The Spectacle Blog

The Case That Could Dismantle Obamacare

By on 7.7.14 | 4:10PM

A high-profile, yet little-covered case is making its way through the D.C. Circuit Court. The ruling in that case could topple the bureaucratic behemoth known as Obamacare. The case rests on the legal and textual interpretation of a section of the law.

According to Newsweek:

It all started in 2011, when Jonathan H. Adler, a conservative law professor at Case Western Reserve University in Ohio, shot an email to his friend Michael Cannon, a health policy expert at the libertarian Cato Institute in Washington, D.C. Adler thought he had spotted an error in Obamacare that could unravel a significant portion of the law.

Over at Cato, the argument is clarified:

The Patient Protection and Affordable Care Act offers refundable “premium-assistance tax credits” to qualified taxpayers who purchase health insurance “through an Exchange established by the State.” The PPACA contains no language authorizing tax credits through the 34 Exchanges established by the federal government in states that declined to establish one themselves, nor does it authorize the Internal Revenue Service to treat those federally established Exchanges as if they had been “established by the State.” Offering benefits only in compliant states was proposed by numerous Republicans and Democrats in 2009, for obvious reasons: Congress cannot force states to implement federal programs, but it can create incentives for states to act, such as by offering health-insurance subsidies to residents of compliant states.

Essentially what happened, according to the plaintiffs, is that the government grossly overreached in its authority as afforded by federalism:

Constitutionally, the federal government cannot order states to create the exchanges, so Adler and Cannon contend that Democratic lawmakers intentionally withheld premium assistance to strong arm states into implementing their own exchanges. Though this is not explicitly stated in the law, Cannon and Adler point to a handful of comments that they argue infer subsidies were intended for state-run exchanges – but there is no explicit evidence. Now that 36 states decided not to create their own exchange, Cannon and Adler maintain that the IRS is not carrying out the letter of the law.

According to the FedSoc blog, a product of the Federalist Society, it seems that the panel is generally in favor of the plaintiffs:

At least two judges on the three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia signaled that the plain language of the law works against President Obama and his legal team.

In the end, it is the idea of textualism that will decide the final ruling:

Appealing to Congress’s subjective “intent” is the subsidies’ only hope for survival. An appeal to “intent” is the only method leftists have available in this case to twist the words to their purpose. A textualist approach means most ObamaCare subsidies will be found unlawful. There is zero debate: a plain language, textualist approach in this case means Obama loses. That’s why every Democrat rejects a plain language approach in this case, and tortures the text to argue that Congress’s “intent” was to provide subsidies for all. As one of the judges said at oral argument, the legislative history is a “wash” — which at least gives Democrats a fighting chance to argue for their version of “intent.” (Emphasis added.)

While the case could go into what is called en banc, which means a review of the panel’s decision by the full D.C. Circuit Court, this is the most serious challenge to Obamacare since the NFIB Supreme Court case. While it looks like the court could rule against President Obama, a review could reverse that decision, since there are overall more liberal justices on the court than conservatives. Still, if textualism plays a role, Obamacare might finally be down for the count.

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