John Barrasso's tell: King is a fraud

In his determination to accent the negative in characterizing the ACA, Senator John Barrasso has exposed the absurdity -- in fact the fraud -- at the heart of the King v. Burwell suit.

Here's how Barrasso characterizes the IRS rule allowing subsidies to flow through the federal exchange:

“Instead of bullying the Supreme Court, the president should spend his time preparing for the reality that the court may soon rule against his decision to illegally issue tax penalties and subsidies on Americans in two-thirds of the country,” he said in a statement. “Congress will not pass a so-called ‘one-sentence’ fake fix.”

The fix is "fake" because, according to this party line, Congress never intended for the federal exchange to be empowered to credit subsidies. But Barrasso leads with "penalties" because it's more fun to emphasize the stick than than the carrot. The individual mandate is the flip side of the subsidies: without subsidies, the vast majority of the uninsured would be exempt because coverage would not be affordable.

The ACA provision that should kill King, updated

[Update, 1/23: The ACA provision discussed below, which directs the federal as well as state exchanges to report to the Treasury tax credits provided to ACA private plan buyers, is treated in full in the government's respondents' brief against the King plaintiffs. The relevant paragraphs from the brief are posted at bottom.]
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July 29 - Ever since a three-judge panel of the D.C. Circuit Court found in Halbig v. Burwell that the ACA only authorizes subsidies to be paid for health insurance bought in state-run exchanges, not in state exchanges set up by the federal government, progressive reporters have been ransacking the record to  prove what they always knew: that the law's creators never intended to exclude federally run exchanges from the subsidy regime.  Today, Greg Sargent and Jonathan Cohn both published compelling circumstantial evidence to that effect.

It seems to me, though, that such circumstantial evidence should be unnecessary. The ACA includes a provision that ought to settle the issue -- on that the majority in Halbig egregiously misread. Health law scholar Timothy Jost highlighted the dispositive provision back in September 2011, two months after the IRS issued a rule spelling out that subsidies would be available through the federal exchange (at which point the brains behind the Halbig suit, Michael Cannon and Jonathan Adler, immediately began arguing in print that the IRS rule contradicted the ACA's text). With reference to the drafting error stipulating only that subsidies be credited through an exchange "established by a state," Jost asserted:

 we do not need to rely on the courts to correct this error. Congress corrected it itself.

Four days after Congress passed the Patient Protection and Affordable Care Act, it enacted the Health Care and Education Reconciliation Act of 2010. Section 1004 of HCERA amended section 36B(f) of the IRC to impose on exchanges established under section 1311(f)(3)—that is, state exchanges—and under section 1321(c)—that is federal exchanges, the obligation to report to the IRS and to the taxpayer information regarding tax credits provided to individuals through the exchange. In this later-adopted legislation amending the earlier-adopted ACA, Congress demonstrated its understanding that federal exchanges would administer premium tax credits.

In a subsequent post, Jost noted, "As a later-adopted statute, HCERA would take precedence over PPACA if there were a contradiction."

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.

The ACA provision that should have killed Halbig

Ever since a three-judge panel of the D.C. Circuit Court found in Halbig v. Burwell that the ACA only authorizes subsidies to be paid for health insurance bought in state-run exchanges, not in state exchanges set up by the federal government, progressive reporters have been ransacking the record to prove what they always knew: that the law's creators never intended to exclude federally run exchanges from the subsidy regime.  Today, Greg Sargent and Jonathan Cohn both published compelling circumstantial evidence to that effect.

It seems to me, though, that such circumstantial evidence should be unnecessary. The ACA includes a provision that ought to settle the issue -- on that the majority in Halbig egregiously misread. Health law scholar Timothy Jost highlighted the dispositive provision back in September 2011, two months after the IRS issued a rule spelling out that subsidies would be available through the federal exchange (at which point the brains behind the Halbig suit, Michael Cannon and Jonathan Adler, immediately began arguing in print that the IRS rule contradicted the ACA's text). With reference to the drafting error stipulating only that subsidies be credited through an exchange "established by a state," Jost asserted:

 we do not need to rely on the courts to correct this error. Congress corrected it itself.

Four days after Congress passed the Patient Protection and Affordable Care Act, it enacted the Health Care and Education Reconciliation Act of 2010. Section 1004 of HCERA amended section 36B(f) of the IRC to impose on exchanges established under section 1311(f)(3)—that is, state exchanges—and under section 1321(c)—that is federal exchanges, the obligation to report to the IRS and to the taxpayer information regarding tax credits provided to individuals through the exchange. In this later-adopted legislation amending the earlier-adopted ACA, Congress demonstrated its understanding that federal exchanges would administer premium tax credits.

In a subsequent post, Jost noted, "As a later-adopted statute, HCERA would take precedence over PPACA if there were a contradiction."