The Affordable Care Act authorizes the federal government to set up an exchange for the purchase of health insurance if a state decides not to; but the statute says that subsidies to consumers are available only on exchanges “established by the state.” That excludes federal exchanges. The implications are enormous: Without subsidies to nearly 5 million Americans buying policies on federal exchanges in three‐dozen states, a core feature of Obamacare becomes dysfunctional.
The government maintains that “established by the state” is a “term of art” — a “technical” phrase embracing more than its actual words denote. When a state opts out, the federal government simply steps in as the state’s surrogate. Functionally, the federal exchange is — pardon the doublespeak — an exchange established by the state. Never mind the assault on federalism.
After perusing a few briefs among the 32 filed on the government’s side, Ms. Greenhouse arrives at these conclusions: First, no reasonable person reading the ACA in full context would deduce that consumers on federal exchanges were to be denied subsidies. Second, when the ACA was enacted, no one interpreted the statute in that manner. Third, state sovereignty is compromised if states that decline to establish exchanges are given no notice of the dire consequences.
For a different perspective, however, consider two briefs (out of 22 supporting King) that Ms. Greenhouse may have overlooked. The first is a filing by Case Western law professor Jonathan Adler and my colleague Michael Cannon, and the second is a brief from Oklahoma and five other states. Those two briefs persuasively counter the points raised by Ms. Greenhouse.
First, regarding Congress’ intent: Recourse to intent may be necessary when the text of a statute is ambiguous. But there is nothing ambiguous about “established by the state.” Moreover, Congress has repeatedly conditioned the receipt of federal benefits on state cooperation. No one should have been surprised or puzzled by yet another program bribing the states to join. The real mockery of legislative intent would be subsidies without strings attached. Think LBJ’s Medicaid, Richard Nixon’s health care reform, Bill Clinton’s SCHIP and his Health Security Act, George W. Bush’s Health Coverage Tax Credit, and President Obama’s Medicaid expansion — all of which withheld federal benefits unless the states jumped through various hoops. The Obamacare subsidy scheme is just one more in a long list of federal carrots and sticks. Congress’ intent was both obvious and commonplace. None other than Jonathan Gruber, a key Obamacare architect, had this to say long before King was filed: “[I]f you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”