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This King has no clothes: How the case against the ACA is unraveling before our eyes

February 10, 2015

Joey Meyer, Brianne Gorod

There’s never been much substance to the arguments made by petitioners in King v. Burwell, the case challenging the availability of tax credits under the Affordable Care Act that the Supreme Court will be hearing next month.  The case has always relied on taking four words, “established by the State,” out of the context of a 900-page statute, and on an argument about congressional intent that one lower court judge called “nonsense, made up out of whole cloth.”  Now that cloth is seriously frayed.  In the months since that court’s decision, it’s become increasingly clear not only how weak that argument is, but how weak all the arguments behind King are.  Indeed, as oral argument rapidly approaches, the case made by the ACA’s opponents is unraveling around them.

The Government Makes Clear the Strength of the Textual Arguments

Petitioners’ argument about the text of the ACA at least has the advantage of being simple (or, more accurately, facile).  The law’s challengers ask the Justices to look at the words “established by the State” in the formula for calculating the amount of the tax credit and declare that these tax credits are not available to individuals around the country that live in states that have refused to establish an ACA-compliant Exchange.  But the ACA explicitly states that the condition for eligibility for the tax credits is income level.  Moreover, petitioners’ textual argument has always depended upon judges willing to turn a blind eye to all of the other provisions in the law that make clear that a state Exchange is functionally the same as a federal one, and that the tax credits should be available on both.  That’s never the way one interprets a statute, as explained by an ideologically diverse array of textualist and administrative law scholars.  The federal government’s brief puts it this way:

[P]etitioners must rewrite so many of the Act’s provisions, and explain away or ignore so many textual incongruities and contradictions, that their argument collapses under its own weight—wholly apart from the havoc it would wreak on the Act’s structure and design (citations omitted).

The Government also has a compelling argument about why even the four words on which the law’s challengers rely don’t support their case.  As the Government explains, that language is in the law to make clear that the Exchange the statute is talking about is the specific state Exchange on which the individual purchased her insurance, regardless of whether that Exchange was set up by the federal government or by the state itself.  This was an important distinction because when the ACA was being debated, there were some Senators who strongly opposed one national Exchange, but were very comfortable with the federal backstop in the law as passed precisely because there would still be individual Exchanges in each state. 

As Evidence of Congress’ Intent Piles Up, Petitioners’ Claims Crumble

In fact, one of the key Senators who strongly opposed the national Exchange, but supported the federal backstop, is former Senator Ben Nelson.  He’s particularly important because lawyers for the challengers have long said that he was the reason the tax credits were made conditional on state establishment of an Exchange; according to them, it was the only way he would cast his critical vote for the law.  Indeed, they make this argument on page four of their most recent brief, and it featured prominently in an oral argument on this issue in the lower courts.

There’s just one big problem with that argument: it isn’t true.  Senator Nelson recently made clear in a letter to Senator Bob Casey that he “always believed that tax credits should be available in all 50 states regardless of who built the exchange, and the final law also reflects that belief as well.”  In response to this evidence, Michael Cannon, an architect of the King challenge, admitted that “[i]t may well be that Ben Nelson always wanted there to be subsidies in state-established exchanges or federal exchanges.”

And this isn’t the first time Cannon has had to walk back a claim about Congress’ intent regarding the tax credits:  in August of last year he retracted a claim that former Senator Max Baucus—who has also repeatedly signed onto briefs supporting the Government—made a statement indicating that tax credits would not be available on the federal Exchanges.

Cannon’s claims that ACA supporters knew the law conditioned tax credits just keep falling.  In the amicus brief he filed with Jonathan Adler in December, Cannon claimed that some House Members “recognized [the ACA] conditioned subsidies on states creating Exchanges.”  The only evidence he cites is a 2010 letter to President Obama by Representative Lloyd Doggett (D-TX) and ten other Texas representatives, and an article mentioning the letter by NPR’s Julie Rovner.  But Doggett has roundly refuted Cannon’s use of his words, stating unequivocally that he and his colleagues “neither specifically mention nor contemplate the far-fetched argument now advanced by reform opponents that premium tax credits would only be available for state-based exchanges.”  And for her part, Rovner confirmed that “there was never any discussion about only state exchanges offering subsidies that I was party to” and that she “never meant to imply it in [her] story” (which, for the record, she did not).

All this comes as the Members of Congress most closely involved with the drafting and passage of the ACA are lining up to state on record that they always intended for the tax credits to be available nationwide.  Their assertions have been echoed by high-level congressional aides, who have also gone on record explaining that nationwide availability was always the intention behind the law. 

Even Conservatives Don’t Line Up Behind the Arguments in King

And supporters of the ACA aren’t the only ones who know the argument in King is completely wrong.  Take, for example, Wisconsin Governor Scott Walker.  Last month it came to light that Governor Walker told the Wall Street Journal in March of 2013 that, after spending “nearly two years looking at this,” he determined that “in the end, there’s no real substantive difference between a federal Exchange, or a state Exchange.”  Walker’s former top health official tried to reason that the Governor wasn’t speaking specifically to the tax credit issue, but then it surfaced that a month before that remark, Walker had unveiled a health care proposal explicitly predicated on the assumption that eligible Wisconsinites who purchased insurance through the federally-facilitated Exchange in Wisconsin would receive tax credits.  Walker is in good company with other Republican Members of Congress and state officials whose remarks—past and present—help to debunk the argument that anyone perceived a threat by Congress to withhold tax credits from uncooperative states.

And the lack of support shows in the amicus filings in King.  Only six Republican state attorneys general signed onto a brief supporting the challenge, in stark contrast with the two dozen who were plaintiffs in the 2012 Obamacare case.  Notably, the biggest federal Exchange states—Florida, Wisconsin, Michigan, and Texas—all with Republican governors, declined to file.  By comparison, 22 state attorneys general, from both red and blue states, and with both state-run and federally-facilitated Exchanges, signed onto a brief supporting nationwide availability of the credit.

There’s Also More and More Evidence of How Catastrophic a Win for the Law’s Challengers Will Be

In recent weeks, study after study has indicated that a ruling against the Government would kick nearly 10 million Americans off of their health insurance and seriously destabilize the individual insurance markets in states with federally-facilitated Exchanges, posing a grave threat to the insurance and health care industries and making coverage vastly more expensive for all Americans in those states.  As the Government highlighted in its latest brief, in their dissent in the 2012 Obamacare case, four of the Court’s conservatives observed that “[w]ithout the federal subsidies . . . the exchanges would not operate as Congress intended and may not operate at all.”

This may be another reason why amicus support for the law’s challengers was so lackluster:  even opponents of the law are wary to put their name on a suit that threatens so much damage to their constituents and to industry, especially given that they offer no credible fix.  It’s worth noting that many health industry stake holders such as insurance providers, medical professional associations, and groups representing virtually every hospital in America have filed in support of nationwide availability, while no major industry voices have filed in support of the law’s challengers.  These stake holders were involved in the development of the law, so they understand that tax credits were always meant to be available nationwide—and they are in perhaps the best position to understand the consequences of eliminating the tax credit in 34 states, both for patients and for their industry. 

Law’s Challengers in Trouble

So as we head into March and oral argument in King, the case against the ACA is coming apart at the seams. That almost certainly won’t stop the law’s challengers from trying to come up with new defenses for their arguments and “evidence” to support their case.  But we already know that this King has no clothes.