Brian Beutler of the New Republic had a post yesterday titled The Conservative Judges Who Ruled Against Obamacare Missed This One Very Important Detail. The post selectively quotes the judges in the Halbig majority, omitting the part that destroys the premise of his entire post.
I’ll quote Beutler at length so you can see what his omission was, and how it kills his argument:
We now know that two conservative judges on the D.C. Circuit Court of Appeals have declared it illegal for the government to subsidize Obamacare health plans in states that didn’t set up their own insurance exchanges. In reaching that conclusion, Judge Thomas Griffith, who authored the opinion of the court, sought to rebut each of the Obama administration’s arguments to the contrary—that the law clearly contemplates subsidizing health plans in every state whether or not a state built its own marketplace.
But in one instance he based his counterargument on information that became outdated less than one week ago. And the recent development turns that counterargument on its head.
One of the White House’s most straightforward arguments is that neither Congress nor the administration would have approved a punitive system so at odds with the ACA’s ultimate, stated goal of achieving near-universal insurance coverage. The law seeks to achieve near-universal coverage by mandating the purchase of guaranteed, subsidized (and thus affordable) health plans. Take away the subsidies, and the plans are no longer affordable. If the plans aren’t affordable, they’re no longer compulsory. And if they aren’t compulsory and affordable the coverage expansion goal will be unattainable.
But if you’re going to conclude that the law unambiguously makes those subsidies conditional, you ought to dispel every notion that Congress had other ideas, which is what Griffith set out to do.
I sympathize with the poor clerks who were assigned to Google for evidence that the administration and Congress were content with ignoring the importance of the subsidies to the expansion goal. This Sarah Kliff article from December is what they came up with. It turns out that due to drafting quirks, the ACA neither mandates coverage, nor provides for subsidies, in several U.S. territories. Per Griffith, “the supposedly unthinkable scenario the government and dissent describe—one in which insurers in states with federal Exchanges remain subject to the community rating and guaranteed issue requirements but lack a broad base of healthy customers to stabilize prices and avoid adverse selection—is exactly what the ACA enacts in such federal territories as the Northern Mariana Islands, where the Act imposes guaranteed issue and community rating requirements without an individual mandate. This combination, predictably, has thrown individual insurance markets in the territories into turmoil. But HHS has nevertheless refused to exempt the territories from the guaranteed issue and community rating requirements.”
If the subsidies aren’t central to the program in Guam, why must they be self-evidently necessary in Nebraska? He didn’t get the memo.
Last week, Kliff wrote an update. “In letters sent July 16, the Obama administration notified territorial regulators that their residents would be largely exempted from health law requirements…perhaps most importantly the requirement that insurers offer coverage to all shoppers.”
In other words, contrary to opinion of the court, the administration believes that absent subsides (and thus absent a broadly applicable mandate) the coverage guarantee has to go as well, leaving the law’s explicit coverage goals well out of reach.
Look again at the way Beutler quoted the Halbig majority. Beutler’s version of the quote purports to end in a period: “But HHS has nevertheless refused to exempt the territories from the guaranteed issue and community rating requirements.” But actually, there is a comma after the word “requirements” — and what Beutler leaves out is . . . rather significant. Here’s the actual quote:
But HHS has nevertheless refused to exempt the territories from the guaranteed issue and community rating requirements, recognizing that, “[h]owever meritorious” the reasons for doing so might be, “HHS is not authorized to choose which provisions of the [ACA] might apply to the territories.”
That’s my emphasis. As I pointed out yesterday, HHS initially admitted that it had no authority to exempt territories from guaranteed issue (i.e., forcing insurance companies to cover pre-existing conditions). HHS’s subsequent reversal is best understood as staking out a litigation position ahead of the Halbig decision. The apparent purpose of the policy change was so that lawyers could claim in future court arguments that the law is unworkable unless all its component parts are in effect. (And if folks like Sarah Kliff and Brian Beutler want to trumpet that position in online lefty media, so much the better.) I believe the odd timing of the announcement, just days before Halbig was announced, was due to the Administration’s desire to avoid the appearance that they were simply reacting to the decision.
On Twitter, Beutler has claimed that he omitted that part of the court’s quote because his piece “wasn’t about” the part he left out. But that claim does not hold up to scrutiny. The whole point of Beutler’s piece was to contradict the court when the court said: HHS has taken the position that the law can, in fact, be workable even if parts of the law are not in effect. But that was not the court’s point. The court’s main point was that the law itself did not exempt territories from guaranteed issue even though it did exempt them from the mandate. In other words, the drafters of the law (not HHS) did not require all three legs of the “three-legged stool” (guaranteed issue, mandate, and subsidies) in the territories. And HHS initially agreed, only because it “recognized” that it had to — admitting that the law’s very terms compelled them to require guaranteed issue without the mandate.
The point is: the law’s drafters did not always require all three legs of the stool — contrary to the Adminstration’s arguments in court.
The fact that HHS did a complete 180 days before Halbig and exempted territories from guaranteed issue, even though they previously said they had zero authority to do that, does not undercut the court’s point at all. It just shows that HHS was trying to bring its policies into line with the lawyers’ arguments — even if doing so violated the law, by their own admission.
And if Brian Beutler had provided his readers with the court’s entire quote, his readers would have known that.
(H/t: John Sexton.)