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The Manufactured Crisis of Halbig

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On July 22, 2014, a divided three-judge panel of the DC Circuit ruled that people living in states with federally-created Health Care Exchanges under the Affordable Care Act are not eligible for subsidies to help them cover the cost of health insurance. On the same day, a different three-judge panel in the neighboring Fourth Circuit said everyone who is eligible for the subsidies can get them, no matter whether the state or federal government created the Exchange through which you happen to purchase your insurance.

If the D.C. Circuit decision in Halbig v. Burwell became the law of the land, it would threaten to place health insurance once again out of reach for the approximately 4.7 million families and individuals living in the 36 states where the federal government set up the Exchange. But all of us who care deeply about that outcome should resist the effort by those on the other side to create a sense of crisis, because panic plays directly into their strategy.

The lawyers orchestrating the challenge to the subsidies are urging the Supreme Court to take up the cases immediately to resolve the circuit split - and, conveniently, halt what is likely to be an avalanche of rulings against them in the lower courts. They urge the full D.C. Circuit not to rehear the Halbig case, because that would delay Supreme Court review and continue uncertainty about whether people who get insurance on federal Exchanges will be eligible for tax subsidies and whether those who have received the subsidies will have to repay them to the federal government.

Not so fast. Whatever crisis of uncertainty exists is entirely of these lawyers' making. They are using their self-proclaimed crisis for purely tactical reasons - to by-pass the lower courts, where they expect to lose, and get into the Supreme Court where they expect the conservative majority there to give them a victory. Resolution of the issue will be welcome but no one needs to worry about having his or her subsidy "clawed back." And if, as many expect, the D.C. Circuit decides to reconsider Halbig en banc and reads the statute in its entirety and consistently with its purpose, as the Fourth Circuit did, there will be no circuit split for the Supreme Court to resolve. And while there are two cases making their way through other circuits, these lower courts should reach the same conclusion - that Congress intended for subsidies to be available to people who purchase insurance on Exchanges, whether state, federal, or a hybrid.

So much ink has been used in analyzing the various provisions of the ACA addressing Exchanges that I fear the issue looks harder than it is. While the ACA was not perfectly drafted and there is isolated language that supports the challengers' argument, the fair reading of the whole statute is that Congress intended the subsidies to be available to persons obtaining insurance on any Exchange set up under the ACA. That is the reading most consistent with Congress' intent to make health insurance available to as many people in the country as possible. Congress directed each state to establish an Exchange, but then provided for the federal government to establish "such Exchange" if a state elects not to do so. The ACA calls both of these marketplaces Exchanges. If Congress had intended to coerce states into setting up Exchanges, by conditioning the receipt of tax subsidies by its citizens on the creation of a state Exchange, it would have said so clearly and there would be a lot more evidence of this coercion than the challengers have been able to uncover. In fact, this argument has been refuted in court filings by those who would know best - the chairpersons of the responsible Congressional committees and state legislators who would have known if there had been any such threat.

The majority of federal judges has concluded that tax subsidies are available to people who purchase insurance on a federal exchange. This reading, by the way, avoids having to toss out a few other provisions of the ACA, such as the one that requires federal Exchanges, like state Exchanges, to report the amount of tax subsidies paid to people obtaining insurance on that Exchange. That requirement would be meaningless if people on federal Exchanges were not eligible for tax subsidies.

The two judges in the majority in Halbig focused on the literal terms of isolated language in the ACA and, in so doing, ignored the other provisions that conflict with that literal reading. Those judges are like the mechanic working on an engine who has a few pieces left over and just throws them away, not worrying that the engine no longer works the way it should. We should give the rest of the mechanic's team a chance to put the engine back together properly.

The lawyers' panic strategy is clever, but it must fail. This "crisis" can and should be resolved in the lower courts. But even if the Supreme Court takes this one, we should expect the Court to do its job and refuse to sacrifice legal analysis at the altar of a political agenda.

As for the state officials who are litigating against their own citizens' ability to get quality health care, they should be ashamed of themselves. They are sacrificing the interests of the people of their states to a political cause - a last ditch, desperate attempt to make the President's health care plan a failure. But it is not and will not be a failure. The millions of people who have health insurance for the first time will not happily give it up.