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5 media mistakes in the Halbig debate

Obamacare’s latest legal challenge won’t be adjudicated by people writing on the internet. But people writing on the internet will be damned if they don’t try.

Over the past few weeks, thousands of words have been written on Halbig v. Burwell, the Obamacare lawsuit that argues subsidies are illegal on the 36 federally-run insurance exchanges. Most of those words have been people talking past each other, about what the law's drafters did (or didn't) intend, and how that might matter for a potential Supreme Court hearing.

As someone who takes this lawsuit seriously and has followed it closely for more than two years, there are some things that I think are just getting lost in the media blitzkrieg — and are worth getting right here.

1) Administrative Law 101: The administration doesn't need to prove intent, just ambiguity

Lost in the back-and-forth about what Congress did or didn't intend is a key fact: the administration doesn't actually need to prove intent to defeat this Obamacare challenge.

Sure, the White House is trying to prove intent. Their primary argument is that a plain-text reading of the law suggests that federal and state exchanges are understood as perfectly equivalent. When Section 1321 of the Affordable Care Act directs the HHS secretary to establish "such Exchange" if a state doesn't create their own, "such Exchange" is understood to be "an Exchange established by the State under 1311".

But they have a fallback argument, too: If you don't agree with them on the plain-text reading, you should at least believe that the text at issue is ambiguous when read within the context of the entire statute. Under a legal doctrine called Chevron deference, ambiguous statutory language is punted to the agency implementing the law. It's a legal tie, but the tie goes to the government.

2) And the text of the law can be read as ambiguous. Yes, even the words "established by the State."

The plaintiffs make a seductively simple argument: an exchange "established by the State" simply cannot be an exchange that was actually set up by the federal government. Those are two different things.

And that’s a good argument, if we can be sure that Congress was very careful in the words that it chose.

For the law to be unambiguous, Congress needs to use language like "established by the State" to refer consistently to state-established exchanges. If we can identify instances where Congress used "established by the State" to refer to exchanges more generally, that signals that Congress wasn’t careful about the words that it chose. It signals ambiguity in the intent conveyed by those words. And ambiguity triggers deference to agency implementing the law.

Let’s say, for the sake of argument, that I agree "established by the State" in the tax credit calculation is most naturally read to withhold tax credits from federal exchanges. Does the story end there, in favor of the plaintiffs?

As it turns out, no.

"The ACA, for example, limits who can buy insurance on an exchange to those who ‘resid[e] in the State that established the Exchange,'" writes Nicholas Bagley, a professor of administrative and health law at the University of Michigan. "Read literally, this would prohibit anyone in states with federal exchanges from buying insurance on those exchanges. Federal exchanges would be useless. That can't be what Congress meant."

Halbig's proponents argue that the "established by the State" language must matter where the subsidies are concerned because Congress chooses its words carefully. If "established by the State" didn't matter, the phrase would be superfluous, and Congress simply doesn't use superfluous language.

But if the precise words Congress chooses always matter, then the entire section establishing federal exchanges is superfluous. The feds can set the exchanges up, but no one can enroll in them. Either that's true, or Congress sometimes used "exchange established by the State" to mean exchanges more generally.

Now we have a semantic dilemma — precisely the kind of ambiguity that typically triggers Chevron deference.

3) Medicaid expansion is a deeply flawed analogy

Challengers have repeatedly drawn a parallel between the exchanges and the Medicaid expansion. Under the initial intent of the law — before the Supreme Court made expansion voluntary — states were offered generous sums of money to expand the public program, the hypothetical "carrot." The "stick" was a big one: if states didn't expand Medicaid, funding was taken away for the entire program, not just the new population.

So it must make sense that they would do this for state exchanges, too: offer funding to scale them up, withhold funding if they don't.

This isn't quite right.

Congress wasn't scheming up something from nothing when it drafted the Medicaid expansion. Periodically during the program's 49-year history, they have tweaked the definition of "Medicaid-eligible" — mandating coverage of more children here, higher income limits for pregnant women there. States have had to accept these new eligibility definitions as part and parcel of the program. That's how Obamacare was going to work, just on a much bigger scale.

The legal logic behind the Supreme Court's decision to make Medicaid "optional" was not a straightforward judgment that expansion was "coercive" — though the Chief Justice did seem to believe that — but that Medicaid expansion was a fundamentally new and different program. It introduced new populations and a new financing scheme. It was Medicaid 2.0, and the federal government could not legally condition Medicaid 1.0 support on participation in Medicaid 2.0.

The state exchanges, built from scratch just for Obamacare, were always a "new program." And so, establishing state exchanges has always been fundamentally optional. That's why there's a federal backstop written into the law for the exchanges, but not for Medicaid. The government recognized the difference.

Starting a new program, without existing rules and regulatory regimes, Congress wouldn't have been oblique in their alleged scheme to withhold subsidies on federal exchanges. It is eminently clear from the bills that eventually became the Affordable Care Act that Congress knew how to use explicit conditions to threaten states; they did that in the old bills. But those conditions fell away in the final legislation.

"Congress wouldn't have pussyfooted around the threat to withhold subsidies from federal exchanges. It would have made the threat known, and in a manner that the states could understand," Bagley told me. "But in fact the states did not see any threat in the ACA — because there wasn't any such threat. In the Medicaid context, they emphatically understood the threat. That's the difference."

4) The "foresight error" argument could cut in favor of the government just as easily as it could cut against it

Following the rulings, a somewhat novel story emerged from conservatives who rejected the idea that this lawsuit is a consequence of sloppy drafting. Rather than being a "drafting error", some argue, perhaps this was a "foresight error." The text is clear on the subsidy threat, they argue, but Congress simply never fathomed that states would be noncompliant.

But this simultaneously assumes two things:

  1. It never occurred to Congress that states would refuse to set up exchanges, and
  2. They invented a giant stick (withholding subsidies) just in case states refused to set up exchanges.

To invent a grand scheme, Congress had to think about the grand scheme! And if they devised a grand scheme, they would have made their scheme more clearly. Clearly enough, at least, that it wouldn't confuse federal appeals courts.

If you say that "people believed all states would set up exchanges" because the subsidies would be withheld, so of course they would, you’re assuming the conclusion. But if Congress wasn’t thinking clearly about the consequences of the words it chose — due to a lack of foresight — that argument wholly supports the notion that Congress was imprecise in the words chose to evince its understanding of "exchanges." We can't sketch intent into the empty contours of "Congress wasn't thinking."

A related point: "All states will set up exchanges" and "subsidies are authorized on federal exchanges" are not mutually exclusive beliefs. The reason many people believed states would establish their own was that the carrot was so big; the ACA authorized unlimited funds for states to scale up marketplaces.

But federal fallbacks could be required for reasons other than noncompliance. Suppose a state faltered on the technological front, and the federal government had to step in. Or they may have had a legislature that met every other year, like Texas, preventing authorizing language from being passed. Do Halbig proponents really believe that Obamacare would withhold subsidies from citizens in these cases?

5) The courts won't really care what Jonathan Gruber — or reporters — knew, or when they knew it

Normally, the news cycle would have swallowed Halbig by now and we'd have moved on to other important matters — like, say, whether or not the doctor shortage is real.

But then, something happened: a blogger surfaced a video of Jonathan Gruber, one of Obamacare's architects, appearing to make the plaintiffs' case. And then another blogger found a second video. Unabashed glee from Obamacare's opponents ensued.

I have thoughts on what Gruber said in the videos, but those thoughts aren't important to share here, because those videos aren't very important. Not in any legal sense. The courts are simply more concerned with the actual text of the law than what people are saying about the text of the law. People are mercurial. Statutory text is not.

Yes, one set of plaintiffs filed a motion using Gruber's comments, but it wasn't to "prove" that they were right and the government was wrong. They use Gruber's comments as evidence against the theory that it would be "implausible" for Congress to ever condition subsidies. The plaintiffs don't need Jonathan Gruber for that. The original Senate HELP bill undercuts the notion of implausibility without his help — it created explicit conditions — and it does so in the courts' preferred medium: written legislation.

This  general sentiment is shared by Jonathan Adler, an administrative law professor and key architect of these court cases.

Sure, you could say that these "revelations" might bias the judges on a personal level. And maybe that's true. But, as Bagley points out, "If you think what Gruber said is some evidence about what the ACA means, you can't ignore other, similar evidence. That's cherry-picking."

There's a litany of other people intimately involved with the design, drafting, and implementation of Obamacare who have offered comment. Peter OrszagLiz FowlerJohn McDonoughDoug Elmendorf. The congressional staff who drafted the law and the members of Congress who voted for it. CBO staffers who scored the law. If Gruber matters, they all do, too.

In the legal challenge and in the conservative media, there's been a revision of history, one that Brian Beutler has artfully covered. But the same legal nihilism holds true for the experience of journalists. It's useful for readers to understand what they learned during the tumult of Obamacare's genesis, but the courts won't — and maybe shouldn't — care.

As for the "But Gruber was lying in documents he filed with the court!" line, even Michael Cannon — a libertarian legal scholar who deserves a hefty share of credit for the existence of these lawsuits — isn't seizing on that.

We've already wasted far too much time and incivility on this thread of the debate.