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Halbig v. Sebelius Explained: the Right’s Latest, Craziest Attempt to Kill the Affordable Care Act in the Courts

March 24, 2014

On Tuesday, March 25, the United States Court of Appeals for the D.C. Circuit will hear oral argument in a case called Halbig v. Sebelius.

If you are not a regular consumer of conservative media, you’ve probably never heard of this case or its sister cases.

If you are, then you’ll know them as the cases that could ”cripple” (National Review), “blow to smithereens” (George Will), “effectively defund” (Forbes), “knock out” (Dick Morris), or “drive a stake through the heart of” (Cato) the Affordable Care Act.

Simply put, Halbig is a last-ditch attack on the ACA’s premium assistance tax credits—a central provision of the law designed to make health insurance affordable.  This new challenge – raised in four different cases around the country – has been brought  by the same team that brought NFIB v. Sebelius, the attack on the ACA that the Supreme Court largely rejected in 2012. That first attack was strategically savvy but a legal loser, and this second challenge is even flimsier.  Two federal judges have already ruled on the legal claim being made in this latest challenge, and both have rejected it as “implausible” and “unambiguously” contrary to the law. 

So why bother giving it any attention? 

Because one day, it could wind up in the Supreme Court, just like the first one did.  That’s undoubtedly the goal of the ACA’s opponents, who will again pitch their arguments to the five conservative Justices, hoping for a different outcome this time.  That’s why the ACA’s opponents are already hard at work to create a media environment that will make such an outcome seem legally credible.  And that’s also  why it’s critical that the media, the public, and anyone with an interest in the fate of the ACA start paying attention to these cases and what the people who have brought them are trying to do.

 

What is Halbig v. Sebelius? 

Halbig v. Sebelius is a lawsuit brought against the Affordable Care Act by a group of conservative and libertarian opponents of the law. These opponents have claimed that, due to the way in which the law is worded, the federal government is not actually authorized to help Americans pay for health insurance in the 34 states that decided not to set up their own health insurance exchanges. They have also gone further to argue that the law was deliberately designed this way.

Halbig, as noted, is one of four lawsuits based on the same argument  brought in  federal courts  in Washington, D.C. (Halbig), Virginia (King v. Sebelius),  Oklahoma (Pruitt v. Sebelius), and Indiana (Indiana v. IRS).  Of the four cases, Halbig is the farthest along. The challengers lost (badly) in the district court in January, and their appeal will now be argued in the D.C. Circuit—one step below the Supreme Court.

 

Who’s behind this challenge? Anyone I might have heard of?

Michael Carvin is the lead attorney on this challenge. He argued the first ACA challenge, NFIB v. Sebelius, before the Supreme Court. He also represented the Bush campaign in Bush v. Gore. Carvin is representing the conservative Competitive Enterprise Institute in Halbig and King v. Sebelius.

The two conservatives who conceptualized the argument being made in these cases are Case Western Reserve law professor Jonathan Adler and Cato Institute economist Michael Cannon. Cannon also founded the “Anti-Universal Coverage Club,” and has been profiled as “Obamacare's Single Most Relentless Antagonist.”

Incidentally, Jacqueline Halbig herself, the plaintiff who gives the case its name, was previously President Bush’s Associate Director of the White House Office of Faith Based and Community Initiatives.

In short, this group is not shy about its intentions.

 

Before we get further into this, could you explain how these state and federal “exchanges” work under the ACA?

When the ACA was established, the law created a system of “exchanges” (or marketplaces) where individuals without insurance from an employer could shop for competitively-priced plans. These exchanges would also be the mechanisms through which the government would distribute subsidies to families that needed help covering the cost of monthly insurance premiums. 

The law gave state governments the option of setting up their own state exchanges. If they didn’t, the law charged the federal government with setting up an exchange. After politically fraught legislative fights and relentless pressure from outside conservative groups and advocates—including Michael Cannon, for example—34 states opted not to establish their own exchange, but let the federal government do so instead.

Americans have been purchasing insurance and receiving premium subsidies from these exchanges since January 1, 2014.

 

What, specifically, is this lawsuit about?

One provision of the Affordable Care Act, the provision that prescribes the methodology for computing the amount of tax credit assistance available to individuals in varying circumstances, describes these tax credits as being available “through an Exchange established by the State under Section 1311.”  

Opponents say that—read in isolation, rather than in the context of the law overall— this language means that tax credits cannot be available to those who live in states in which an exchange was established by the federal government on behalf of the state.

 

I see. So the challengers are arguing that the Democratic architects of this law accidentally left a grammatical “glitch” in the wording?

Actually, no. That’s what they were arguing, at first. In 2011, Cannon and Adler published an op-ed claiming they had found a “glitch” in the wording of the law. However, this argument didn’t quite get them across the finish line by itself. According to a long-standing Supreme Court principle, even if the text of the ACA were ambiguous on this issue, the courts would still be bound to defer to the interpretation of the expert agency charged with administering the law–in this case, the IRS.

After doing “some more research,” as Newsweek explains, Cannon and Adler ditched the “glitch” idea and began presenting the issue very differently.

The Halbig team is now arguing that the architects of the ACA designed it this way—in other words, in a way that bars people from receiving tax credits—intentionally, as a threat. In this version of history, Congress said to the states, in effect: set up a state exchange or your citizens get no money.

 

Wait a minute. It sounds like you’re saying that the opponents of the ACA are arguing that Nancy Pelosi, Harry Reid, and the others who helped pass this law actually wanted the law to work this way— that, after all that they went through to see the Affordable Care Act become a reality,  they gave state governments the power to kill it. Really?

Yes, that’s exactly right.

To quote CAC’s Senior Counsel, Simon Lazarus, “To believe their argument, you have to believe that [top Democratic Senators] Harry Reid and Chuck Schumer and Patty Murray and Max Baucus got together off the Senate floor one day and said, ‘I know what we’ll do to convince these states that they should set up exchanges: We’ll give them the power to completely destroy at least the exchange portion of Obamacare in their states’ . . . . People think a lot of things of those individuals, but dumb is not one of them.”

 

This seems pretty easy to clear up. Can’t all those Members of Congress weigh in and explain what they meant?

They are doing just that. Congressional leaders from the 2009 Affordable Care Act fight have signed an amicus brief authored by Constitutional Accountability Center and filed in the D.C. Circuit explaining to the court their understanding of the law they wrote. The signees include Senate Majority Leader Harry Reid, Senator Tom Harkin, House Democratic Leader Nancy Pelosi, Representative George Miller, Representative Sander Levin, Representative Henry Waxman, and former Senator Max Baucus. As their brief states:   

Congress did not provide that the tax credits would only be available to citizens whose States set up their own Exchanges. The purpose of the tax credit provision was to facilitate access to affordable insurance through the Exchanges—not, as Appellants would have it, to incentivize the establishment of state Exchanges above all else, and certainly not to thwart Congress’s fundamental purpose of making insurance affordable for all Americans.

More than one hundred state lawmakers also signed this amicus brief, stating the following:

[S]o far as [we] amici are aware, no State ever suggested that the lack of subsidies on a federally -facilitated Exchange was a factor in its decision . . . .

If amici state legislators thought there was a possibility that their constituents would lose access to these valuable tax credits unless the State established its own Exchange, they would have vigorously advocated for a state-run Exchange citing this potential consequence. But this was not part of the debate in the States because no one understood the statute to operate in the manner Appellants claim. Rather, everyone involved at the time understood that the tax credits were an essential component of the ACA that were to be available to all Americans regardless of whether they purchased insurance on a state run or federally facilitated Exchange.

 

How are these cases faring so far? What have judges had to say about them?

The challenge to the ACA made in Halbig v. Sebelius was rejected by District Judge Paul Friedman. After hearing two days of argument, Judge Friedman concluded, “[T]here is simply no evidence in the statute itself or in the legislative history of any intent by Congress” to support the opponents’ reading of the law. Full decision.

In King v. Sebelius, the ACA opponents’ challenge was rejected by District Judge James R. Spencer, a Reagan appointee. Judge Spencer called their argument “not a viable theory,” and said that when “statutory context is taken into account, Plaintiffs’ position is revealed as implausible.” Full decision.

The two other cases, Pruitt v. Sebelius and Indiana v. IRS, are awaiting argument at the district court level.

 

If these cases are faring so badly in the lower courts so far, why should anyone be concerned?

The strategy here mimics the strategy of the multiple challenges to the ACA individual mandate: throw a lot of cases at the wall and see if one sticks. That strategy came very close to being successful last time, but partly because the challenge was not taken seriously by ACA supporters  for so long.

In 2009, the idea of challenging the ACA’s individual mandate on constitutional grounds was initially dismissed out of hand by progressive experts and many conservatives, too. (Conservative attorney Orin Kerr gave the argument “a 1% chance.”) Yet, in 2012, the challenge ended in a Supreme Court nail-biter. That trajectory was made possible in large part by conservatives’ ability to cultivate a very specific media climate. Over the course of months, then years, this team was able to build a steady drumbeat of commentary around a few key principles. Many defenders of the law felt the challenge was frivolous enough to not be worth dignifying at first. Conservatives took advantage of that vacuum.

Lesson learned.  

The flaws in Halbig and its companions are clear, as two district courts have already recognized.  But as we’ve so recently seen when it comes to the ACA, this doesn’t mean that attention should not be paid.

 

Simon Lazarus contributed to this post. 

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