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.
Bush amnesia syndrome.
“Bush set a lot of bad things in motion and they seem to have a life of their own.” -Swarthmore mom
Ex-Chief of C.I.A. Shapes Response to Detention Report
By MARK MAZZETTIJULY 25, 2014
http://www.nytimes.com/2014/07/26/world/george-tenet-ex-chief-of-cia-is-set-to-defend-actions-on-interrogation-program.html?_r=0
Well said, Swarthmore mom.
nick, When unemployment is below 5 percent, when there is some degree of normalcy in Iraq, when Roberts and Alito retire or at least are in the minority, and when the national security state pulls back. Bush set a lot of bad things in motion and they seem to have a life of their own. Cheney is responsible for some of them, but then Bush did chose him. No one is obsessed but YOU can’t re-write history.
SWM, I saw that, good news! I know a lot of people here who would be thrilled to get rid of Walker.
Is there any statute of limitations for you Bush obsessed folk? The statute has run for virtually and civil or criminal matter except murder.
“nick Bush may be out of office but we are still suffering from the two wars he started, his financial crash, and his right wing court appointees.” -swarthmore mom
…and a whole host of other problems.
When I was ~12 my old man voted against a strike but the members voted for a strike in a close vote. My old man told me the offer was a good one and the union leaders were just showboating, something the younger members couldn’t see. He told me the union would lose. He worked waiting tables for a few months. The union did get their ass kicked. All he got was lost wages. It opened the eyes of almost all the members.
My old man was an IAM member. He taught me about the inherent problem w/ unions, protecting the worst members and becoming all about the fat cats and not about the hard working members.
My mother was a state of Illinois public employees union member and my father in law was a newspaper guild member.
No, but my husband was when he was a student. He really believes in strong unions. You get better healthcare, working conditions, and pay. Most good blue collar jobs are still unionized, thankfully.
blue collar and union are not the same, SWM. Were you ever blue collar?
“blue collar jobs”… I though you hated unions.
Let me ask you something, SWM. Do you think I’m BSing you when I say I want to vote for Burke. Or, do you just send Walker stuff my way because I live in Wi. I have made it clear I only voted for him in the recall out of contempt for the hissy fit. I had 200k like minded cheeseheads w/ me on that. Do you believe that?
SWM, Much to my chagrin, Burke looks like a lightweight. I hope she finds her stride. I want to vote for her but she has to show me something more than she has.
This election will not be about the wars, and the economy is Obama’s. Funny, his economy has done fine for Wall St. but the blue collar folks that elected him are shit outta luck so far. Finally, al Qaeda is “not on the run.” It is now morphed into ISIS and it is exponentially more powerful. There is going to be hell to pay for this incompetence. I know you don’t see it. But, Dem pols do. They’re running away from Obama.
http://www.washingtonpost.com/blogs/the-fix/wp/2014/07/23/scott-walker-is-tied-with-his-challenger-in-a-new-poll-just-wait-until-the-campaign-starts/
nick, Most polls show they hold Bush responsible for the wars, the economic collapse and really don’t care much for the Roberts court. As for the elections this fall, there are quite a few democrats that are running in red states and some of them will likely lose. Don’t see the democrats losing in Michigan or Minnesota. That some will lose in Romney states is expected. Don’t see a tidal wavelike 2010. I think people realized that the tea party is not the answer. Scott Walker is now tied.
SWM, We disagree. The voters will speak later this year. I don’t think they’ll be thinking about Bush. Do you?
““Yea but Bush,” The issue is OBAMA. Bush is long gone. I never voted for Bush. The incompetence of the big govt. philosophy has taken a gut shot, and those gut shots hurt like hell and are almost always fatal. ” nick Bush may be out of office but we are still suffering from the two wars he started, his financial crash, and his right wing court appointees.
Mespo,
A bad law that does good things is still a bad law. Maybe you don’t care how law is made but some people aren’t nearly so myopic. Tomorrow you will wake up and some other President will have an agenda and some other Congress will be making laws and they too may care more about “doing good things” rather than following the rule of law. But in this new Executive and this new Congress, their good things (in your worldview) aren’t good at all. Oops! Too late; elections have consequences, right?