Today’s Wall Street Journal’s Review and Outlook examines the Halbig v Burwell ruling, invalidating health insurance subsidies to 36 states with federally run exchanges:
President Obama’s penchant for treating laws as unlimited grants of power to his Administration is catching up with him. The irony is that on Tuesday the nation’s second highest court ruled that ObamaCare is defined by what Congress enacted, not how his Administration has rewritten it.
In Halbig v. Burwell, the D.C. Circuit Court of Appeals held that the Administration violated the Affordable Care Act by expanding subsidies to the 36 insurance exchanges run by the federal government. The plain statutory language of ObamaCare repeatedly stipulates that these credits shall flow only through “an Exchange established by the State.” The 2-1 panel majority thus did not “strike down” part of ObamaCare, as liberals and the media claim. Using straightforward textual construction, the court upheld the law the President signed but it vacated the illegitimate federal-exchange subsidies he tried to sneak in via regulation.
Distinguishing between state and federal exchanges was no glitch or drafting error. In 2010 Democrats assumed that the unpopularity of ObamaCare would melt away and all states would run their own exchanges. Conditioning the subsidies was meant to pressure Governors to participate. To evade this language, the Internal Revenue Service simply pumped out a rule in 2012 dispensing the subsidies to all. The taxmen did not elaborate on niceties such as legal justification.
The courts usually defer to executive interpretation when statutes are ambiguous, but Mr. Obama’s lawyers argued that the law unambiguously means the opposite of the words its drafters used. Judge Thomas Griffith knocked this argument away by noting in his ruling that, “After all, the federal government is not a ‘State,’” and therefore “a federal Exchange is not an ‘Exchange established by the State.’”
The White House also argued that the court should ignore the law’s literal words because Congress intended all along to subsidize everybody, calling the contrary conclusion an “absurd result.” Yet this is merely ex post facto regret for the recklessness and improvisation of the way ObamaCare became law, when no trick was too dirty after Democrats lost their 60-vote Senate supermajority. Nancy Pelosi said we had to pass the bill to find out what’s in it. Now we know.
Judge Griffith, a George W. Bush appointee known as a moderate, writes that he and Judge Ray Randolph reached their conclusion “frankly, with reluctance,” given the practical consequences. “But, high as those stakes are, the principle of legislative supremacy that guides us is higher still. 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.”
About two-thirds of the U.S. population lives in one of the 36 federal-exchange states, and about 4.7 million people are receiving subsidies for which they are not legally eligible. The White House is making much of these lost subsidies if the ruling stands, but the fault is with the Democrats who drafted the bill, not the courts or scholars like Case Western Reserve law professor Jonathan Adler and Michael Cannon of the Cato Institute who first noticed the IRS abuse.
Another irony is that ObamaCare’s own architecture could thwart its goal of evolving into national health care. By attempting to coerce the Governors into joining, Democrats also handed them a veto. If Halbig survives on appeal, then Mr. Obama will have no choice but to ask Congress to rewrite the law if he wants subsidies for the 36 states with federal exchanges. And that would open up the law to a larger rewrite.
As it happens, the White House got lucky on Tuesday and a different appellate court, the Fourth Circuit, ruled in favor of the federal subsidies in a separate lawsuit—even if the White House position prevailed “only slightly,” as Judge Roger Gregory wrote.
“There can be no question that there is a certain sense to the plaintiffs’ position,” he continued. “If Congress did in fact intend to make the tax credits available to consumers on both state and federal Exchanges, it would have been easy to write in broader language, as it did in other places in the statute.”
The competing decisions increase the likelihood that the Supreme Court will eventually agree to hear the cases. If it is serious about its claims of damage, the White House could even seek an expedited High Court hearing. But the White House may be more worried that it will lose at the Supreme Court, so it will try to dodge a split appellate judgment by first seeking review by the entire D.C. Circuit.
Senate Democrats broke the filibuster in a rush last year to pack the D.C. Circuit with three more liberals, precisely in anticipation of this Halbig result. The liberal majority may well overturn Judge Griffith.
But our guess is that the Supreme Court will still take Halbig, and it should. The case is part of a growing body of jurisprudence on executive overreach, the separation of powers and political accountability. Mr. Obama’s profound disdain for Congress is inspiring a healthy legal counteroffensive that goes to the heart of American self-government.
In perhaps the greatest irony of all, Chief Justice John Roberts would then get a chance to honor his words from his famous—or infamous—2012 ruling upholding ObamaCare. He wrote then that, “It is not our job to protect the people from the consequences of their political choices.” Indeed.