Analysis: Halbig v. Burwell

Ok, as promised, I have now read the opinions in the Obamacare subsidy cases. I’m sure it will surprise nobody at all I conclude the DC Circuit has the right of it, and the language of the statute expressly forbids the payment of the subsidies in federally established exchanges. [EDIT: As blogger Jill Renshaw corrects me in the comments, the statute does not expressly forbid payments in federal exchanges, it does so implicitly. Rather, it expressly limits such payments to State established exchanges.]

Important links:

  • 26 USC 36b A section of the Internal Revenue Code, it provides direction to IRS on how the subsidies should be established and conducted. This is the section including the language “…enrolled in through an Exchange established by the State under 1311…” which is the cause of action of all of this legal bumf.
  • 5 USC 706 The Administrative Procedures Act, the actual law under which the Obamacare challenge is mounted.
  • 42 USC 18031 The section of PPACA defining what an American Health Benefit Exchange (the Exchanges) is, and does. Section (b)(1) requires each State to establish one by 1JAN2014. Section (d)(1) is “Section 1311 of PPACA” as quoted above in the IRS code link, and tells the States how to go about setting one up and what guidelines they must meet.
  • 42 USC 18041 Section 1321 of PPACA. Section (c)(1) tells the Secretary of HHS to establish an exchange by 1JAN2014 in those States who are unwilling or incapable of so doing.
  • 467 US 837 A Supreme Court opinion in the case styled Chevron USA, Inc. v. Natural Resources Defense Council, Inc. Chevron is the case where the Supremes determined how the US court system shall interpret regulatory rulemaking in places where the text of the controlling statute is unclear, contradictory or ambiguous. Among many, many other things, Chevron holds “[where] Congress has directly spoken to the precise question at issue” courts must defer to the exact statutory language; and where the Congress has not, the regulatory agency, having been established by the Congress for the purpose of writing such things, is entitled to a good deal of deference.
  • United States Court of Appeals for the District of Columbia Circuit/14-5018 The opinion of the DC Circuit in the case of Halbig v. Burwell.
  • (No, actually, I don’t expect you guys to read all that crapdoodle. I did it so you don’t have to. But if you want to argue with me, put your reading glasses on…)

The basic facts of the case are fairly widely known, but I will recount them in brief. When Congress wrote Obamacare, they expected all of the States to establish an exchange, and were highly surprised many chose not to and others were not capable of accomplishing the task. The exchanges provide the vehicle by which Obamacare comes to the People; that’s where you go to comparative shop policies, and buy one. That’s where you go to apply for a government subsidy to help pay for the policies. The ACA also establishes what started life as a penalty for not having insurance and was later magically transformed into a tax for not having insurance by the prestidigitation of John Robers, Chief Justice of the Supreme Court. The statutory language provides people whose income lies between 100% and 400% of the poverty level are qualified for the subsidies; and that persons who could not find a policy at or below 8% of their annual income were exempt from the taxes. At particular issue in the case is the precise language quoted above in the IRS Code link, whereby the subsidies are paid. The government argues Congress intended for the subsidies to apply to everybody. Halbig, et al, argue the language in the link specifies the subsidies will be paid only in exchanges “established by the State under section 1311”. This is important because plaintiffs reside in a State that did not establish an exchange, and their income level is such no policies available to them would fall under 8% of their income, thereby exempting them from the Obamacare slave collar. Therefore, by paying the subsidies in non-establishing States, they allege, IRS has damaged them by forcing them to either buy a policy against their will, or be subject to the taxes for having failed to do so. Plaintiffs brought suit in Federal District Court to enjoin IRS from paying the subsidies in non-establishing states, arguing under the Administrative Procedures Act IRS lacks authority to do so as it directly contravenes the statutory language. And that’s how we got here.

The essential conflict in the case is, does the PPACA say what Congress wants it to say, or does PPACA say what Congress actually wrote in the law. The government, and the dissenting judge (Senior Circuit Judge Edwards), think the law says whatever it must to enact the Congress’ purpose. Their essential argument is it’s ludicrous to think the Congress would have written a law that allowed the States to undo it just by not establishing an exchange, thereby causing the dreaded “adverse selection death spiral” they fear so greatly. The Opinion of the Court (Circuit Judge Griffith) disagrees. In a lengthy, involved and carefully reasoned opinion, citing dozens of previous cases, he takes each of the government’s arguments in turn and defeats them one by one. Primarily, he concludes the Congress did, in fact, write a law that allows the states to do just exactly that because two different sections of the law– the establishment of exchanges in the territories which are not states, and the now-repealed CLASS Act portion of PPACA– write provisions requiring guaranteed issue without providing for mandated compliance. Thus, having done so in two other places in the act, it is not possible for the Government to argue the Congress would not have done it. The entire opinion is filled with the same thing. When the Government argued Section 1321 (federal) exchanges were mere replacements for Section 1311 (State) exchanges, and the federal government “stood in the shoes” of the States to establish them, well, over here in this other section he finds the Congress exactly defining what they mean by a “State” and the feds don’t qualify. When the Government argues in one section the actual intent of the Congress was to exclude this or that, over in another section the Congress has enacted specific language excluding things.  And on and on…

The bottom line is very simple: 26 USC 36b clearly and unambiguously states the subsidies will be paid in “exchanges established by the State under 1311” and the Court, by long precedent [a very great number of case law citations omitted here], does not have the right, or the authority, to change the language. Similarly, it is not possible to read this as rendering the statute moot, because the Congress has used identical constructions in other parts of the statute, despite the fact those other sections risk the same adverse selection, and the Congress appeared to be Ok with it there. It is possible to argue this decision is not what the Congress intended, but it can not be argued this decision is not what the Congress said, and in the absence of clear, unambiguous proof of Congress’ intent– which proof does not exist outside the text of the law– the Court has no authority to rewrite the law just because it won’t do what Congress wanted it to do the way they wrote it. It is, in other words, Congress’ job to fix that, not the Court’s. Therefore, as the “Congress has directly spoken to the precise question at issue” in the text of the law, by theory inherent in Chevron the written language of the law controls.

I incline my agreement with Judge Griffith. The actual wording of the statute is what the law is, and must be enforced.


themaskedblogger is a native born Texan, a registered voter and possessed of some minimal ability to read, write and think.

Posted in Courts, Domestic Policy, Healthcare and health insurance
3 comments on “Analysis: Halbig v. Burwell
  1. Jill Renshaw says:

    Author writes: “he language of the statute expressly forbids the payment of the subsidies in federally established exchanges.”

    Uh, No. I suspect you don’t know what the word “expressly” means. (Kind of like how the kids today use the word “literally” to mean “NOT literally”).

    The statute IMPLICITLY limits subsidies to state exchanges by failing to say anything about the federal exchanges at all. In order to “expressly forbid”, there must be language directly to that point. The fact that there is NOT any such language is why the case went to court in the first place.

    Just saying: Language is important. That is the whole point of this article, right? So pay attention!

    • themaskedblogger says:

      Well done! You’re perfectly correct, and I was wrong. The language expressly limits payments to state-established exchanges but, while functionally equivalent, it is not quite the same thing as expressly forbidding them in federal exchanges. Language is important, as you observe, and that is the point of the article.

      My thanks for the correction, and seriously. I strive for honesty and consistency in blog, and I appreciate readers helping to keep me honest. FWIW, yours is the first comment any of my articles on this blog have drawn. It is fitting– and humbling– the first should be a correction. All authors need humbling from time to time, definitely including me 🙂

  2. […] a quick update; as I predicted, the losers in the 4th Circuit’s King v. Burwell dismissal have today appealed the case to […]

Leave a Comment

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Enter your email address to follow this blog and receive notifications of new posts by email.

%d bloggers like this: