS rule.

The court rejected the seemingly endless string of legal arguments the administration offered in defense of its actions. Despite those arguments, the court held, “the government offers no textual basis…for concluding that a federally-established Exchange is, in fact or legal fiction, established by a state.” As a result, the PPACA “does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges” and the Obama administration’s decision to offer them anyway is not only unauthorized but “gives the individual and employer mandates…broader effect than they would have” if the IRS followed the law.

While the dissent was political, focusing on the plaintiff’s motives, the opinion of the court was authored by Judge Thomas B. Griffith, whom the Washington Post has described as “widely respected by people in both parties, and those who have worked with him elsewhere regard him as a sober lawyer with an open mind. There is considerable reason to think he would make a fine judge.” His nomination to the D.C. Circuit drew praise from prominent Democrats including Seth Waxman and David Kendall. Indeed, then-senator Barack Obama himself supported Griffith’s nomination. Griffith noted that while the court’s ruling could have a significant impact on the PPACA, “high as those stakes are, the principle of legislative supremacy that guides us is higher still.”

The D.C. Circuit applied the law that Congress enacted. Any downstream effects of Halbig are the result of the PPACA itself, not today’s ruling. If those effects are intolerable, then it is up to Congress to change the law, not the IRS. If Halbig results in people losing health-insurance subsidies, the blame lies with a president who recklessly offered millions of Americans tens of billions of dollars in subsidies he had no authority to offer, that could vanish with a single court ruling.

Government Can’t Rewrite Obamacare Text Without Legislation

The D.C. Circuit ruled today that the government isn’t Humpty Dumpty and so statutory text doesn’t mean whatever the government says it means.  The provision at issue, which grants tax credits for people to buy health insurance, only applies to people buying policies through “exchanges established by the State”–which in any sane world can’t apply to exchanges established by the federal government. The fact that the vast majority of states have declined the federal government’s offer to establish exchanges–the list grows daily as initially supportive states’ exchanges fail–and that the resulting system thus doesn’t function as Obamacare’s supporters hoped is of no moment.

The government would have the IRS and courts rewrite the law to fix its massive structural weaknesses. But neither executive-agency bureaucrats nor judges can change the text of the Affordable Care Act, after-the-fact legal rationalizing notwithstanding. Today’s ruling shows that Obamacare, a cynical political bargain that lacked popular support from day one, simply doesn’t work as conceived. It’s time to repeal this Frankenstein’s monster and instead pass market-based health care reform that lowers costs, expands choice, and increases quality-all while respecting the rule of law.

Read Cato’s brief in Halbig v. Burwell, which I previously blogged about here.

Halbig v. Burwell Winners Outnumber Losers by More than Ten to One

Today at DarwinsFool.com, I released estimates of the impact of a potential ruling for the plaintiffs in Halbig v. Burwell, one of four cases currently before federal courts claiming that the subsidies and taxes the IRS is implementing in the 36 states with health-insurance Exchanges established by the federal government are illegal. The Patient Protection and Affordable Care Act repeatedly says those taxes and subsidies are authorized only “through an Exchange established by the State.”

Left-leaning groups and media outlets that defend the IRS are attempting to portray a potential ruling for the Halbig plaintiffs as catastrophic, because it would put an end to the subsidies roughly 5 million individuals enrolled in federal Exchanges are currently receiving. As I explain in detail, those commenters ignore three crucial facts. One, a victory for the Halbig plaintiffs would increase no one’s premiums. It would merely stop the IRS from unlawfully shifting the cost of those overly expensive PPACA premiums from enrollees to taxpayers. Two, if federal-Exchange enrollees lose subsidies, it is because the courts will have found those subsidies are, and always were, illegal. And three, if the Halbig plaintiffs prevail, the winners in the 36 states with federal Exchanges would outnumber the losers by more than ten to one.

As I explain at Darwin’s Fool, here is what the IRS’s defenders don’t want you to know about the impact of a potential Halbig victory.

  • A Halbig victory would free more than 8.3 million individuals from the PPACA’s individual mandate. That’s how many people in those 36 states the IRS is currently subjecting to the individual-mandate tax without statutory authorization.
  • In the 36 states with federal Exchanges, a Halbig victory would free 250,000 firms and 57 million employees from the PPACA’s employer mandate. That’s how many people the IRS is unlawfully subjecting to the employer mandate.
  • The number of winners under a Halbig victory is therefore more than ten times larger than the 5 million people who would lose an illegal subsidy.
  • Those 5 million people are “losers” not because they were deprived of an illegal subsidy. Regardless of one’s position on the PPACA, we can all agree that courts should put an end to illegal government spending whenever they can. Those people are “losers” because the Obama administration recklessly induced them to purchase overly expensive Exchange coverage with the promise of billions of dollars in subsidies that it has has no authority to offer, and that could disappear with a single court ruling.

I also provide state-level estimates of the number of firms and individuals Halbig would free from these mandates. For example:

  • A Halbig victory would free nearly 1 million Floridians from the individual mandate, and more than 16,000 firms and 5.1 million Floridians from the employer mandate.
  • It would free more than 1.5 million Texans from the individual mandate, and free more than 24,000 firms and nearly 7 million Texans from the employer mandate.
  • A Halbig victory would also enable the 14 states (plus D.C.) that established Exchanges to exempt residents and employers from those mandates by switching to a federal Exchange, as well as create political and economic incentives for states to make the switch.
  • If the Halbig plaintiffs prevail, the 14 establishing states (plus D.C.) could cumulatively exempt 3.8 million residents from the individual mandate and exempt 123,000 firms and nearly 29 million residents from the employer mandate.
  • California, for example, could exempt 1.7 million residents from the individual mandate, and exempt 32,000 firms and 9.4 million workers from the employer mandate.
  • Though those states would lose Exchange subsidies if they switched to a federal Exchange, the much larger number of firms and residents who would benefit could still pressure state officials to make the switch.
  • These states could also experience economic pressure to switch to a federal Exchange, because the employer mandate (which increases the cost of doing business) will be operative in their states but not in states that opt for a federal Exchange. Establishing states could therefore lose jobs to federal-Exchange states, unless they become federal-Exchange states themselves.

Click here for state-by-state data on the impact (or potential impact) of a Halbig ruling.

Halbig v. Burwell Would End The Disruption

The U.S. Court of Appeals for the D.C. Circuit could issue a ruling today in Halbig v. Burwell, one of four lawsuits challenging an Internal Revenue Service rule that effectively implements the Patient Protection and Affordable Care Act’s exchange subsidies where the statute does not permit: in exchanges that were not “established by the State” – i.e., federal exchanges. 

Tim JostNorman OrnsteinAvalere Healththe Urban Institute, the Robert Wood Johnson Foundation, and others who support the Obama administration’s position (we cannot say they support PPACA) predict much disruption if the courts rule against the administration. 

Over at DarwinsFool.com, I have a new post explaining how Halbig would put an end to the disruption, which is much greater than they recognize:

In 2011, the Obama administration issued an IRS rule in which it unilaterally decided to tax, borrow, and spend billions of dollars. Treasury and IRS officials apparently knew they did not have statutory authority to do it. They did it anyway.

The impact of that IRS rule has been enormous. Insurers chose to participate in the PPACA’s Exchanges who otherwise would not have. Employers have reconfigured their health insurance benefits, eliminated jobs, and/or cut hours for perhaps millions of employees, including teaching assistants and restaurant workers, to comply with a mandate from which they are, by law, exempt. Millions of Americans are already paying penalties under, or have purchased coverage to comply with, an individual mandate from which they are, by law, exempt. Nearly 5 million Americans agreed to enroll in Exchange coverage with the promise of subsidies the Obama administration has no authority to offer to them, that could vanish with one court ruling or by regulatory fiat. With every unauthorized subsidy that flows from the IRS to private insurance companies, the federal debt rises above the level authorized by law, imposing an unauthorized tax burden on current and future generations.

The IRS rule has had a sweeping impact on the political process as well. It denied states—denied voters—the use of a policy lever Congress granted to them: the ability to veto the PPACA’s subsidies, employer mandate, and individual mandate. In effect, the rule disenfranchised voters in the 36 states that exercised those vetoes. Had the administration followed the law, those 36 vetoes would have led to changes in the PPACA, and possibly changes in Congress. Instead, the IRS rule altered the outcome of congressional votes and, likely, of congressional elections. Americans voted in 2012 as if there were not a gaping hole in the PPACA that would expose its full cost and destabilize its regulatory scheme. The IRS rule is still influencing congressional elections today. Potential candidates are deciding whether to enter the 2014 congressional races as if that gaping hole does not exist; as if the law Congress enacted were more popular and successful than it actually is…

The purpose of Halbig is to end the massive economic and political disruption caused by the president’s decision to ignore the clear statutory language he is sworn to uphold.

Read the whole thing.

Hold Pakistan Accountable For Blasphemous Oppression

In a world aflame, religious minorities are among those who suffer most.  Pakistan is notable for its failure to protect religious liberty, the most basic right of conscience.

The State Department recently reported on Pakistan that “The constitution and other laws and policies officially restrict religious freedom and, in practice, the government enforced many of these restrictions.  The government’s respect for and protection of the right to religious freedom continued to be poor.”

Minority faiths frequently face violent attack.  Although Islamabad does not launch these assaults, it does little to prevent or redress them.  This failure, the State Department explained, “allowed the climate of impunity to continue.”

The most common tool of persecution may be the charge of blasphemy which, explained the U.S. Commission on International Religious Freedom, is used to “target members of religious minority communities and dissenting Muslims and frequently result in imprisonment.”  The blasphemy laws are made for abuse:  “The so-called crime carries the death penalty or life in prison, does not require proof of intent or evidence to be presented after allegations are made, and does not include penalties for false allegations.”

With evidence unnecessary, the charge is routinely used in personal and business disputes.  Penalties are not limited to the law.  Since 1990, at least 52 people charged with blasphemy have been killed before reaching trial.

Should Boehner Sue Obama?

Well into our sixth year with this president, we’re long past the point of having to demonstrate his indifference to the rule of law—the unconstitutional appointments, the Obamacare rewrites, the IRS and VA scandals, the list goes on.  In fact, it’s Obama’s indifference simply to doing his job that lately has drawn attention. “The bear is loose”—on the golf course, in the pool hall, dining late with athletes and entertainers. It’s driven House Republicans to talk of impeachment and of a House suit against him for his failure to faithfully execute the laws.

Both would be a mistake, Thomas Sowell tells us this morning, and he’s right. As November’s mid-term elections loom just ahead, either course would shift public attention from Obama to his critics, just as happened when the House impeached President Clinton. Not that there isn’t a case to be made for both impeachment and a suit. But impeachment, at the end of the day, is less a legal than a political matter, as we saw in the Clinton episode. So too is the suit that Speaker Boehner is now considering. Both proposals, therefore, have to be looked at through that lens.

To a good many in the House, however, a suit against the president seems like the lesser but wiser course. And contrary to first impressions, including my own, such a move is not as far-fetched as it might seem. In fact, if one takes the time to wade through the dense testimony that our good friend Elizabeth Price Foley presented to the House Judiciary Committee last February, it soon becomes clear that the standing objection that arises immediately with such a suit could likely be overcome in this case.

But even if a suit could get off the ground, would one be wise? True, unlike with impeachment, where the House is the “grand jury” and the Senate the “court,” in this case it wouldn’t be the other political branch attacking the president. Rather, attention would be directed to the third, non-political branch of government, where the action would be happening, and that would soften the attack to some extent, making it seem less a political than a legal charge. But those are subtleties. In the hands of the media, they’d likely pass over most heads as we move toward November.

And what turns on November? Nothing less than the courts themselves, as Sowell points out. To elaborate just a bit on the point, after November, Obama will have two more years in office. He got off to a slow start exercising the most long-lasting of a president’s powers, the power to nominate judges for lifetime appointments on our federal courts. But he’s catching up. We saw just last month how his two Supreme Court appointments have read the Constitution on some of the most important cases of the Court’s just-concluded term.

Well it’s no different below, especially in the courts of appeal, except that it’s less noticed. We tend to focus on the Supreme Court, which blinds us too often to the fact that the Court decides only 70 or so cases a year while the 13 federal appellate courts terminate some 60,000 cases—and they don’t always follow the guidance of the Supreme Court in doing so. It’s crucial, therefore, given the inclination of this president to see his view of the Constitution reflected in the people he nominates for seats on those courts, to have a Senate over the next two years that will carry out its advice and consent responsibilities more responsibly than has been done under the leadership of Harry Reid. Anything that distracts from that focus should be avoided.   

Bloomberg: “I Don’t Think There’s Roads” Where Voters Backed Gun Rights

Michael Bloomberg has now fully completed his transition from un-libertarian but arguably competent New York City mayor to abrasive, polarizing figure-of-fun on the national scene. Having dumped a sizable chunk of his billion-dollar fortune into gun control and nanny-state campaigns around the country, Bloomberg now grants an interview in the upcoming Rolling Stone, where he takes credit for Colorado’s passage of a law restricting firearms liberty and along the way casually insults substantial portions of that state’s population:

In Colorado, we got a law passed. The NRA went after two or three state Senators in a part of Colorado where I don’t think there’s roads. It’s as far rural as you can get. And, yes, they lost recall elections. I’m sorry for that. We tried to help ‘em.

“Where I don’t think there’s roads.” The Colorado media has been having a lot of fun with that one. The two successful recalls were in Colorado Springs (pop. 430,000) and Pueblo (pop. 100,000). It took me about two minutes online to establish that Colorado Springs, best known as home to the Air Force Academy, in fact has a share of residents with graduate degrees that’s 40% above the national average, a figure I believe compares favorably to that of the combined five boroughs of NYC. It has roads, too, as does Pueblo.

Lesson of Mayor Bloomberg’s interview: when people show contempt for your liberty, it can be a sign that they have contempt for you, too.