Gruber clips inspire powerful condensed defenses of the ACA

On occasion, I've made my case against opinion writers' "paragraph briefs," which make an omnibus case for something by packing disparate and often dubious assertions in comma-separated series.

An often more powerful variant, though still subject to slipping in slugs and ringers, is the link-packed paragraph brief.  These cite an array of evidence in a way that dares the reader not to take the cited authorities on faith -- each of them, maybe a half-dozen, are a click away. Of course, most of us do take most of them on faith most of the time. But the cards are on the table.

The Gruber brouhaha has driven a lot of progressive policy wonks to retrospection -- reviewing the legislative and political history of the ACA while chewing over Gruber's assertions that the process was deceptive and his apparent early impression that federal subsidies to states that built their own exchanges might not be immediately forthcoming.  That process has given rise to what's struck me as two particularly powerful paragraph briefs.

First, Ezra Klein delivers a short legislative history that rebuts the preposterous Halbig/King contention that the ACA's drafters intended to make premium subsidies available only to buyers in state-run exchanges:

The ACA preserved state regulation of health insurance

Yesterday I noted that the state-vs.-federal exchange debate within the Democratic party in early 2010 was focused primarily on which level of government would regulate insurance -- and not, as Halbig proponents are suggesting, on whether the "backstop" federal exchange created by the Senate bill would be enabled to issue tax credits.

Both before and after the Scott Brown earthquake, the question was how the Senate and House bills would be reconciled. The House bill created a federal exchange, with an opt-out for states that wanted to create their own. The Senate bill stipulated that states would establish their own exchanges, with an opt-out for those that chose to cede the function to the federal government.

As it turned out, the reconciliation bill that tacked House modifications on the Senate bill did not substantially alter the Senate bill's state exchange structure -- though it did, by the way, include a tax reporting provision that referred directly to tax credits allocated by the federal exchange, a provision that should lay to rest the Halbig contention that ACA tax provisions preclude the federal exchange allocating tax credits.  And although the federal government did end up running most of the state exchanges, in the sense of running the website processing citizens' applications, regulation of insurance, within the broad coverage parameters set by the ACA, remained mainly in state hands.*

Evidence of that retained state control can be found in the varying steepness of 2015 health insurance premium increases in different states. Overall, the rate hikes are in line with or slightly below the increases of previous years. A heat map by PriceWaterhouseCooper indicates that states that ran their own exchanges, and so more actively oversaw the offerings approved for sale, were on balance subject to more moderate increases (Vermont is an exception). From the data that's come in so far (only about half of the states have so far reported wholly or partly on 2015 rates), Jonathan Cohn extracts an illustrative tale of two states:

No, Ben Nelson didn't scuttle the ACA's federal exchange

[Update, 1/29/15: As Jonathan Cohn reports, Nelson has just precisely confirmed the reading below of his position re federal and state exchanges.]

The latest bit of sophistry deployed by Halbig supporters to convince the world that the Senate Democrats who drafted the ACA deliberately barred subsidies from flowing through any exchange set up by the federal government is a claim that "Ben Nelson made them do it," Here's David Catron in The American Spectator (retailed without value-add by the Wall Street Journal's James Taranto):

Jonathan Cohn advises his New Republic readers, “Like other journalists who were following the process closely, I never heard any of them suggest subsidies would not be available in states where officials decided not to operate their own marketplaces.”

This is an odd statement indeed considering that high-profile publications were reporting a lively debate over this very issue. And Ben Nelson’s name was frequently mentioned. In January of 2010, for example, Politico reported that he regarded federal control of Obamacare’s exchanges as “a dealbreaker.” Nelson said that too much federal involvement would inevitably lead to government-run health care: “I wouldn’t support something that would start us down the road of federal regulation of insurance and a single-payer plan.”

He reiterated his objection to federal exchanges in this 2010 video, wherein Greta Van Susteran presses him to provide a legitimate motive for ultimately voting in favor of health care “reform.” Nelson vehemently insists that no one bought his vote: “I had requirements… no government-run plan, no federal exchange… and adequate language to deal with abortion. Those were requirements, but no one was buying any vote.” Nelson clearly implies that these conditions had been met and this is why he flip-flopped and voted for the bill.

These statements prove nothing, and indicate nothing.There was precisely zero public debate over whether the Senate bill allowed a federal exchange to credit subsidies. Catron strips the context out of the Politico article, which in fact indicates the opposite of what Catron and Taranto imply.

Michael Cannon gives the game away, cont.*

The Halbig plaintiffs and their allies would have you believe that the titanic struggle in the Supreme Court in 2012 over the constitutionality of the ACA's individual mandate was a fight over nothing. Or, alternatively, that the government had a bulletproof defense of the law's constitutionality that it inexplicably left on the table.

According to the Halbig plaintiffs, the ACA's framers deliberately barred any exchange established by the federal government from crediting subsidies to qualified buyers of health plans offered on the exchanges. Only an exchange "established by a state can do that. Thus, the ACA could only function in a state that established its own exchange.  The law's creators and proponents have been protesting for three years that this claim is preposterous on its face, as a federal exchange would be worthless without the ability to credit subsidies, but that is the suit's  contention.

Michael Cannon gives the game away

Cato's Michael Cannon, a mastermind behind Halbig, has made much of video clips in which ACA architect Jonathan Gruber seems to suggest that states that do not build their own exchanges might forgo their citizens' access to the tax credits subsidizing coverage. Gruber has since claimed that the assertion was a verbal slip, and that he probably meant to suggest (at a time when no one expected states to abstain from building their own exchanges) that a federal "backstop"  might not be in place in time for the first open season.

That's how I understood Gruber when I listened to the first unearthed clip (at minute 31). But Cannon isn't buying it. He's going for the perceived jugular,  claiming proof that the ACA's framers (with whom Gruber worked closely) intended to make the whole ACA machinery dependent on state action:

The problem with his explanations is that Jonathan Gruber doesn’t “flake.” He knows this law in and out. He knew what his words meant, with all their implications, when he spoke them. He knew the feature he was describing essentially gave each state a veto over the PPACA’s exchange subsidies, employer mandate and to a large extent its individual mandate. He knew that could lead to adverse selection. To claim Gruber didn’t know what he was saying is as absurd as saying a conductor might fail to notice that the brass section suddenly stopped playing.

As Cannon asserts, if only the state exchanges can grant subsidies, the individual mandate is all but inoperative in states relying on the federal exchange, because insurance will be unaffordable for most of the state's uninsured, exempting them from the mandate.

If that is the case, the flagship suit against the ACA's constitutionality decided by the Supreme Court in June 2012, NFIB v. Sebelius, is moot, because the ACA effectively imposes no federal individual mandate, only state ones.

SCOTUS: Federal government can't *deny* subsidies to refusenik states?

Yesterday, I suggested that if the conservative justices of the Supreme Court wanted to uphold the D.C. ruling in Halbig, denying the federal government the right to provide subsidies to people who buy health insurance on  healthcare.gov, they might deflect reluctance to upend the law by recourse to states' rights. That is, Roberts in particular  might actually approve on principle leaving it up to the states whether to fund subsidies offered on the ACA exchanges, as he did with respect to the Medicaid expansion. By email, TNR's Brian Beutler responded:

Here's a fun thought. What if Roberts determines that an unambiguous reading of the statute denies subsidies to states that do not set up their own exchanges, but that this constitutes YET ANOTHER unconstitutional exercise of the spending power, a la the Medicaid expansion, and that the subsidies must flow everywhere.

Could the ACA exchanges go the way of the Medicaid expansion?

If the D.C. Circuit panel ruling in Halbig stands, and the state exchanges currently run by the federal government are deemed unable to grant subsidies to health plan buyers who qualify for them under the ACA's criteria, Nicholas Bagley posits that "the states with federally established exchanges will come under enormous pressure to establish their own exchanges." The federal government could make it easy for them, Bagley suggests, essentially allowing them to decree that they've "established" exchanges while letting Healthcare.gov continue to run them.  Thus the ACA would likely prove indelible after all:

True, not every state would accept the invitation to establish its own exchange, even if doing so were more or less a formality. But lots of states would, especially as voters started to howl about losing their tax credits. If so, even a bad outcome in Halbig might not matter that much in the end.

That quasi-forecast recalls the argument that all states will ultimately come round to accepting the ACA Medicaid expansion, albeit in their own sweet time (Arizona, the last state to implement Medicaid itself, did so 17 years after Congress established the program).

While this thought might be expected to soothe ACA proponents, for me it had the opposite effect. The Medicaid scenario might provide cover for the Supreme Court to uphold the D.C. Circuit panel in Halbig.

When Chief Justice John Roberts held in June 2012 that the ACA's individual mandate exceeded Congress's power under the Commerce Clause but was a legitimate exercise of Congress's taxing power, he justified the recourse to "the Government's alternative argument" by citing SCOTUS precedent that “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.” He would not thwart Congress's intent by destroying the law's ability to function if he could avoid it.

He showed no such reluctance, however, with regard to the ACA's requirement that states expand Medicaid eligibility to a new class of beneficiaries or else stand to lose federal funding for their existing Medicaid programs. He deemed that requirement coercive, and was joined by six other justices in striking the requirement down and making the Medicaid expansion voluntary for the states.