Health Care

| July 22, 2014

What’s in Obamacare? Federal courts disagree

Then-Speaker of the House Nancy Pelosi famously said of the Affordable Care Act, “we have to pass the bill so that you can find out what is in it.” Today, two federal courts of appeals tried to determine what is in just one sentence of the act—and came to opposite conclusions.

The ACA scheme tries to force people to buy health insurance, penalizing them if they don’t and rewarding many people with subsidies if they do. Trouble is, the actual text of the ACA only allows subsidies for those “covered by a qualified health plan … enrolled in through an Exchange established by the State….”

The federal government, of course, is not a state. And today, 34 states have refused to create exchanges. People in those states are covered by a federal exchange. The Obama Administration determined early on to ignore the ACA text and, through an IRS rule, give subsidies to people enrolled through the federal exchange. Extending subsidies also allows the Administration to enforce the mandate and penalty parts of the ACA against people in those recalcitrant states.

Multiple lawsuits challenged the IRS rule. In the two decided today, the judges agreed common sense favors reading the ACA to say exactly what it says: subsidies only apply to those enrolled through a state exchange.

The Court of Appeals for the Fourth Circuit nevertheless held that plain text and common sense must give way to the Court’s understanding of what Congress and the President wanted to do. The Court of Appeals for the D.C. Circuit came to the opposite result, holding that the plain meaning of the text must govern.

Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges.

Thus, although our decision has major consequences, our role is quite limited: deciding whether the IRS Rule is a permissible reading of the ACA. Having concluded it is not, we reverse the district court and remand with instructions to grant summary judgment to appellants and vacate the IRS Rule.

Attorney General Scott Pruitt filed briefs in both cases and has a suit pending before a federal district court in Oklahoma, all in favor of enforcing the plain text of the ACA and striking down the Obama Administration’s IRS rule.

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