Halbig

The appeals court has ruled against the administration. This really guts ObamaCare.

[Update a few minuts later]

Jonathan Adler has some initial thoughts:

If this decision is upheld, it will present some three-dozen states with a choice: Establish exchanges so as to authorize tax credits for state citizens while also triggering penalties on employers and individuals who do not wish to purchase qualifying health insurance. As my co-author Michael Cannon notes, the implications of this decision go beyond its effect on tax credits. How will states respond? Time will tell. As with the Medicaid expansion, it is not entirely clear how states will react now that so much of PPACA implementation is clearly in their hands.

A lot of dominoes could fall from this.

[Update early afternoon]

Thoughts from John Hinderaker:

If the D.C. Circuit does re-hear the case en banc, it may reverse today’s panel decision. If that happens, there will no longer be a split between the circuits, but one would think the Supreme Court will take the case regardless. In that event, we may be back in familiar territory, with Justice Anthony Kennedy deciding what Congress had in mind. If you think that discerning Congress’s intent is, in this case, a fool’s errand, since no one in Congress had read the law before voting on it, you are probably right. Which is one reason why courts look to the words of a statute rather than to the subjective intentions of 535 legislators. Given that Justice Kennedy was willing to deal Obamacare what he thought was a death blow under the Commerce Clause, Democrats cannot view their ultimate prospects with much confidence.

Especially after the election.

46 thoughts on “Halbig”

  1. Could someone with legal expertise explain what will happen next? Does this put a halt on Obamacare, or is it business as usual until the Supreme Court weighs in?

    1. I don’t think the court enjoined, so the administration will just continue to ignore the law. It may go to an en banc appeal in DC, which is loaded with Obama appointees, so after that ruling, it will probably go to SCOTUS.

    2. It’s business as usual until the Supreme Court weighs in. First the entire D.C. Circuit Court of Appeals will hear the case (today’s decision was made by 3 of the 11 judges on that panel). Whoever loses that decision will almost certainly appeal to the Supreme Court. At that point the Supreme Court will decide whether to take the case, or leave the D.C. Circuit decision in place.

      There’s a good explainer here.

      Disclaimer: I am not a lawyer.

      1. Ya, I don’t think anyone expected Obama to say, “Looks like the courts ruled against me, guess I will change my behavior.”

  2. The most nonsensical reaction to the decision that I’ve seen comes from John Boehner: “Today’s ruling is also further proof that President Obama’s health care law is completely unworkable. It cannot be fixed.”

    The ruling hinges on a mistake in one sentence of the law. It could be fixed by adding three words to a 906 page document, changing “Exchange established by the State” to “Exchange established by the State or federal government”. If any flaw in the law can be fixed, it’s this one. The only reason it won’t be fixed is that Boehner would never agree to bring such a fix up for a vote.

    The plaintiff, David Klemencic of West Virginia, has standing to sue because he doesn’t want to buy insurance, which would cost him all of $21/year after the subsidies. $21/year works out to less than six cents a day.

          1. Gallup shows the rate of uninsurance falling by a quarter, which translates to over 10 million people. Other surveys arrive at similar figures.

            I don’t care, even if that’s true

            Now that the ACA is clearly meeting its primary goal — expanding coverage — its opponents can be more forthright about the source of their opposition. They just don’t care that much about expanding coverage, at least not when it means taxing the wealthy to buy or subsidize coverage for the poor and lower middle class.

          2. “They just don’t care that much about expanding coverage, at least not when it means taxing the wealthy to buy or subsidize coverage for the poor and lower middle class.”

            Obamacare is a tax on everyone not just the wealthy.

          3. Two things to observe about “expanding coverage”. A lot of people have been kicked into Medicaid from insurance. So for those people, coverage has declined. Second, expanding coverage was always a distant second place to reducing costs. For all the talk of drops in premiums, we still have the ugly dynamics of a significant portion of the population paying a fixed price for arbitrary levels of consumption. That’s an inherent driver for price increases. In addition, we have a dubious framework in place to bail out insurance companies for making bad risk decisions. That won’t kick in over a single year.

          4. “What quantitative goal has it failed to meet?”

            Number of newly insured.

            You can keep your health plan if you like it.

            It will save you $2500 a year.

            All of these were touted as outcomes. All have failed.

          5. The number of newly insured.

            Huh? The net increase in insured is estimated at 10-12 million, which is in line with the goals for the first year.

      1. Yes, it is coercion, just as it’s coercion that we have to pay payroll taxes on earned income to fund Social Security and Medicare. SCOTUS famously ruled in 2012 that the coercive aspects of the Affordable Care Act are Constitutional. They were only relevant in this case to give the plaintiff standing to sue. He had to show that paying subsidies to people enrolled in a federal-run exchange causes him harm, and the specific harm was his having to pay $21/year for health insurance. Many, if not most, people would consider it a windfall.

        1. “SCOTUS famously ruled in 2012 that the coercive aspects of the Affordable Care Act are Constitutional. ”

          As a tax and not a penalty as argued by the Obama administration. Democrats are still claiming that Obamacare is a penalty and not a tax, which isn’t true.

          “Yes, it is coercion,”

          The subsidies were a coercion to get states to set up their own exchanges. Some chose not to just like some chose not to expand Medicaid for the “free” money.

          1. Democrats are still claiming that Obamacare is a penalty and not a tax, which isn’t true.

            Eight out of nine Supreme Court justices concluded it was a penalty. Roberts is the only one who treated it as a tax.

          2. The majority decision says it is a tax and that it would be unconstitutional if it were a penalty. Looks like Obama is lucky Roberts decided it was a tax.

          3. Four justices said it was a penalty and unconstitutional. Four justices said it was a penalty and constitutional. One justice said it was a tax and constitutional. Robert’s vote made the law constitutional; it didn’t turn the penalty into a tax.

        2. So we might as well coerce people to do other things for the public good.

          Since teenage pregnancies account for a large amount of poverty, should we temporarily sterilize all girls at age 12 until they are 18? Or perhaps force abort all fetuses unless the mother is married? We would have a dramatic increase in the public good.

          By the way, the Supreme Court ruled against Dred Scott. Should we have kept that?

        3. I think all 18 year olds should spend 4 years in the Armed Forces. They would mature much faster, gain some badly needed discipline and become model citizens. This would benefit the public good.

          1. No. A significant number should do and does as you suggest, but not all. There are, however, other options besides the Armed Forces. For instance, able-bodied welfare recipients could be put to work on public projects, allowing cities to reduce their workforces. Four hours a day, five days a week of cleaning graffiti, picking garbage from medians, and so forth is not unreasonable.

        4. “Yes, it is coercion, just as it’s coercion that we have to pay payroll taxes on earned income to fund Social Security and Medicare. ”

          Not all coercions are created equal. Very few coercions are good. Your example pf the Social Security tax is one of them.

    1. “The ruling hinges on a mistake in one sentence of the law. ”

      It wasn’t a mistake and it wasn’t just one sentence. There are repeated references to State Exchange or State Exchanges as opposed to the Exchange. The text of the law treats State Exchanges explicitly different than the Exchange.

      The important part, though, is that this was intentional on the part of Obama and the Democrats to coerce states into setting up their own exchanges. The wouldn’t get the “free” money unless they set up their own exchanges. States had the choice, just as they did with Medicaid expansion.

      (1) IN GENERAL- The Secretary shall, as soon as practicable after the date of enactment of this Act, issue regulations setting standards for meeting the requirements under this title, and the amendments made by this title, with respect to

      (A) the establishment and operation of Exchanges (including SHOP Exchanges);

      (B) the offering of qualified health plans through such Exchanges;

      (C) the establishment of the reinsurance and risk adjustment programs under part V; and

      (D) such other requirements as the Secretary determines appropriate.

      The preceding sentence shall not apply to standards for requirements under subtitles A and C (and the amendments made by such subtitles) for which the Secretary issues regulations under the Public Health Service Act.”

      IMO, that says the the HHS secretary can not mandate risk adjustment programs (subsidies) for states that did not set up their own exchanges and the the HHS secretary can not create exchanges for states.

        1. It was intentional because it was clearly and explicitly stated. There is zero room for interpretation on this clause in the law.

          Do A and you must do B

          Don’t do A and you don’t have to do B

          1. It was intentional because it was clearly and explicitly stated.

            So it’s impossible that the drafters of a 900 page bill could have made a mistake?

            There is exactly zero evidence that anyone involved intended the Halbig interpretation.

      1. Section 1321 provides that if a state “will not have any required Exchange operational” by then — that is, an exchange required by Section 1311 — then the federal government “shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State.”

        So yes, the Federal government can create an exchange for a State that chooses not to do so, and the Federal exchange stands in for the State exchange. “Stand in” would, in any logical universe, mean “serve the same function as.” Also, since the tax exemption at issue is a Federal tax, one would assume that the Federal government would be the best arbitrator of who has to pay it.

          1. Yes. (scroll down) Quote:

            SEC. 1321. STATE FLEXIBILITY IN OPERATION AND ENFORCEMENT OF EXCHANGES AND RELATED REQUIREMENTS.

            c) Failure To Establish Exchange or Implement Requirements-

            (1) IN GENERAL- If–

            (A) a State is not an electing State under subsection (b); or

            (B) the Secretary determines, on or before January 1, 2013, that an electing State–

            (i) will not have any required Exchange operational by January 1, 2014; or

            (ii) has not taken the actions the Secretary determines necessary to implement–

            (I) the other requirements set forth in the standards under subsection (a); or

            (II) the requirements set forth in subtitles A and C and the amendments made by such subtitles;

            the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.
            ***
            The Secretary shall establish and operate such Exchange…(emphasis mine). Seems pretty clear to me.

        1. If it is as plain as this, why did it go to the SC?

          Second, your quotes only show the establishment of the exchanges, not the funding.

          1. why did it go to the SC? hasn’t, yet, but given the hatred the law has generated, grasping at straws seems to be standard operating procedure.

            establishment of the exchanges so the Feds can establish an exchange if the State doesn’t but they can’t fund it? And that makes sense in what universe? Remind me to never ask for a ham sandwich and step on it unless I want my sandwich to have your shoe print on it.

    2. So it’s basically the difference between “Congress shall make no laws” and “Congress shall make laws”. I mean it’s just one word, what harm can one word do?

  3. Remind me to never ask for a ham sandwich and step on it unless I want my sandwich to have your shoe print on it.

    Your arguments are totally irrelevant. You just assume funding goes along with the setup of the exchanges. They are totally unrelated. In my universe, we follow what is written down. We are not telepathic and do not understand the intention of the lawmakers by thought alone.

    1. So in your universe, if I ask you to get me a cheeseburger from Burger King but tell you that McDonalds will do, and then you give me a McDonalds cheeseburger, you’ve violated my request?

      What does “Secretary shall take such actions as are necessary to implement such other requirements,” found in a section entitled “State Flexibility” mean if not allowing the Feds the power to create an Exchange with the tax credits normally found therein? I mean, if the law had somewhere (anywhere) delineated separate Federal and State exchanges that might make sense, but there’s only one type of Exchange envisioned in the bill.

      Or shorter – what else can’t the Federal Exchange do but the State Exchange can?

      1. So in your universe, if I ask you to get me a cheeseburger from Burger King but tell you that McDonalds will do, and then you give me a McDonalds cheeseburger, you’ve violated my request?

        You never gave me any money for McDonalds. You just said you’d give me money for Burger King. And that is a big deal in the universe of the law. With your logic, as your mayor, I could say you owe me 35% of your income in taxes because we were thinking of raising your taxes anyway for all those bridges we built.

        This all goes back to Cornhusker’s Kickback Senator Ben Nelson, who insisted on the specific language for giving funding of the exchanges only for those states who accepted building one of their own.

        1. Be careful how literal-minded you get. By your interpretation, no matter what it says in the Federalist Papers, only members of a well-regulated militia can own guns.

          1. The Federalist Papers are not legislation.

            I think you’re missing Chris’s point. The 2nd Amendment is legislation. If look only at its text, and ignore everything else (including the intent expressed in the Federalist Papers), the right to bear arms becomes very narrow.

            But arguing over language 225 years old vs language 5 years old is very different.

            One difference is that you can actually ask the people who wrote the bill what they meant. They all say that the Halbig interpretation never even occurred to them.

        2. You never gave me any money for McDonalds

          But he did ask you to report how much money you spent at McDonalds. The ACA tells the IRS to report how much has been paid in subsidies for policies on the federal exchange, an odd request if the authors did not intend for there to be such subsidies.

          Senator Ben Nelson, who insisted on the specific language for giving funding of the exchanges only for those states who accepted building one of their own

          Funding to build exchanges is a totally different issue than subsidies for insurance purchased on exchanges. Obviously states should only get funding to build an exchange if they in fact build an exchange!

          1. The ACA tells the IRS to report how much has been paid in subsidies for policies on the federal exchange, an odd request if the authors did not intend for there to be such subsidies.

            That’s too bad. It’s a shame that competing rules get thrown into a monster bill cobbled together by crony capitalists and corrupt politicians. It’s almost like it would fall apart once implemented. Didn’t Pelosi say we wouldn’t know what’s in the bill till it was passed?

            Funding to build exchanges is a totally different issue than subsidies for insurance purchased on exchanges. Obviously states should only get funding to build an exchange if they in fact build an exchange!

            You missed the point. It’s not funding to build exchanges, it’s funding an exchange that was built by the states. It’s totally different.

          2. It’s almost like it would fall apart once implemented.

            Only if activist judges pull it apart.

            It’s not funding to build exchanges, it’s funding an exchange that was built by the states

            That isn’t the issue in Halbig either. Halbig strikes down subsidy payments to insurers, not exchange funding.

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