# *NYT* Shows No One Buys Government’s ‘Term of Art’ Argument in *King v. Burwell* While the *Times*’ sources may have intended to undercut the *King* challengers’ case, they, like others before them, inadvertently bolstered it. May 26, 2015 • Commentary By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) This article appeared on *[National Review (Online)](http://www.nationalreview.com)* on May 26, 2015. The Supreme Court is likely to rule on *[King v. Burwell](http://www.forbes.com/sites/michaelcannon/2013/12/31/for-reporters-law-professors-citizens-a-reference-guide-to-president-obamas-illegal-obamacare-taxes/)* by the end of June. The *King* plaintiffs are four Virginia taxpayers. They claim the [Patient Protection and Affordable Care Act](https://object.cato.org/sites/cato.org/files/documents/20100423_ppaca_final_sen_recon.pdf) (ACA) does not authorize the Internal Revenue Service to issue certain subsidies or impose certain taxes in states like Virginia, whose health-insurance “Exchanges” were established by the federal government rather than the state itself. The challengers argue Congress intentionally authorized those taxes and subsidies only—as the ACA says—“[through an Exchange established by the State](http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapA-partIV-subpartC-sec36B.pdf).” A win for the challengers means: more than [57 million Americans](http://www.forbes.com/sites/michaelcannon/2014/07/21/halbig-v-burwell-would-free-more-than-57-million-americans-from-the-acas-individual-employer-mandates/) in up to 38 states will be freed from the ACA’s individual and employer mandates, with [considerable economic benefits](http://americanactionforum.org/research/taking-stock-the-potential-impact-of-king-v.-burwell); and perhaps [8 million](http://acasignups.net/15/04/16/mazel-tov-gop-winning-king-v-burwell-will-screw-your-base-while-helping-those-you-hate) consumers will see the full cost of their ACA plans. The Obama administration, on behalf of the IRS,[argued](https://object.cato.org/sites/cato.org/files/documents/respondentsbrief_halbig_v_burwell14-114.pdf) before the Supreme Court that the statutory phrase “through an Exchange established by the State” is actually “a term of art that includes an Exchange established for the State by HHS.” Today’s *New York Times* [asks](http://www.nytimes.com/2015/05/26/us/politics/contested-words-in-affordable-care-act-may-have-been-left-by-mistake.html) how the phrase “through an Exchange established by the State” got into the ACA’s subsidy-eligibility rules: > The answer, from interviews with more than two dozen Democrats and Republicans involved in writing the law, is that the words were a product of shifting politics and a sloppy merging of different versions. Some described the words as “inadvertent,” “inartful” or “a drafting error.” A few observations about the *Times*’ account. **1. Senators and staff involved in the process don’t buy the government’s “term of art” argument.** None of the senators or staffers quoted in the article echoed the government’s argument that the phrase “through an Exchange established by the State” is a “term of art” meant to encompass Exchanges established by the federal government. This is not too surprising. The government itself didn’t cook up that argument until *King* reached the Supreme Court. As Jonathan Adler and I explain [here](https://object.cato.org/sites/cato.org/files/articles/cannon-jhppl-v40n3-2015.pdf), there are reasons to believe the government doesn’t even believe its own “term of art” argument. While the *Times*’ sources may have intended to undercut the *King* challengers’ case, they, like others before them, inadvertently bolstered it. Indeed, by describing “through an Exchange established by the State” as “inadvertent,” “inartful,” or “a drafting error,” the senators and staff implicitly acknowledge the phrase clearly does not encompass federal Exchanges. **2. The ACA’s authors rejected “term of art” language.** The *Times* explains that Majority Leader Harry Reid (D., Nev.) and other Senate Democrats rejected language that would have converted “through an Exchange established by the State” into a term of art. The ACA was the merged product of two bills, [one](http://beta.congress.gov/111/bills/s1796/BILLS-111s1796pcs.pdf) produced by the Senate’s Finance Committee and the [other](http://beta.congress.gov/111/bills/s1679/BILLS-111s1679pcs.pdf) by the Senate’s Health, Education, Labor, and Pensions (HELP) Committee. The *Times* explains—as Adler and I [explained](https://object.cato.org/sites/cato.org/files/articles/cannon-adler-health-matrix-23.pdf) three years ago—that in merging the two bills, Reid *et alia* rejected language from the HELP bill that would have created full equivalence between state-established and federally established Exchanges. (Adler and I also showed that Congress rejected a House-passed bill that contained similar equivalence language.) The fact that the law’s authors rejected such language suggests the non-equivalence that appears in the ACA was intentional. **3. Senators, staff, and reporters still don’t understand the ACA or its legislative history.** The *Times* article, which is based on the recollections of senators and staff, provides ample evidence that those recollections are unreliable indicators of what Congress actually intended. Here are a few examples. The *Times* reports that the HELP bill “clearly allowed subsidies in all states.” On the contrary, as even the [government](https://object.cato.org/sites/cato.org/files/documents/respondentsbrief_halbig_v_burwell14-114.pdf) and [its allies](http://law2.wlu.edu/deptimages/Faculty/jost.exchange%20georgetown%20final.uploadcopy.pdf) acknowledge, the HELP bill conditioned Exchange subsidies on states implementing that bill’s employer mandate. The *Times* claims the ACA’s federal-Exchange provisions come from the HELP bill. On the contrary, they are a reorganized version of [the Finance bill’s federal-Exchange provisions](https://www.congress.gov/111/bills/s1796/BILLS-111s1796pcs.pdf). The Senate Finance Committee’s former Democratic staff director claims the idea of a federal fallback Exchange did not appear in the Finance bill. On the contrary, federal fallback Exchanges appeared in the [chairman’s mark](https://object.cato.org/sites/cato.org/files/documents/09160920americas_healthy_future_act.pdf) (p. 11) introduced on September 22, 2009, and in every [subsequent draft](https://www.congress.gov/111/bills/s1796/BILLS-111s1796pcs.pdf) of the Finance bill and the ACA. When merging the Finance and HELP bills, Reid did not just “\[take\] the language on tax credits from the Finance Committee.” Under his supervision, drafters *added* the restrictive language “through an Exchange established by the State” to the ACA’s tax-credit eligibility rules in multiple places. As Adler and I [explain](https://cei.org/sites/default/files/KING%20v.%20BURWELL%20-%20No.%2014-114%20-%20Amicus%20Brief%20of%20Jonathan%20H.%20Adler%20and%20Michael%20F.%20Cannon%20-%20December%2030%202014.pdf) in an amicus brief to the Supreme Court, “Restricting tax credits to Exchanges ‘established by the State’ was no accident. This phrasing was added to Section 1401 in multiple places at multiple times in the drafting process … under the supervision of Senate leaders and White House officials…. This requirement survived multiple rounds of revisions throughout the drafting process, including revisions to the cross-references attached to it.” The *Times* and its sources speak of conditioning tax credits on state cooperation as if it were some foreign concept. No one acknowledges the [chairman’s mark](https://object.cato.org/sites/cato.org/files/documents/09160920americas_healthy_future_act.pdf) also conditioned tax credits for small businesses on state cooperation: “[If a State has not yet adopted the reformed rating rules, qualifying small employers in the state would not be eligible to receive the credit.](https://object.cato.org/sites/cato.org/files/documents/09160920americas_healthy_future_act.pdf)” Nor do any of the sources acknowledge the HELP bill conditioned Exchange subsidies on state cooperation. The *Times* cites the former chief of staff to Senate Finance Committee chairman Max Baucus (D., Mont.) as saying Baucus “would never have agreed to an arrangement that jeopardized tax credits for his constituents.” Yet he proposed exactly that with respect to small businesses in both his [chairman’s mark](https://object.cato.org/sites/cato.org/files/documents/09160920americas_healthy_future_act.pdf) and [the Finance bill](https://www.congress.gov/111/bills/s1796/BILLS-111s1796pcs.pdf). **4. Consider the sources.** Aside from the ACA itself and its antecedent bills — all of which Adler and I [covered](https://object.cato.org/sites/cato.org/files/articles/cannon-adler-health-matrix-23.pdf) three years ago — the *Times* article presents no contemporaneous, primary-source material. It includes no contemporaneous written or spoken statements from senators, Senate staff, Senate legislative counsel, House members, or House staff. Instead, it relies on the unreliable recollections of members of Congress and staff, whose contributions consist mainly of professions of ignorance: *I don’t ever recall … It was never part of our conversations … I don’t know how else to explain it … As far as I know, it escaped everyone’s attention … I didn’t ever hear anybody suggest … I didn’t ever hear…* Indeed, they’re not even the right senators and staff. The Republican staffers quoted in the article were not involved in drafting the ACA. The Democratic and non-partisan staff most responsible for the statutory language in question were unavailable. It is not clear that *any* of this article’s sources actually helped draft the relevant language. While the *Times*’ sources may have intended to undercut the *King* challengers’ case, they, [like](http://www.wbur.org/npr/122483567) [others](http://www.forbes.com/sites/michaelcannon/2015/02/10/king-v-burwell-in-2013-nelson-admitted-he-didnt-know-if-aca-offered-subsidies-in-fed-exchanges/) [before](http://www.vox.com/2014/11/20/7253591/obamacare-lawsuit-obama-cannon) [them](http://www.forbes.com/sites/michaelcannon/2014/07/25/oops-gruber-did-it-again/), inadvertently bolstered it. They acknowledged, perhaps inadvertently, that they did not pay as much attention to the bill as maybe they should have, that they had [no choice](http://www.edition.cnn.com/TRANSCRIPTS/1003/03/cnr.05.html) but to enact a bill [they knew was flawed](http://www.newrepublic.com/blog/the-treatment/47-health-policy-experts-including-me-say-sign-the-senate-bill), that the statute’s meaning is plain, and that the government’s “term of art” argument is unbelievable. They demonstrated why courts should rely on the plain meaning of statutes and ignore post hoc statements by members of Congress about what they really intended. ##### About the Author [![Michael F. Cannon](/sites/cato.org/files/styles/author_picture/public/2021-01/Michael%20Cannon.jpg?itok=0UROn8Dc)](/people/michael-f-cannon) ##### [Michael F. Cannon](/people/michael-f-cannon) Director of Health Policy Studies, Cato Institute [ ](https://x.com/mfcannon) [ ](mailto:mcannon@cato.org)