There is an interesting twist this morning on the controversy over the Halbig decision that we have previously discussed. As I have stated in testimony before Congress and columns, I do not view the law as ambiguous and agree with the conclusion in Halbig as a matter of statutory interpretation, even though I think that the change ordered by the Obama Administration makes sense. Nevertheless, the White House and various supporters have insisted that the key language in the law linking tax credits to exchanges “established by a State” was a typo and nothing more. One of those voices has been Jonathan Gruber, a Massachusetts Institute of Technology economist who played a major role in the drafting of the law and was paid almost half of a million dollars to consult with the Administration on the law. He told MSNBC recently that “It is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it`s a typo, that they had no intention of excluding the federal states.” However, a libertarian group just uncovered a video showing Gruber saying quite clearly after the passage of the law that this provision was a quid pro quo device: state exchanges for tax credits. Conservative sites have lit up over the video below showing Gruber essentially describing the very tradeoff identified in Halbig.
As I explained in my testimony, at issue is the express language of the statute that ties the creation of state (as opposed to federal) exchanges to the availability of tax credits. Congress established the authority of states to create their own exchanges under Section 1311. If states failed to do so, federal exchanges could be established under Section 1321 of the Act. However, in Section 1401, Congress established Section 36B of the Internal Revenue Code to authorize tax credits to help qualifying individuals purchase health insurance. However, Section 1401 expressly links tax credits to qualifying insurance plans purchased “through an Exchange
established by the State under 1311.” The language that the qualifying exchange is “established by the State” seems quite clear, but the Administration faced a serious threat to the viability of the Act when 34 states opted not to create exchanges. The Administration responded with an interpretation that mandates: any exchange – state or federal – would now be a basis for tax credits. In adopting the statutory construction, the Administration committed potentially billions in tax credits that were not approved by Congress. The size of this financial commitment without congressional approval also strikes at the essence of congressional control over appropriation and budgetary matters.
Around the 31 minutes mark on the video below, Gruber addresses the issue:
What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.
Critics have called out Gruber for later joining the counter spin from the White House and denouncing that very interpretation as “nutty.”
I can understand Gruber changing his views on the issue and there is no need to pummel him. He is quoted on one site in explaining that “I was speaking off-the-cuff. It was just a mistake.” However, in fairness, it does show that even supporters at the time viewed the language as meaning exactly what it said. The import is that there was a carrot and stick approach to exchanges. In crafting the act, Congress created incentives for states to set up health insurance exchanges and disincentives for them to opt out. The law, for example, made the subsidies available only to those enrolled in insurance plans through exchanges “established by the state.” However, to the great surprise of the administration — some 34 states opted not to establish their own exchanges, leaving it to the federal government to do so. This left the White House with a dilemma: If only those enrollees in states that created exchanges were eligible for subsidies, a huge pool of people would be unable to afford coverage, and the entire program would be in danger of collapse.
In the end, this issue will not be decided by spin but statutory interpretation. It will be interesting to see if both the Fourth Circuit and D.C. Circuit opinions go to en banc review. You could have the D.C. Circuit flip the result in favor of the Administration and the Fourth Circuit flip in favor of the challengers — preserving the split in the circuits. Even without such a split, however, there is a strong argument for Supreme Court review. It will be equally interesting to see if briefs bring in Gruber’s statement since he has signed amicus briefs in favor of the Administration’s interpretation.
Since the Democrats own this law, warts and all, then the States (Republicans) are in good shape. They will simply claim they really didn’t need to waste taxpayer money setting up an exchange because the Feds would do it for them. They will insist they had the same understanding as the States that opted in regarding the 36B tax credits and that they expected the law to be what was sold.
This will be portrayed as just another example of the Democrats complete disregard for healthcare for everyone. The Republicans will appear fiscally conservative,compassionate and a defender of citizens of the State; Democrats, well, not so much.
Yes Squeeky, it’s like I’ve said elsewhere, this development has the potential to put Republicans on the backbench in more than a few states
Let’s pretend for a moment it was a typo and the tax credits are eligible for ALL exchanges. Why then would any State set up an exchange when the Feds would do it for them? Look at Oregon for instance; the only thing gained was moving money from the Federal government to a very liberal State. So, was this a redistribution of wealth scam? Was this a jobs bill in disguise? It certainly doesn’t make sense for States to opt in for anything other than political advantage.
It looks to me like the Repubs are going to have major problems if the subsidies get disallowed. They had best get busy writing a Subsidy -Disallowance Relief Bill just in case. And not celebrate too much in the mean time. Plus, get their talking points ready about how this is Pelosi and the Dem ‘s fault. Just sayin’. . .
Squeeky Fromm
Girl Reporter
The line repeated thousands of times by the President and his sycophants “If you like your insurance you can keep your insurance” was a lie, AND THEY KNEW it was a lie. This monstrosity is suffering the death it deserves, slow and painful.
John Oliver – had the truth been reported by the media, the law would not have passed PERIOD. No ifs, ands, or buts about it.
Of course it was a typo, I mean at this point what difference does it make? Well, I’m not smart enough to figure out these questions I have, so perhaps some answers can come from this group.
What difference does the exchange host make? What is the incentive for the States to setup (or not) an exchange? Why bother establishing any state exchanges if the federal exchange provides the same benefit? If the State or Federal exchanges qualified the enrollee for tax credits then was the State’s right to opt out simply another illusion among many ACA illusions?
OR, should we look at this as no typo, but rather a long-term strategy for the Democrats. Is it logical to conclude they were counting on the negative fallout for those “recalcitrant” State governments? After all, once their residents discovered they do not qualify for tax credits because they didn’t have a State exchange; well, they would be looking for answers. Right?
So I ask, would this law have passed had the Federal exchanges been the only option? Would this law have passed had it been sold that only State exchanges would get tax credits? Would this law have passed, had the tax-paying residents of States that opted out would still be funding tax credits for the States that have opted in?
The law is ambiguous if you have the language of “established by the state” in it and not all 50 states go along with it. The assertion that it was a typo is hogwash. They had the “established by the state” language in there because they wanted all 50 states to agree to socialized medicine and not all 50 did. And when not all 50 did, the feds step in to pick up the slack. By virtue of that fact, the law and how it is administered is ambiguous. And since the word “state” is not well defined in this sense, the law is ambiguous. So it is not a typo and it is ambiguous.
Nick,
It’s not nice to fool Mother Nature.
The judicial branch takes risk when it attempts to make a deliberate end run around the legislative branch, which is the power and authority of the people.
Rules and protocols for rules’ and protocols’ sakes???
Let’s have a runoff. Send it back to Congress for a runoff. The Circuit Court en banc can’t conduct a runoff on an issue of this import and magnitude to the people.
The ACA has lost and there are sore losers. The judicial cannot act on ideology and vote/cheat its way out of evidence, facts and reality.
“Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.”
Gruber and the court want to devolve to INTENT.
I think it was the INTENT of the Framers of the Constitution to have issues decided by the people through their Congress and have legislation written by the people through their Congress,
NOT THE JUCICIAL BRANCH.
The judicial challenges the power of the people through their Congress with the power of the judicial branch. The judicial branch has no power to legislate or modify.
Is that the function of the judicial branch, to challenge the power of the people through their elected representatives in Congress?
I don’t think so.
This flawed ACA must revert to the Congress for disposition.
John, Maybe the position will be like the Clinton impeachment, no evidence will be presented. I always voted for Russ Feingold. He is famous for voting against the Patriot Act. But he was vilified and threatened w/ a primary for having the temerity to not follow the Dem cult. Silly Russ, he said what is a trial w/o evidence. I’m feeling “deja vu all over again.” Yogi Berra
MA,
I am anxiously awaiting you position on the fact of deliberation in the wording. It seems the Circuit is in a box with this video evidence.
Do you continue to believe the en banc vote will ultimately support the ACA?
Seems like it would expose the court and be an embarrassment.
I suppose it’s fun to argue over whether the gentleman is a prevaricator, but it has no bearing on the judicial construction of the legislation, assuming anyone remains interested in the rule of law rather than partisan gamesmanship.
Nick Spinelli
Carol, Bubba Clinton …
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In animal numbers, isn’t that just before Bubble Bush?
I like Bubba Watson.
You rike lock and loll.
Paul C. Schulte
Dredd – you are so far off the mark, you are in a different country.
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Yep …
Not in your country.
You live in the country where there is no military NSA spying on all the “free people.”
You live where the government is the size of a bathtub and the military is the size of the planet, because to your meme complex the military is not part of the government.
You live … well you get my drift … no use saying the whole book of a thousand sentences … you have clung to your sentence.
BTW.
How is Paul’s Egypt doing (Viva Egypt – 2)?
Dredd –
This is just so far off the mark. You really need to get a handle on reality.
Carol, Bubba Clinton and his defenders changed the Dem paradigm on perjury.
“since he has signed amicus briefs in favor of the Administration’s interpretation”. Hmmm . . . isn;t that somewhat akin to making a false statement to the court? Just askin’.
Jane L, Great comment. It seems there are no legit defenses to this Gruber’s gaffe. I’ve certainly read none here or on the internet. As you probably know, in DC a gaffe is when you accidentally speak the truth. That’s what occurred here. Those video cameras can be a mofo! That’s what I did for a living.
Another tape has surfaced in which Gruber makes the same point in PREPARED REMARKS.
Hardly “off the cuff” or “Speak-O”.
Liar.
Paul C. Schulte
Gruber is in CYA mode.
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CIA man mole mode.
Dredd – you are so far off the mark, you are in a different country.