NRO Repackages Discredited Challenge To Affordable Care Act As States' Rights Struggle

Blog ››› ››› SERGIO MUNOZ

National Review Online called upon Republican state officials to "create a 30-state united front with Oklahoma" and join a challenge to the legality of new insurance marketplaces set up under health care reform, without mentioning that the theory behind this lawsuit is not new and has been widely criticized.

Claiming Republican Attorney General Scott Pruitt of Oklahoma has "found an ingenious way to call a halt to the Obamacare project," NRO failed to note that the administrative law challenge is neither new nor of Pruitt's creation, but rather represents his last-ditch attempt to salvage his previous constitutional challenge to the Affordable Care Act, rendered irrelevant by the Supreme Court's historic rejection of similar arguments in 2012.

Not credited by NRO, Pruitt's lawsuit is based on a novel theory of two libertarian conservative scholars and long-time and persistent Affordable Care Act critics, one of whom is an NRO contributing editor. Their highly contentious argument is that the new health care reform marketplaces, otherwise known as "exchanges" managed by either the federal or state governments, can only offer crucial tax credit subsidies for purchasing private insurance if the system is state-run. From NRO's description of the challenge:

Oklahoma attorney general Scott Pruitt has found an ingenious way to call a halt to the Obamacare project: Hold the federal government to the letter of that misbegotten law. His fight is a lonely one: While a majority of states signed on to the 2010 lawsuit opposing Obamacare on constitutional grounds, Oklahoma is standing largely alone today.


The tax credits apply only to those using exchanges created by the states. The federal government can create its own exchanges within states; however, it has no authority under the law to use them to offer subsidies and inflict the accompanying taxes.

But there was an unforeseen development: Some 33 states have refused to create those exchanges, Oklahoma among them. If a state's residents are not eligible for exchange subsidies, then its employers are not subject to the associated punitive tax. Contra the administration's amen corner in the media, this was not a rookie drafting error in the legislation -- it was an intentional feature of the bill. The law is explicitly written to deny subsidies to states that refuse to create exchanges. The president and congressional Democrats simply failed to anticipate that the majority of states would refuse to create exchanges.

NRO incorrectly characterizes the widespread debunking of this argument as merely an "inventive legal theor[y]" of the Department of Justice in service of the Obama administration's "habitually cavalier disregard for the rule of law."

In fact, the statutory argument that Pruitt adopted has been rejected not only by multiple legal and health reform experts, but also by the congressional drafters of the law and the nonpartisan Congressional Budget Office (CBO). These extensive critiques were issued not only when the idea was originally floated last summer, but also last fall when right-wing media misreported Oklahoma's lawsuit.

As has been reported, exchanges are not capable of offering affordable health insurance to working families without tax credits. Interpreting the Affordable Care Act as only allowing these federal subsidies in state-run exchanges would make the default federally-run exchanges useless. Because of this fact, the conclusion of most (even conservatives) is that any ambiguity in the statute is a classic drafting error, especially common in highly complex legislation pieced together from multiple sources.

NRO gets around this ambiguity problem - which the Congressional Research Service has confirmed a court would typically leave to the interpretation of the implementing agency - by claiming the mistake was intentional and that the drafters of the law foolishly thought every state would prefer to use its own resources rather than have the federal government set up its exchange.

Those Senators whose staff drafted the bill deny this dubious explanation that they set up an alternative exchange system that would be paradoxically unaffordable. An original architect of the exchange concept also denied such intent, as reported by Mother Jones:

Jonathan Gruber, who helped write former presidential candidate Mitt Romney's Massachusetts health care law as well as the Affordable Care Act, calls this theory a "screwy interpretation" of the law. "It's nutty. It's stupid," he says. And beyond that, "it's essentially unprecedented in our democracy. This was law democratically enacted, challenged in the Supreme Court, and passed the test, and now [Republicans] are trying again. They're desperate."

Gruber and [health law expert Timothy] Jost both say the interpretation conservatives are peddling has nothing to do with congressional intent. There is language scattered throughout the bill, Jost says, that refers to state-established exchanges, but as a whole, it's obvious that the law treats state and federal exchanges equally. "If you don't know anything about reading statutes, you assume that the way courts do it is by taking a sentence here and a sentence there," he says. "But if you look at it in context, the whole statute hangs together." If [Oklahoma's] interpretation is right, Jost says, it would mean that Congress wrote "the law to set up federal exchanges and then said they can't do anything."

Furthermore, in addition to the congressional drafters and Gruber, Reuters recently reported that the CBO, who repeatedly analyzed the bill for both Republicans and Democrats, also saw "no sign Congress meant to limit" the subsidies to state-run exchanges. From Reuters:

In a development that could complicate Republican efforts to limit funding for a key provision of President Barack Obama's healthcare law, a top congressional researcher said the issue of restricting subsidies never arose in producing the legislation.

Congressional staff involved in the creation of the law did not suggest that federal insurance subsidies be restricted only to states that run their own healthcare exchanges, the head of the nonpartisan Congressional Budget Office said on Thursday.

"Nor was the issue raised during consideration of earlier versions of the legislation in 2009 and 2010," CBO Director Douglas Elmendorf informed Republican Representative Darrell Issa in a letter dated December 6.

However, legal experts have warned that if last year's Supreme Court decision upholding the constitutionality of the Affordable Care Act proved anything, it's that even far-fetched reinterpretations of settled law can race though the federal courts if right-wing media, conservative activists, and state officials are properly aligned. As explained by Simon Lazarus, senior counsel for the Constitutional Accountability Center:

However such maneuvers play out in court, the administration and its allies need to play their game out of court as well. Specifically, they need to not repeat their near-death experience with the individual mandate challenge, when they left their adversaries free to frame the legal issues, unanswered, for the media, politicians, and the public, long before Solicitor General Donald Verrilli faced off against a phalanx of hostile justices. Health reform opponents have this point down pat. Just last month, Randy Barnett, architect of the strategy that blew past literally centuries of precedent and won four Supreme Court votes to throw out the ACA, counseled an American Enterprise Institute conference to "take very seriously" the lesson that, "an argument that many other people thought was frivolous is only going to get traction in the courts if there's a political valence that allows it to get traction."

For sure, the team behind this new guerilla assault takes that lesson very seriously. They have pushed out their message through conservative blogs, Fox News, and some major mainstream media outlets. Countering their message will not require public relations wizardry. To observers across the political spectrum, their upside-down core contention--that the Congress that enacted Obamacare actually "intended" to deny benefits necessary for millions of low-income Americans to afford health insurance--can be portrayed as just as in-your-face preposterous as, in fact, it is. But the truth won't prevail, if it isn't told.

Posted In
Government, Health Care Reform, Justice & Civil Liberties
National Review Online
Courts Matter
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