Four words could be ACA’s Water­loo

The Times Herald (Norristown, PA) - - OPINION -

WASH­ING­TON — Some­one you prob­a­bly are not fa­mil­iar with has filed a suit you prob­a­bly have not heard about con­cern­ing a four-word phrase you should know about. The suit could blow to smithereens some­thing ev­ery­one has heard al­to­gether too much about, the Pa­tient Pro­tec­tion and Af­ford­able Care Act (here­after, ACA).

Scott Pruitt and some kin­dred spir­its might ac­cel­er­ate the ACA’s col­lapse by block­ing another of the Obama ad­min­is­tra­tion’s law­less uses of the In­ter­nal Rev­enue Ser­vice. Pruitt was elected Ok­la­homa’s at­tor­ney gen­eral by promis­ing to de­fend states’ pre­rog­a­tives against fed­eral en­croach­ments and to­day he and some prop­erly liti­gious peo­ple else­where are de­fend­ing a state pre­rog­a­tive that the ACA ex­plic­itly cre­ated. If they suc­ceed, the ACA’s dis­in­te­gra­tion will ac­cel­er­ate.

Be­cause un­der the ACA, insurance com­pa­nies can­not refuse cov­er­age be­cause of an in­di­vid­ual’s pre-ex­ist­ing con­di­tion. Be­cause many peo­ple might there­fore wait to pur­chase insurance af­ter they be­come sick, the ACA re­quires a man­date to com­pel peo­ple to buy insurance. And be­cause many peo­ple can­not af­ford the insurance that sat­is­fies the ACA’s cri­te­ria, the ACA man­date makes it nec­es­sary to pro­vide sub­si­dies for those peo­ple.

The four words that threaten dis­as­ter for the ACA say the sub­si­dies shall be avail­able to per­sons who pur­chase health insurance in an ex­change “es­tab­lished by the state.” But 34 states have cho­sen not to es­tab­lish ex­changes.

So the IRS, which is charged with en­forc­ing the ACA, has rid­den to the res­cue of Barack Obama’s pride and joy. Tak­ing time off from writ­ing reg­u­la­tions to re­strict the po­lit­i­cal speech of Obama’s crit­ics, the IRS has said, with its breezy in­dif­fer­ence to le­gal­ity, that sub­si­dies shall also be dis­pensed to those who pur­chase insurance through fed­eral ex­changes the gov­ern­ment has es­tab­lished in those 34 states. Pruitt is chal­leng­ing the IRS in the U.S. Dis­trict Court for the East­ern Dis­trict of Ok­la­homa, and there are sim­i­lar chal­lenges in Indiana, Vir­ginia, and Wash­ing­ton, D.C.

The IRS says its “in­ter­pre­ta­tion” — it ac­tu­ally is a re­vi­sion — of the law is “con­sis­tent with,” and jus­ti­fied by, the “struc­ture of” the ACA. The IRS means that with­out its rule, the ACA would be un­work­able and that Congress could not have meant to al­low this. The ACA’s leg­isla­tive his­tory, how­ever, demon­strates that Congress clearly — and, one might say, with mal­ice afore­thought — wanted sub­si­dies avail­able only through state ex­changes.

Some have sug­gested that the lan­guage lim­it­ing sub­si­dies to state-run ex­changes is a draft­ing er­ror. Well.

Some of the ACA’s myr­iad de­fects do re­flect its slap­dash en­act­ment, which pre­saged its chaotic im­ple­men­ta­tion. But the four po­ten­tially lethal words were care­fully con­sid­ered and ex­press Congress’ in­tent.

Congress made sub­si­dies avail­able only through state ex­changes as a means of co­erc­ing states into set­ting up ex­changes.

In Se­nate Fi­nance Com­mit­tee de­lib­er­a­tions on the ACA, Chair­man Max Bau­cus, D-Mont., one of the bill’s pri­mary au­thors, sug­gested the pos­si­bil­ity of mak­ing state-run ex­changes the sole source of sub­si­dies be­cause only by do­ing so could the fed­eral gov­ern­ment in­duce state co­op­er­a­tion with the ACA. Then the law’s insurance re­quire­ments could be im­posed on states with­out run­ning afoul of con­sti­tu­tional law prece­dents that pre­vent the fed­eral gov­ern­ment from com­man­deer­ing state gov­ern­ments.

The per­ti­nent lan­guage orig­i­nated in the com­mit­tee and was clar­i­fied in the Se­nate. (See “Tax­a­tion With­out Rep­re­sen­ta­tion: The Il­le­gal IRS Rule To Ex­pand Tax Cred­its Un­der The PPACA,” by Jonathan H. Adler and Michael F. Can­non in Health Ma­trix: Jour­nal of Law-Medicine.)

Also, pas­sage of the ACA re­quired the vote of ev­ery Demo­cratic se­na­tor. One, Nebraska’s Ben Nel­son, ad­mirably op­posed a fed­eral ex­change lest this be­come a step­ping­stone to­ward a sin­gle-payer sys­tem.

If courts, per­haps ul­ti­mately in­clud­ing the Supreme Court, dis­al­low the IRS’ “in­ter­pre­ta­tion” of the law, the ACA will not func­tion as in­tended in 34 states with 65 per­cent of the na­tion’s pop­u­la­tion. If courts al­low the IRS’ de­marche, they will val­i­date this:

By dis­pens­ing sub­si­dies through fed­eral ex­changes, the IRS will spend tax rev­enues with­out con­gres­sional au­tho­riza­tion.

And by en­forc­ing the em­ployer man­date in states that have only fed­eral ex­changes, it will col­lect taxes — re­mem­ber, Chief Jus­tice John Roberts saved the ACA by declar­ing that the penalty en­forc­ing the man­date is re­ally just a tax on the act of not pur­chas­ing insurance — with­out con­gres­sional au­tho­riza­tion.

If the IRS can do nei­ther, it can­not im­pose penal­ties on em­ploy­ers who fail to of­fer ACAap­proved insurance to em­ploy­ees.

If the IRS can do both, Congress can dis­band be­cause it has be­come pe­riph­eral to Amer­i­can gov­er­nance.


Ge­orge Will’s email ad­dress is georgewil­l­wash­


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