The Spectacle Blog

The Next Big Obamacare Court Fight?

By on 6.20.13 | 8:26AM

Opponents of Obamacare claim to have found a linguistic quirk within the Patient Protection and Affordable Care Act that could undermine provisions of the law, including the individual mandate—if their case succeeds in court.

A key piece of Obamacare makes federal subsidies available to lower-income Americans in order to make their healthcare premiums more affordable, and the law states that these subsidies are to flow through healthcare “exchanges” established by the states. But more than half the states have now declined to establish such exchanges. The IRS has tried to paper over the gap by authorizing the subsidies to flow through alternate federal exchanges—but some say the language of the law does not allow this, and they have filed a lawsuit, Halbig v. Sebelius, to prove it.

“It’s not a question of statute, it's a question of the rule of law,” Michael Carvin, an attorney who helped bring a case, said Monday during a panel discussion at the Cato Institute. “I'm quite confident the federal judiciary will vindicate that view."

Michael Cannon, Cato’s director of health policy studies, said this issue only came up once during congressional discussion, and that the bill’s author, Sen. Max Baucus (D-Mon.), had admitted that if a state refused to set up an exchange, low-income individuals living there would not receive the federal tax credits. In fact, Cannon said such an arrangement was intentional, to incentivize states to adopt the program.

No one ever suspected that the law would be so unpopular, and that so many states would decline to implement the exchanges, until it was too late. Cannon said the Halbig suit has “very real” potential to “sink Obamacare.”

Not everyone, of course, agrees. Simon Lazarus of the Constitutional Accountability Center spoke against the suit, calling it a last-ditch effort by Republicans to defeat Obamacare through the legal system based on a “perverse interpretation,” since the GOP lost in the political arena.

Attorney Robert Weiner believes that legislators intended to allow the subsidies to flow through federal exchanges, and that the authorizing language is missing essentially because of a “typo” within the enormous piece of legislation. He pointed out that Supreme Court Justice Antonin Scalia wrote in his book on statutory interpretation that if a law is unclear or includes a mistake that detracts from the law’s purpose, judges should defer to the overall intent of the legislation. “This is isolating seven words is an absurd attempt to screw the statute's meaning,” he said. "It's like inviting somebody to dinner, and then not feeding them."

To Carvin, though, the text of the law is clear. “It’s ... the English language versus nonsense,” he said emphatically.

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