It’s been a busy Obamacare week. Last week Halbig and King dropped on the same day. This morning Sissel, the origination clause challenge dropped. And now, there is a new Obamacare challenge.
In West Virginia v. HHS, the Attorney General of the Mountain State is challenging the President’s “administrative fix” to Obamacare. After the President’s promise that “if you like your plan, you can keep your plan” proved to be the “lie of the year,” the Administration unilaterally changed the law to allow people to keep illegal plans. Specifically, the “fix,” which was not subject to the notice-and-comment process, gave state insurance commissioners the burden of allowing insurers to sell these illegal plans. West Virginia is asserting an injury based on this change.
Here is the key paragraphs describing the violation of the law:
Adopted without any advance notice or opportunity for public comment, the Administrative Fix unilaterally suspends federal enforcement of the ACA against individual plans made illegal by the ACA and fundamentally transforms what Congress intended to be a regime of “cooperative federalism.” Prior to the Administrative Fix, the ACA gave the States the option of enforcing the law’s federal requirements against non-compliant individual health plans, but required the federal Department of Health and Human Services to enforce the requirements if the States declined to do so. The States thus had no authority over whether the federally mandated requirements would ultimately be enforced. But under the Administrative Fix, HHS abdicated its enforcement role and left the States solely responsible—and accountable—for deciding whether federal law would be enforced. …
The Administrative Fix is an unlawful agency rule for several reasons.
a. First, it is contrary to the ACA. Under the ACA’s enforcement scheme, HHS “shall enforce” the Act’s eight market requirements against individual health plans if the States do not do so. Put another way, the ACA sets up a mandatory regime of cooperative state/federal enforcement. The Act prohibits HHS from leaving enforcement discretion over the ACA’s eight federal market requirements solely to the States.
b. Second, the Administrative Fix was promulgated without public notice and opportunity to comment as required by the Administrative Procedure Act.
c. Third, the Administrative Fix constitutes unlawful delegation of federal executive and legislative powers by the Executive Branch to States.
There are strong parallels to the proposed Boehner suit, which faults the President for suspending the requirements of the ACA, and taking care that the laws are faithfully executed.
The primary hurdle here, as always, is standing. While the complaint does not sketch out in detail, it alludes to a “political accountability” theory of standing, based on Justice O’Connor’s opinion in New York v. United States. I discussed some of these themes in this post. In short, the President shifted the burden of enforcing the law onto the state, thus distorting who bears political accountability for decisions.
With the Administrative Fix, the President intentionally and improperly sought to shift to the States the potential political burden for the cancellation of individual health plans. In announcing the new rule, he explained his desire “to be able to say to these folks, you know what, the Affordable Care Act is not going to be the reason why insurers have to cancel your plan.” He stressed that after the Administrative Fix, it would be “state insurance commissioners [who] still have the power to decide what plans can and can’t be sold in their states.” Although the ACA still makes it unlawful to renew an individual plan that does not comply with the law’s federally mandated market requirements, the President has attempted to transfer the legal and political responsibility to the States by giving them exclusive authority to determine whether to actually enforce the ACA’s prohibition.
The complaint ties in this theory of standing directly into 10th Amendment sovereignty:
d. Fourth, the Administrative Fix violates the States’ sovereignty under the Tenth Amendment and interferes with constitutional principles of federalism. By making States solely responsible for determining under federal law whether plans made illegal by the ACA must be cancelled, the President has unlawfully conscripted States into federal service, making them part of the federal regulatory system and deliberately “diminish[ing]” “the accountability of . . . federal officials” at the expense of the States. New York v. United States, 505 U.S. 144, 168 (1992).
And views the injury to WV from the fix in terms of reducing political accountability:
67. By fundamentally changing the cooperative federalism regime created by the ACA for enforcement of the eight federally mandated market requirements against non- compliant individual health plans, the Administrative Fix has harmed all States, including the State of West Virginia.
68. First, the State has been injured by the Administrative Fix by being forced to become the sole and exclusive enforcer of federal law within its borders.
69. Second, the Administrative Fix reduced the political accountability of the federal government at the expense of the States.
With the fix, the lines between the federal and state regimes are blurred.
70. Prior to the Administrative Fix, there was no question that the federal government was responsible for the ACA’s policy consequences. The federal government—through Congress and the President—adopted the ACA and its eight federal market requirements. Under the cooperative federalism regime provided by the ACA, the States had no authority to decide that individual health plans made unlawful by the ACA could be sold—unpunished—within their borders. While the States could defer punitive enforcement to the federal government by refusing to participate, the ACA gave the States no policymaking discretion over the ultimate enforcement of federal law.
71. Under the Administrative Fix, the lines of political accountability are far less certain. By granting the States dispositive authority over the enforcement of the eight federal requirements and turning the States into federal policymakers, the Administrative Fix creates—at a minimum—confusion as to which government is actually to blame for the ACA’s policies. That confusion exists regardless of whether the States choose to actually enforce the eight federal requirements or not: in either circumstance, the States will be held at least partly accountable by their citizens for having made a federal policy choice.
72. Indeed, the President’s self-described purpose in adopting the Administrative Fix was to shift political accountability away from the federal government to the States. He said: “[W]hat we want to do is to be able to say to these folks, you know what, the Affordable Care Act is not going to be the reason why insurers have to cancel your plan.” Presidential Press Conference, Exh. 4 at 4. He specifically noted that after adopting the Administrative Fix, it would be the “state insurance commissioners [that] still have the power to decide what plans can and can’t be sold in their states.” Id. at 2; see also Administrative Fix Fact Sheet, Exh. 5 at 2 (“Whether an individual can keep their current plan will also depend on their insurance company and State insurance commissioner – but today’s action means that it will no longer be implementation of the law that is forcing them to buy a new plan.”).
73. Consistent with the President’s goal of blurring political accountability, HHS formalized the Administrative Fix by sending to all state insurance commissioners a letter that made clear that the burden was on the States to decide whether to “adopt the same transitional policy.” Administrative Fix Letter, Exh. 6 at 3.
74. Similarly, in the Extension Rule, HHS repeatedly stated that enforcement was now “the option of the States” and also described in detail the actions that States could (and would need to) take to allow their citizens to benefit from the extended Administrative Fix. Extension Rule, Exh. 8 at 2.
75. The States are clearly the targets of the Administrative Fix.
76. This blurred political accountability diminishes the sovereignty of West Virginia and all other States by interfering with the relationship between state officials and their constituents, inhibiting the ability of elections to properly hold government and public officials accountable, and harming the reputation and dignity of the States and their officials and agencies. See Gregory v. Ashcroft, 501 U.S. 452, 460 (1991) (“Through the structure of its government, and the character of those who exercise government authority, a State defines itself as a sovereign.”).
I discuss this “fix” at some length in my article, Congressional Intransigence and Executive Power.
In the fall of 2013, as expected, nearly 5 million Americans unexpectedly began to receive cancellation notices. In response, at the last conceivable moment, the President unilaterally changed the law. Through a new policy, announced in a letter, the Administration “allowed” insurers to offer plans that did not meet the statute’s requirements, even though they were illegal under federal law. In short, the new policy “grandfathered” plans that were illegal under federal law, and granted blanket hardship exemptions for cancelled plans. “The bottom line,” President Obama said, is that “insurers can extend current plans that would otherwise be canceled into 2014, and Americans whose plans have been canceled can choose to re-enroll in the same kind of plan.” The new policy shifted the burden to the insurance companies, and the state insurance regulators, to figure out how to un-cancel plans on extremely short notice, at a risk of destabilizing the insurance pools.
This “fix” was without any authority, and violated the laws in numerous ways.
While statutes, in general are susceptible to broad executive discretion, there was not even a pretense of statutory basis for this decision not to enforce a linchpin of the entire ACA. “What is the legal basis for this change,” Jonathan Adler asked. “The Administration has not cited any.” Zachary Price, in an article about executive non-enforcement, explained that “The legal basis for this ‘transitional policy’ is not entirely clear.” Price added that the delay “defies the proper understanding of executive duty” and amounts to a “prospective suspension of the law for a specified category of insurance plans.”)
Further, the “fix” passed the buck, and shifted the burden to the states that were unwilling to offer illegal plans.
Further, the executive action “does not change relevant state laws,” Adler explained, as the “legal requirement remains on the books so the relevant health insurance plans remain illegal under federal law.” Thus, another burden was shifted to the state commissioners to bear the “political accountability” of complying with the President’s directive, or complying with ACA’s structuring of the insurance market.
Within hours, state insurance commissioners balked at this immediate and unexpected disruption to their insurance markets.
“It took about three hours exactly for states to start pushing back against President Obama’s request that regulators allow insurance plans to offer current products in 2014. Washington state insurance commissioner Mike Kreidler has announced that he will not allow insurance companies to do so. “In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course,” he said in a statement moments ago. “We will not be allowing insurance companies to extend their policies. I believe this is in the best interest of the health insurance market in Washington.”
As a nice historical footnote, after the House passed a bill that would have grandfathered the plans, the President threatened to veto it because it would “sabotage” the law. He then issued the “fix” obviating the need for Senators to take a difficult vote:
Continuing his “We Can’t Wait” mantra, the President explained when he announced the policy, “regardless of what Congress does, ultimately I’m the President of the United States and [the people] expect me to do something about it.” Perhaps what is most remarkable, is that as a few hours before the President announced this new executive policy, he threatened to veto a bill in Congress that would have allowed accomplished the same goal, and allowed insurers to continue offering invalid plans. The bill had passed the House by a bipartisan vote of 261-157, and was headed to the Senate. Faced not with congressional intransigence, but a rare, bipartisan proposal to cooperate and amend the ACA where it was affecting people, the President instead relied on his inherent executive powers. Rather than waiting to veto the bill, he mooted the entire subject by changing the law himself, and taking the issue outside of the legislative debate. (Once the President issued the new policy, Senators had no need to take a difficult vote). In a statement threatening to veto the bill, the Administration claimed that it would “sabotage” the Affordable Care Act. An Act of Congress would not “sabotage” the law. It would change the law. What “sabotages” the law is unilateral executive suspension of the law, without consulting the other branches, which created great instability in the market. In the words of one healthcare wonk, it made a “big mess.”
The complaint makes this point well:
37. Congress began preparing to amend the Act in order to stop the cancellation of health insurance plans. See, e.g., Keep Your Health Plan Act of 2013, H.R. 3350, 113th Cong. (2013); Keeping the Affordable Care Act Promise Act, S. 1642, 113th Cong. (2013). West Virginia and many other States support legislative solutions like these that could lawfully allow individuals to keep their health insurance plans.
38. The President, however, sought to preempt any congressional action that would have addressed the problem legally and led to a permanent cure to the problem. In fact, he formally threatened to veto a bill that would allow people to keep their individual health insurance plans. Office of Mgmt. & Budget, Executive Office of the President, Statement of Administration Policy, H.R. 3350 – Keep Your Health Plan Act of 2013 (Nov. 14, 2013) (attached as Exh. 3).
39. Instead, acting through Defendant HHS, the President unilaterally sought to “fix” the problem administratively for a limited period of time—long enough for him to avoid political accountability.
64. By changing the States’ enforcement roles, the Administrative Fix forces States to become federal policymakers. States now fully control the extent to which the eight federally mandated market requirements will be enforced within their respective States.
65. This is not a situation in which the federal government has chosen not to regulate health insurance, leaving the States free to regulate (or not) according to state law as they see fit.
66. Instead, the ACA prohibits certain individual health plans as a matter of federal law, and the Administrative Fix has now pushed onto the States the sole responsibility for determining the effect to give that federal law.
You can download the complaint here.
In my last post on #AspenGate, I noted that there were two versions of the 8th Edition of Dukeminier for sale: the traditional print version that you can keep ($223 with the ISBN of 9781454851363) and the “casebook connect” version that you rent ($182 with the ISBN of 9781454837602). I asked my campus book store to stock both versions.
I have since learned that this isn’t possible. Aspen is only allowing bookstores to sell the $223 traditional print version. If students want to obtain the $182 “casebook connect” version, they have to buy it online, and have it shipped to the school. For some reason, the 8th edition is not yet showing up on the Property catalog page, which is a problem because classes start in two weeks!
So here’s the long and short of it. Your students will only be able to buy the more expensive version in the book store, and can buy the cheaper version rental online. As you may expect, the book stores will not be advertising the online version in the stores, as it will undercut them.
I should stress that none of this was made transparent by Aspen. I only found this out through my diligent campus book store who filled me in on the details. I was previously under the impression that both books could be sold in the store, which is not correct. #AspenGate continues.
Stephen Bough, who was nominated to the federal bench in the Western District of Missouri, regularly blogged about politics from 2007 to 2009. One of his posts has drawn the attention of Iowa Senator Chuck Grassley.
At a confirmation hearing at the Senate Judiciary Committee on Thursday, Sen. Chuck Grassley, R-Iowa, brought up the “shouldn’t be a judge” line with a smile and a laugh. “One time you said something you might regret,” Grassley said. Then he read a partial quote from Bough with the line.
It turns out that the full quote is more benign. Bough was describing the opinion of a small group of people. “You and the 3 other folks who read this blog will agree I shouldn’t be a judge,” Bough wrote in the comments section of a 2007 post.
But Grassley warned Bough his old blogs were getting plenty of new readers on Capitol Hill.
“I just wanted to make sure you are aware that some question whether you possess the temperament we typically look for in a candidate for federal judge,” Grassley said. “I just wanted you to know in fairness that we’ll be taking a close look at your writings on that blog and I imagine some of my colleagues will as well.”
I think it sets a very bad precedent to disqualify judicial nominees who write stuff that may later be deemed unpopular. It creates a perverse incentive for those who want to achieve high office to keep quiet. I don’t want nominees to remain quiet. I want to know what they think. It is a shame that aspiring Judges (and really Justices), in the words of Pam Karlan, trim their sales for the potential confirmation hearing. Fittingly, Karlan was appointed to a position that did not require Senate confirmation.
Now, this is very different than judges who continue to blog after being appointed to the bench. Recent episodes with Judge Kopf highlight the precariousness of this medium for those in robes.
Judge Rogers, writing for Judges Pillard and Wilkins, have rejected the origination clause challenge to Obamacare’s “tax.” The opinion is here.
Here is the introduction:
ROGERS, Circuit Judge: Section 5000A of the Patient Protection and Affordable Care Act, 26 U.S.C. § 5000A, mandates that as of January 2014, non-exempt individuals maintain minimum health care coverage or, with limited exceptions, pay a penalty. Matt Sissel, who is an artist and small-business owner who serves from time to time on active duty with the National Guard, appeals the dismissal of his complaint alleging that the mandate violates the Commerce Clause, U.S. CONST. art. I, § 8, cl. 3, and the Origination Clause, U.S. CONST. art. I, § 7, cl. 1. We affirm, because his contention that the mandate obligating him to buy government-approved health insurance violates the Commerce Clause fails under the Supreme Court’s interpretation of the mandate in National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566, 2598 (2012) (“NFIB”), and his contention that the mandate’s shared responsibility payment was enacted in violation of the Origination Clause fails under Supreme Court precedent interpreting that Clause.
I’ll update this post as I make my way through the opinion.
The Court avoids deciding the origination issue by finding that the “tax penalty” was not a “Bill for raising Revenue.”
He states in his complaint that “[i]n September, 2009, the House [of Representatives] passed H.R. 3590, entitled the ‘Service Members Home Ownership Tax Act of 2009,’” to “‘amend the Internal Revenue Code of 1986 to modify [the] first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees.’” Compl. ¶ 40. He alleges this bill “had nothing to do with health insurance reform,” and yet “[i]n November of , the Senate purported to ‘amend’ the House bill by gutting its contents, replacing them with health-insurance reforms (including the purchase requirement and associated payment), and renaming the bill the ‘Patient Protection and Affordable Care Act.’” Id. The “substitute legislation,” he alleges, was “a revenue-raising tax bill,” id., and the enactment of the Act violated the Origination Clause “[b]ecause the tax originated in the Senate, and not in the House,” id. ¶ 41. Because we conclude that the shared responsibility payment in Section 5000A is not a “Bill for raising Revenue” within the Supreme Court’s accepted meaning of that phrase, and thus was not subject to the Origination Clause, this court has no occasion to determine whether it originated in the House or the Senate.
Because the ACA was not designed strictly to “raise revenues,” but to expand the number of insured, it is not subject to the origination clause:
The purposive approach embodied in Supreme Court precedent necessarily leads to the conclusion that Section 5000A of the Affordable Care Act is not a “Bill for raising Revenue” under the Origination Clause. The Supreme Court’s repeated focus on the statutory provision’s “object,” Nebeker, 167 U.S. at 203, and “primary purpose,” Munoz-Flores, 495 U.S. at 399, makes clear, contrary to Sissel’s position, that the purpose of a bill is critical to the Origination Clause inquiry. And after the Supreme Court’s decision in NFIB, it is beyond dispute that the paramount aim of the Affordable Care Act is “to increase the number of Americans covered by health insurance and decrease the cost of health care,” NFIB, 132 S. Ct. at 2580, not to raise revenue by means of the shared responsibility payment. The Supreme Court explained: “Although the [Section 5000A] payment will raise considerable revenue, it is plainly designed to expand health insurance coverage.” Id. at 2596 (emphasis added); see id. at 2596–97. This court noted in Seven-Sky v. Holder, 661 F.3d 1, 6 (D.C. Cir. 2012), abrogated by NFIB, 132 S. Ct. 2566 (2012), that the “congressional findings never suggested that Congress’s purpose was to raise revenue.” See 42 U.S.C. § 18091(2) (congressional findings). To the contrary, “the aim of the shared responsibility payment is to encourage everyone to purchase insurance; the goal is universal coverage, not revenues from penalties.” Seven-Sky, 661 F.3d at 6. The Supreme Court acknowledged that the Section 5000A shared responsibility payment may ultimately generate substantial revenues — potentially $4 billion in annual income for the government by 2017, see NFIB, 132 S. Ct. at 2594 — if people do not “sign up” for coverage, but those revenues are a by- product of the Affordable Care Act’s primary aim to induce participation in health insurance plans. Successful operation of the Act would mean less revenue from Section 5000A payments, not more.
Sissel argued that the way the ACA operates does not fall squarely within the court’s precedents. The D.C. Circuit seems to concede this point, but says it doesn’t matter, as the Supreme Court hasn’t held clearly otherwise.
Sissel contends, however, that the Supreme Court cases rejecting Origination Clause challenges merely embody “two exceptions” to the general “presumpt[ion]” that “[a]ll taxes” are subject to the Clause. Appellant’s Br. 14; Reply Br. 6–7. He maintains that the Affordable Care Act does not fall within either exception because the Section 5000A payment neither funds a particular governmental program, as was true in Munoz- Flores, 495 U.S. at 397–98, nor enforces compliance with a statute passed under some other (non-taxing) constitutional power, as in Millard, 202 U.S. at 433. Yet even assuming Sissel is correct that the precedent can be classified in one or both of his categories, neither the Supreme Court nor this court has held that a statute must be so classifiable to avoid the requirements of the Origination Clause. All Sissel has demonstrated is that the Affordable Care Act’s mandate does not fall squarely within the fact patterns of prior unsuccessful Origination Clause challenges, not that his challenge should succeed.
Here is the conclusion:
In sum, under Supreme Court precedent, the presence of another constitutional power does not suggest that a provision is not a “Bill for raising Revenue,” and the absence of another constitutional power does not, in itself, suggest that it is. Because the existence of another power is not necessary (or sufficient) to exempt a bill from the Origination Clause, the mere fact that Section 5000A may have been enacted solely pursuant to Congress’s taxing power does not compel the conclusion that the entire Affordable Care Act is a “Bill for raising Revenue” subject to the Origination Clause. Where, as here, the Supreme Court has concluded that a provision’s revenue-raising function is incidental to its primary purpose, see NFIB, 132 S. Ct. at 2596, the Origination Clause does not apply. The analysis is not altered by the fact that the shared responsibility payment may in fact generate substantial revenues. In light of the Supreme Court’s historical commitment to a narrow construction of the Origination Clause, this court can only hold that the challenged measure — whose primary purpose “plainly” was not to raise revenue, id. at 2596 — falls outside the scope of the Clause.
One of the biggest criticisms of the D.C. Circuit’s opinion in Halbig, is that it would have been ridiculous for the Affordable Care Act, which aims to provide “near-universal” health insurance, to deny tax credits to residents of uncooperative states. Why, critics argue, would the drafters of the law allow recalcitrant Republican governors to sabotage its implementation and deny benefits to their poorest residents?
In a new article in the American Spectator, titled “Obamacare Was Designed to Punish Uncooperative States,” I show how another key portion of the Affordable Care Act was designed to operate in just this fashion–the Medicaid expansion. Recall that in NFIB v. Sebelius, one of the main issues was whether HHS would take away all of a state’s Medicaid budget if it did not expand under the ACA. The Justices pressed Solicitor General Verrilli on this point, based on a letter HHS sent to Arizona Governor Jan Bewer threatening to gut her entire Medicaid budget.
In 2010, Arizona inquired about what would happen if it declined to expand its Medicaid coverage under Obamacare. The federal government replied that it would eliminate its contribution to the state’s Medicaid budget entirely. The Department of Health and Human Services sent Arizona Governor Jan Brewer an ominous and pointed letter: “In order to retain the current level of existing funding, the state would need to comply with the new conditions under the ACA.” This observation was followed by a stark warning: “We want you to be aware that it appears that your request…would result in a loss of [all] Medicaid funding for Arizona.”
Arizona stood to lose almost $8 billion. That would have obliterated the Grand Canyon State’s budget, eliminated health insurance for the poorest of Arizonans, and potentially thrown the entire market into an adverse-selection death spiral. The feds could not force Arizona to expand Medicaid, but if Arizona declined to play ball, they would gut the state’s program entirely. It was Brewer’s choice.
Ultimately, the Supreme Court held that this was no meaningful choice at all—like putting a gun to someone’s head and saying “your money or your life.” Though conservatives were ultimately disappointed with Obamacare’s trip to the high court, this was their silver lining. During oral arguments, the justices pressed Solicitor General Donald Verrilli, the top government lawyer, about the letter to Arizona. They wanted to know whether the federal government would in fact take away all of Arizona’s funding if it declined to participate in the expansion. Verrilli refused to answer whether HHS Secretary Kathleen Sebelius had the power to revoke all funds, saying only that she would not exercise it.
The SG refused to answer the questions of the Justices, because he knew that Secretary Sebelius would not disclaim that power (I provide a lengthy background discussion in Part VI of Unprecedented).
Justice Scalia ribbed: “I wouldn’t think that is a surprise question.” The solicitor general was not unprepared. Verrilli told the justices, “I’m trying to be careful about the authority of the secretary of health and human services and how it will apply in the future.”
The Obama administration made a conscious choice, as I discuss in Unprecedented: The Constitutional Challenge of Obamacare. Sebelius was not willing to relinquish the power to deprive uncooperative states of all of their Medicaid funding. She wanted to preserve this ultimate authority to punish a state that disobeyed federal dictates. Verrilli’s evasion inflamed the concerns of Justices Roberts, Breyer, and Kagan, the very justices who would soon vote against him. The Obama administration would not disclaim that power, so the court took it from them.
Chief Justice Roberts wrote for the court, “What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding.” It was coercive and unconstitutional. Yet this was the original design of the law, which no Democrats in Congress found objectionable.
Obamacare’s history, including the Solicitor General’s position in NFIB v. Sebelius, suggest that a core feature of the ACA would have punished noncompliant states, and their residents. While we may never know how those four words wound up in the statute, as further evidence of legislators’ state of mind, we could take notice of the fact that the Affordable Care Act’s Medicaid expansion worked exactly on this theory of carrots and sticks. Uncooperative states, and their residents, would be punished.
Please note that my piece has nothing to do with Chevron. Rather, in light of the reasoning behind the Medicaid expansion, as both the D.C. and Fourth Circuit concluded, it is at least “plausible” that these four words were deliberately placed in the statute for this purpose.
Both courts acknowledged that legislative history does not say how these four words made their way into the statute. With this silence, the Fourth Circuit noted that “it is at least plausiblethat Congress would have wanted to ensure state involvement in the creation and operation of the Exchanges.” The D.C. Circuit likewise observed, “the most that can be said of [the challenger’s] theory is that it is plausible.” It’s telling that both courts independently came up with the exact same description: “plausible.”
That no one found this Medicaid regime objectionable in 2009 suggests that the tax credit scheme may not have been objectionable as it seems today.
Here is my conclusion:
Keeping the history of the law’s Medicaid provisions in mind, consider again whether it is indeed “plausible” that someone in the Senate—or maybe even an influential lobbyist or academic helping to draft the bill—intended with these four words to dangle similar carrots to induce unwilling states to establish health insurance exchanges. Perhaps some states would have initially declined to build exchanges, and in those cases HHS had the authority to operate a federal exchange as a backup. Could red-state governors have long handled the backlash from their citizens being punished with unaffordable insurance premiums? Maybe. Maybe not.
But such an incentive structure is at least consistent with the thinking behind other provisions of Obamacare: that states can be made to swallow bitter pills.
In considering this law, we should never lose sight of the fact that this was a rushed, draft piece of legislation that was never meant to be final. But this is the final law we have.
No one knows for sure how these four words made their way into the statute—which is to be expected. The 3,000-page bill was drafted quickly behind closed doors. Almost no one in the Senate bothered to read it. The version of the bill that passed the Senate on a straight party-line vote on Christmas Eve 2009 was only a draft that was never intended to become law. However, once Democrats lost their filibuster-proof majority after the election of Senator Scott Brown in Massachusetts, they decided to foist this incomplete, rushed, and unfinished draft on the American people.
And in January 2010, 51 health policy experts–including Tim Jost and Jon Gruber–urged the President to sign the incomplete Senate bill, warts and all.
These bills are imperfect. Yet they represent a huge step forward in creating a more humane, effective, and sustainable health care system for every American. We have come further than we have ever come before. Only two steps remain. The House must adopt the Senate bill, and the President must sign it.
So here we are, with the imperfect bill.
Update: Peter Suderman weighs in with similar thoughts:
Indeed, that explains Obamacare’s original Medicaid expansion mechanism, which, prior to Supreme Court intervention, threatened states that did not participate with the loss of all existing federal Medicaid funding. This would have been a huge price, and would have effectively gutted one of the nation’s two major health programs had a large number of states chosen not to comply.
If conditioning subsidies on the state establishment of exchanges was “legislative nihilism,” then so too was Obamacare’s original treatment of its Medicaid expansion.
The reason that Congress made its Medicaid threat so easily is that it was assumed that every state would eventually play ball and expand the program. Funding for the expansion was generous, and resistance would be catastrophically expensive.
The federal exchange system was such an afterthought that the law provided no funding whatsoever to create it. Federal health authorities had to scramble to rewire funding in order to get it built. In contrast, Obamacare provided nearly unlimited funds for states to set up their own exchanges. The thinking was that no state would turn the government down.
The total lack of funding for the federal exchange strongly suggests that Congress didn’t intend any subsidies to flow through the federal exchanges, because Congress didn’t really intend for them to exist.
In 2009, I created FantasySCOTUS. What started off as a joke, and began as a hastily-put-together website, has grown beyond my wildest imagination. Now, we have over 20,000 players who make predictions about how the Justices will decide cases. In an article I co-authored in 2011, we found that our prediction market was strikingly accurate, with the power predictors hitting a 75% accuracy rate in a given year.
Today, I am proud to announce the next evolution in Supreme Court prediction. Rather than relying on human predictions, my colleagues and I have developed an algorithm that can predict any case decided by the Supreme Court, since 1953, using only information available at the time of the cert grant.
In a new article, my co-authors Daniel Martin Katz, Michael J. Bommarito II, and I have designed a general approach to predicting the behavior of the Supreme Court of the United States. Using only data available prior to the date of decision, our model correctly identifies 69.7% of the Court’s overall affirm and reverse decisions and correctly forecasts 70.9% of the votes of individual justices across 7,700 cases and more than 68,000 justice votes.
While other models have achieved comparable accuracy rates, they were only designed to work at a single point in time with a single set of nine justices. Our model has proven consistently accurate at predicting six decades of behavior of thirty Justices appointed by thirteen Presidents. It works for the Roberts Court as well as it does for the Rehnquist, Burger, and Warren Courts. It works for Scalia, Thomas, and Alito as well as it does for Douglas, Brennan, and Marshall. Plus, we can predict Harlan, Powell, O’Connor, and Kennedy.
69.7% Accuracy for Case Outcomes
We begin making forward prediction starting with the first case of the Warren Court in 1953, through the end of the 2012-2013 term. For each of the predictions, offered over 60 years–7,700 cases and in excess of 68,000 individual justice votes–we only rely on data that would have been available prior to the Court’s decision. In effect, we generated a new round of predictions every day of every Supreme Court term since 1953. With this data, through a method of machine-learning known as “extremely randomized trees,” and a process known as feature-engineering, we were able to build a model that can generate Justice-by-Justice predictions for any case. Applying the extremely randomized trees approach to each case from 1953-2013, our model correctly forecasts 69.7% of Case Outcomes and 70.9% of Justice Level Vote Outcomes over the sixty year period.
This graph illustrates our accuracy rate over the past six decades. Although our accurate rate fluctuates year-to-year–as low as 60% and as high as 80%–the best fit line hovers right around 71%. We tended to be a bit more accurate during the Warren and Burger courts than during the Rehnquist and Roberts Courts.Recent courts have had much more variability.
70.9% Accuracy for Justice Predictions
Overall, we have a 70.9% accuracy rate for justice predictions. Some justices were harder to predict than others. To illustrate the “predictability” of a Justice, we generated a heat map. On this map, we’ve plotted each Justice who has served on the Court, and for each year added a shaded box. The more green the cell, the more predictable the Justice in that year. Our method performs well at predicting certain Justices and not as well on others.
For example, Justices Harlan, Frankfurter, and Burton prove comparatively difficult to predict. All of these Justices are closer to the ideological center. By contrast, our method is fairly accurate at predicting the behavior of Justices Douglas, Brennan, and Thomas. These justices are quite far from the ideological center. There are, of course, notable exceptions. Justice Stevens begins as a difficult to predict justice but over time becomes increasingly easier to predict. In his years as an Associate Justice our performance in predicting William Rehnquist is relatively strong. This changes almost immediately following his elevation to Chief Justice in 1986 when our performance begins to decline. Our model learns, and can track a Justice’s shifting throughout his or her tenure from appointment till retirement.
Predicting Affirmances and Reversals
We are also able to break down our accuracy based on the vote configurations. Our model tracks the commonplace intuition that 9-0 reversals are easier to forecast than 5-4 reversals. While our performance between these categories is somewhat close in certain years, we consistently perform better in unanimous reversal cases than in cases which feature disagreement between justices. We also perform better on cases with a vote of 9-0 to affirm than in cases that affirm through a divided court.
Our model struggles to identify in advance cases that the Court ultimately decides to affirm–especially unanimous affirmances. Since 1953, the Court has affirmed 2,623 cases or 34.1% of its fully argued cases. On this subset of cases, our model does not perform particularly well. In some years, we are able to forecast less than 25% of these cases correctly. This graph represents the overall reverse rate.
Machine Learning Model – Extremely Randomized Trees
So how does our algorithm work? Our model generates many randomized decision trees that try to predict the outcome of the cases, with different variables receiving different weights. This is known as the “extremely randomized trees” method. Then, the model compares the predictions of the trees to what actually happened, and learns what works, and what doesn’t. This process is repeated process many, many times, to calculate the weights that should be afforded to different variables. In the end, the model creates a general model to predict all cases across all courts. You can download all of our source code here.
This general model is represented by this graph, which lists the 90+ variables we consider for each case, and their relevant weights.
Collectively, individual case features account for approximately 23% of predictive power while Justice and Court level background information account for just 4.4%. Much of the predictive power of our model is driven by tracking a variety of behavioral trends. This includes tracking the ideological direction of overall voting trends as well as the voting behavior of various justices. Differences in these trends prove particular useful for prediction. These include general and issue specific differences between individual justices and the balance of the Court as well as ideological differences between the Supreme Court and lower courts. Contrary to what many may think, it’s not all about ideology. The identity of the petitioner, respondent, what the cause of action is, what Circuit the case arises from, and other case-specific features are very significant.
So what’s next? I’m sure you’re wondering how our model will do with future cases decided in the upcoming term. That’s the plan.
This year we will be hosting a tournament where the players of FantasySCOTUS will compete against our algorithm. What IBM’s Watson did on Jeopardy, our model aims to do for the Supreme Court. Stay tuned for more details.
The House Oversight Committee has released a lengthy report on the Affordable Care Act’s risk corridors, which have the effect of providing additional payments to insurance companies that suffer losses under the law. One of the more interesting findings is that several insurance companies deliberately underpriced plans in the expectation of receiving a “bailout” under the risk corridors. If the risk corridors were not fully funded, the “carriers will have to increase rates substantially.”
Here is a letter Chet Burrell, the President and CEO of CareFirst Blue Cross Blue Shield sent to White House adviser Valerie Jarrett:
Very recently, this position appears to have been reversed under a rule issued by HHS that requires “budget neutrality” – possibly meaning that if the amounts paid in by “winning carriers” turn out to be insufficient to cover the cost of the “losing” carriers, the Federal government would not step in.
If this is indeed the policy, then carriers will have to price premiums as if the Risk Corridor features is not fully available. While this is a highly technical matter that few understand, the impacts are real and immediate. That is, if the transitional protection is not there, carriers will have to increase rates substantially (i.e., as much as 20% or more beyond what they would otherwise file) to make sure that premiums adequately reflect expected costs – because there would be little protection if they do not.
Here is the urgency: Premium rate filings for January 1, 2015, are due on May 1, 2014, and all carriers are not making rate-filing decisions. There is great concern among carriers about the intent behind the recent change in rule. Uncertainty or confusion will equate to higher rates. This could confront the Administration with a sea of far larger premiums increases than expected. Once the filings are made, they will likely quickly become public.
Immediate action to clarify the administration’s position is needed to avert this. The most effective action would be assurance that the original HHS interpretation of the ACA (which conforms best to a plain language reading of the ACA) still stands and that carriers could count on federal funding for risk corridors during the transition years (2014-2016)
The Report concludes that this memo effectively told the President that he can either fund their losses, or deal with higher-than-expected premiums:
Mr. Burrell’s memo is further evidence that insurers generally expect to receive payments through the Risk Corridor program. It also shows that this expectation of receiving payments allowed insurers to keep exchange plan premiums significantly cheaper than they would have been without taxpayers being on the hook for a bailout. Mr. Burrell’s memo essentially presents the Administration with a choice: face significantly higher premium increases in 2015 for exchange plans or make taxpayers bail out insurance companies.
Jarret replied that “the policy team is aggressively pursuing options.” The Administration issued a revised policy, insisting on budget neutrality, that did not address Burrell’s concerns. He wrote back to Jarrett, noting that the Administration will have to deal with rate increases:
This confirms the very policy we were concerned about and that I wrote you about. I think the WH has to be prepared for large premium rate increases in many parts of the country because a key stabilizer (risk corridors) can now not be counted on.
AHIP and BCBSA are analyzing the impact and will issue their joint assessment soon so I certainly do not speak for the industry. I offer only my opinion here.
Until last month, all in the industry assumed there would be no budget neutrality given the way ACA is written, so this is seen as a key change very late in the implementation process. It will adversely impact premium rates in 2015, I am sorry to say.
Putting aside the merits of this matter, it is jarring how rent-seeking works in reality. The president of a large corporation sends an email to the White House, practically threatening the Administration to not give them rents–if they don’t they’ll jack up rates. Of course, this would limit the number of people who sign up for Obamacare.
Jarret wrote back, surprised that this didn’t do the trick. “Jeanne [Lambrew] really thought this would help. We will regroup next week.” After some consultation, Jarret replied again:
“After speaking at length today with Jeanne and our other policy folks, I do not think I have any more to add. They seem to have given you 80 percent of what you requested and I am not in a position to second guess there [sic] analysis.”
Burrell still wasn’t happy.
Thanks, Valerie for all your efforts and follow through. I am appreciative of the discussion I had with Jeanne, Al and Julian and all you did to arrange it. My view remains the same – substantial rate increases are coming but it seems it can’t be helped.
After the insurance lobby continued to state that premiums would increase if risk corridors stuck to risk neutrality, the Administration “reversed course.”
After receiving warnings of substantially higher premiums if the Administration implemented the Risk Corridor program in a budget neutral manner, the Administration reversed course and indicated that it would not implement the program in a budget neutral manner. On May 16, 2014, CMS finalized a rule that addressed changes to the Risk Corridor program for plans in 2015.105 In this rule, HHS wrote “In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers. In that event, HHS will use other sources of funding for the risk corridors payments, subject to the availability of appropriations.”
What those “other sources” are, who knows. If you want to dive deep into the weeds, search for the testimony of my friend Seth Chandler. I saw Seth light up the Committee hearing room in person, and he brought his expertise to the discussion. In short, it is almost impossible for the government to assert that the risk corridors will be risk neutral. Further, to the extent they are not budget neutral, the Secretary lacks the authority to make these payments. Seth raised the point that tinkering with the funding of the statute, without congressional authorization, threatens the separation of powers.
According to Professor Chandler, the Administration’s transitional policy not only raised major questions about separation of powers, but it also increased the likelihood and cost of a taxpayer bailout of insurance companies:
[T]he Obama Administration’s sabotage of its own delicate mechanisms for adverse selection containment by what it calls a transitional policy … violat[es] the law [Congress] passed and permit[s] insurers in many States to sell policies that fail to provide essential health benefits and that otherwise violate the ACA. That action increased the cost of risk corridors substantially, even as it challenged separation of powers.
It is simply remarkable how callously the rule of law, and billions of taxpayer dollars are whisked around, in the face of no congressional authorization, when policy decisions are being made.
In October, the Supreme Court called for the Solicitor General’s response in the case of Young v. United Parcel Service, which considered whether employers should treat pregnancy-related limitations similarly to other non-pregnancy conditions. In its brief, the United States opposed the cert grant, in part because the EEOC was considering “new enforcement guidelines”:
Finally, as noted at p. 8, supra, the EEOC is currently considering the adoption of new enforcement guidance on pregnancy discrimination that would address a range of issues related to pregnancy under the PDA and the ADA. The publication of such guid- ance should clarify the Commission’s interpretation of those statutes with respect to policies like the one at issue in this case, thus diminishing the need for this Court’s review of the question presented at this time.
The WSJ reported that the EEOC has issued such new “enforcement guidance”:
The Americans with Disabilities Act, passed in 1990, has always had the potential to morph into a legal monster for employers. In 2008 Congress amended and expanded the act substantially, arguing that the Supreme Court’s interpretations of “disability” were too narrow. Then the Obama Administration arrived, and you know what that means: Who needs Congress?
On a straight 3-2 party-line vote July 14, the Equal Employment Opportunity Commission voted new “enforcement guidance” rules, which define pregnancy as a workplace disability.
Even after the 2008 amendments, the ADA at no point defines pregnancy as a “disability.” To end-run this fact, the agency discovers pregnancy’s “impairments.” The EEOC’s guidelines argue, “Although pregnancy itself is not a disability, impairments related to pregnancy can be disabilities if they substantially limit one or more major life activities.” Morning sickness, for example, would become a qualifying impairment under the ADA.
The WSJ notes the history:
In May, Solicitor General Donald Verrilli counseled the Supreme Court not to accept certiorari on Young v. United Parcel Service, a case that addresses the rights of a pregnant woman who couldn’t perform her job functions and asked the shipping company for special treatment. Mr. Verrilli told the Justices that the EEOC was working on “new enforcement guidance” and so the Justices should wait until the bureaucrats weigh in.
On July 1, the Supreme Court took the case. Two weeks later, the Obama EEOC issued its pregnancy guidelines. Effectively, the Obama Administration is using the EEOC to deliver marching orders to the High Court.
These strategies don’t just happen. On July 20 foremost Obama White House adviser Valerie Jarrett published a piece on CNN’s website promoting the EEOC’s pregnancy guidelines.
This could moot the Court’s cert in grant in Young. Stay tuned for a possible DIG.
After Town of Greece was decided, I was surprised that Chesterfield County, Virginia was sticking with their policy of only inviting members of monotheistic religions to offer legislative prayers. In a series of back-and-forths with Kevin Walsh, I came to the conclusion that Town of Greece imposes something of a non-discrimination principle, whereby governments cannot pick and choose the religions that offer prayers.
Via Kevin, I see that Chesterfield has abandoned this policy. Instead, the Supervisors of the County Board will not offer invocations themselves, or preside over a moment of silence.
The Board of Supervisors has changed its legislative prayer policy. Starting next year, the supervisors will rotate among themselves in delivering an invocation or presiding over a moment of silence. This is a shift away from a practice of inviting ordained clergy of monotheistic religions, which some contended was unconstitutional under a perceived non-discrimination requirement in the Supreme Court’s decision in Town of Greece v. Galloway.
The shift is prudent even if not constitutionally required, and it may be that the supervisors were closer in thinking to Josh Blackman’s assessment of Town of Greece than to mine. The decision may also reflect the reality that the County would be on the hook for plaintiffs’ attorneys’ fees and costs if the County litigated and lost, but the County could not recover it own fees and costs if the County litigated and won.
It would seem that the supervisors will now be acting as the Chaplain did in Marsh v. Chambers. Though this policy would be okay under Greece’s non-discrimination policy, I suppose there is an open question if the supervisors only offer overtly-Christian prayers. This may run afoul of Town of Greece. Recall the chaplain in Marsh offered ecumenical prayers, though the relevance of this fact is somewhat unclear in Justice Kennedy’s majority opinion.
The IRS announced that the maximum “tax penalty” (I refuse to use that term without mock-quotes) for the Affordable Care Act will be $2,448.
The IRS said Thursday that the maximum penalty individuals could face for failing to obtain health insurance this year will be $2,448, while families with five or more members could face fines up to $12,240.
The maximum penalty would only hit individuals without insurance whose income is above $244,800. For families of five or more, the maximum penalty would affect people making a combined yearly income of $1.2 million.
“The only people who could potentially be impacted by this guidance are the nation’s highest earners — those who make more than about a quarter of a million dollars a year but choose to go without health insurance,” said a Treasury Department representative.
“Only a small number of the highest earners would pay this maximum fee.“
Believe it or not, the Chief Justice’s saving construction in NFIB was not limitless. The penalty was only “deemed” a tax to save it, subject to certain conditions identified by the Chief. One of those conditions was that cost of the “tax” was less than the cost of insurance, a person has a legitimate choice, and there is no coercion:
The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. FN 8 It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture. 259 U. S., at 37.
FN 8 In 2016, for example, individuals making $35,000 a year are expected to owe the IRS about $60 for any month in which they do not have health insurance. Someone with an annual income of $100,000 a year would likely owe about $200. The price of a qualifying insurance policy is projected to be around $400 per month. See D. Newman, CRS Report for Congress, Individual Mandate and Related Information Re-quirements Under PPACA 7, and n. 25 (2011).
Though it is not entirely correct that the “tax” can never be more than the cost of insurance.
The relevant statute is (our favorite) 26 U.S. Code § 5000A. The penalty starts at $95 a month, and will increase to $325 in 2015, $695 in 2016, and will grow with inflation after that. It’s expected to hit $800 a month by 2023. For wealthier Americans, the penalty (when fully phased in) will be even greater, between 1% and 2.5% of income.
(B) Percentage of incomeAn amount equal to the following percentage of the excess of the taxpayer’s household income for the taxable year over the amount of gross income specified in section 6012 (a)(1) with respect to the taxpayer for the taxable year:
Though, this penalty is capped by statute.
The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to failures described in subsection (b)(1) shall be . . . amount equal to the national average premium for qualified health plans which have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends.
In plain English, this says that the amount of the penalty (not “tax” in case anyone bothered to read the law Congress passed) will not exceed the “national average premium for qualified health plans which have a bronze level of coverage.” So the Chief is wrong to say that the amount will always be less. Why? Because the cost of bronze plans varies by states. In some states it may be more expensive than other. Due to the very nature of an average, in some states it will be above the average, and in some states it will be below the average. In no way can the prices be the same nationwide.
Now it may be true for “most Americans” (those above the average) but not for all Americans (below the average). In fact, the wealthiest Americans, who live in states with the lowest bronze-priced plans, will almost certainly be faced with a false choice–the “tax” will be more expensive than the cost of insurance. 2% of their income will almost certainly be more than the cost of the cheapest bronze plan.
Let’s do some math. CBO projects that the average national bronze plan will be $5,000 a year in 2016. Therefore, if the penalty would be capped at $5,000 a year, who would pay a $5,000 penalty? An individual earning $200,000 a year (200,000 * .025 = 5,000). But what if the cheapest available plan that qualifies under the Affordable Care Act in that person’s state is less than $5,000 a year? Say the cheapest bronze plan is $4,000 a year. Because the statute pegs the penalty to the national average, rather than a local average–and it is impossible to buy across state lines–for some wealthier individuals, there is no meaningful choice.
By it’s very terms, this would seem to run headlong into the Chief Justice’s saving construction, which misstated the nature of the statutory cap. At this point, it would no longer be a “constitutional tax” but an “unconstitutional penalty.”
More likely than not, the $2,448 penalty will be less than the cheapest bronze plan, so it will still be cheaper for people to pay the penalty than pay for insurance. I’ll update this post each year.
In Property law, sellers generally have no affirmative duty to disclose defects in a home, unless they are “material.” Lying is always a no-no, but unless a defect is material, the seller can remain silent. One of the cases we use to teach this doctrine is Stambovsky v. Ackley, where a court (wrongly in my opinion) held that a house reported to be haunted suffered from a material defect, which the seller had a duty to disclose. Thankfully, this remains the minority rule.
Home sellers in Pennsylvania are under no obligation to disclose if a house was the site of a murder, a suicide, or even satanic rituals, according to the Supreme Court of Pennsylvania.
“The varieties of traumatizing events that could occur on a property are endless,” wrote Justice J. Michael Eakin in the court’s July 21 opinion. “Efforts to define those that would warrant mandatory disclosure would be a Sisyphean task.”
The ruling was in response to a suit filed by a Delaware County woman who had claimed the McMansion she bought in Thornton had an undisclosed “material defect,” because the seller had not told her that at a murder/suicide had been committed in the home.
The ruling dismissed the woman’s argument that the home’s history resulted in a reduction in its value.
The court said that such events could not be quantified, and went on to ask if a death by poisoning would be “a less significant defect” than a bloody stabbing or shooting.
“What if the killings were elsewhere, but the sadistic serial killer lived there? What if satanic rituals were performed in the house?” Justice Eakin wrote.
The court also noted the 2006 tragedy had been well-publicized, news that could have been discovered easily in print or online.
This ruling is exactly right. And in the age of Google, it is inexcusable not to Google an address and see what pops up.
Kimberly Robinson and her colleagues at Bloomberg BNA put together a detailed piece about Halbig. I am quoted at some length:
But in an e-mail to Bloomberg BNA July 23, Josh Blackman, a professor at South Texas College of Law, Houston, said that the plaintiffs challenging the rule in the Fourth Circuit case will, in all likelihood, ‘‘immediately’’ file a petition requesting Supreme Court review.
This creates ‘‘a race for the Court house,’’ Blackman, who teaches constitutional law and focuses on the Supreme Court, wrote on his blog.
The plaintiffs challenging the law in the D.C. Circuit could then ask the court to delay its en banc proceedings until after the Supreme Court decides whether to take the Fourth Circuit case, Blackman said.
This would effectively prevent a circuit-split-killing reversal, he said.
Blackman added that the plaintiffs in the Fourth Circuit case likely have their certiorari petition ‘‘ready to roll,’’ and that the petition could be filed in time for the justices’ fall conference.
And, here is my line that Rick Hasen labeled “quote of the day”:
But Blackman noted, ‘‘John Roberts wasn’t willing to kill Obamacare in 2012 when no one was relying on it. Why would he do so in 2015 when millions are relying on it?’’
Shortly after Halbig was decided, I perceived this Marquez-esque sense of deja vu. We’ve been here before. The argumentation process is almost second-nature at this point.
In particular, I observed that soon there would be attempts to intimidate the Chief Justice to rule the right (left?) way:
“Soon enough, the full-court press on Chief Justice Roberts will commence. As I said, deja vu.”
Little did I know that within hours of the D.C. Circuit’s decision, Ezra Klein voxsplained how the Chief Justice would not rule in Halbig’s favor because horrible things would happen. Or did Ezra voxtimidate the Chief Justice Justice not to rule in Halbig’s favor because horrible things would happen.
For Halbig to unwind Obamacare the Supreme Court would ultimately have to rule in the plaintiff’s favor. And they’re not going to do that. By the time SCOTUS even could rule on Halbig the law will have been in place for years. The Court simply isn’t going to rip insurance from tens of millions of people due to an uncharitable interpretation of congressional grammar.
For five unelected, Republican-appointed judges to cause that much disruption and pain would put the Court at the center of national politics in 2015 and beyond. It would be a disaster for the institution. Imagine when the first articles come out recounting the story of someone who lost their insurance due to the SCOTUS ruling and then died because they couldn’t afford their diabetes or cancer treatment. Imagine when every single Democrat who had any hand at all in authoring the law says the Court is completely wrong about what the law meant. Imagine when every single Democrat runs against the Court.
Chief Justice John Roberts realized that in 2012 when he ruled the individual mandate constitutional. All evidence suggests he didn’t want to rule the mandate constitutional. But he thought it would harm the Court to do otherwise. Deciding for the plaintiffs in Halbig would do far more damage to the law than striking down the mandate and it would do so when the law is actually providing insurance to people. It’s not going to happen.
There is a blurred line between voxsplaining and voxtimidating, that pundits walked delicately in the runup to NFIB v. Sebelius. Now, it is a well-worn path. And there is one key difference. We know the Chief blinked in 2012. Why should we think he will act any differently in 2015. Whether the full court press on the Chief worked in 2012, it is certainly worth a shot again.
After five years, two mandamus petitions, two different federal district judges, and an intervention by Chief Justice Roberts, at long, long last, the District of Columbia’s blanket ban on bearing arms outside the home has fallen.
The procedural posture of this case redefines “tortured.” This case was first filed on August 6, 2009. Summary judgment was filed on August 26, 2009. There was a hearing on 1/22/10, and the matter was taken under advisement. Then, on July 18, 2011, eighteen months later (!), Chief Justice John Roberts reassigned the case from Judge Henry. H. Kennedy to Judge Frederick J. Scullin, Jr. of the Northern District of New York. Why? Because of the delay!? There was a status conference on July 22, 2011. There was a motion hearing scheduled for 8/29/2012 , which was then rescheduled for 10/1/12 (a full year later?!). Matters were taken under advisement. A motion to expedite was filed on 8/9/13 (another year later?!). On October 21, 2013, Gura sought mandamus in the D.C. Circuit. On December 16, 2013, Mandamus was denied by the D.C. Circuit. Gura sought mandamus again in March 2014, which was pending when Judge Scullin finally got around to ruling on it.
In my last post from December, I commented ” I hope this is the magnum opus of Second Amendment opinions, because with all this time to work on it, it better be.”
Well, it’s not that. It is 19 pages long, and effectively parrots the 9th Circuit’s decision in Peruta. Putting aside the merits–which I agree with–it is totally inexcusable for a constitutional right to remain void for 5 years.
In any event, congratulations to Alan Gura, my co-author, on his dedication to this case. To the nuclear D.C. Circuit we go.
Chemerinsky’s “Case Against the Supreme Court” cites Decisions of the Roberts Court including Bush v. Gore and United Citizens
Dean Chemerinsky needs to fix the blurb of his new book, “The Case Against the Supreme Court,” which lists decisions of the Robert’s Court, including Bush v. Gore (2000) and United Citizens (no such case):
Most Americans share the perception that the Supreme Court is objective, but Erwin Chemerinsky, one of the country’s leading constitutional lawyers, shows that this is nonsense and always has been. The Court is made up of fallible individuals who base decisions on their own biases. Today, the Roberts Court is promoting a conservative agenda under the guise of following a neutral methodology, but notorious decisions, such as Bush vs. Gore and United Citizens, are hardly recent exceptions. This devastating book details, case by case, how the Court has largely failed throughout American history at its most important tasks and at the most important times.
Only someone of Chemerinsky’s stature and breadth of knowledge could take on this controversial topic. Powerfully arguing for term limits for justices and a reassessment of the institution as a whole, The Case Against the Supreme Court is a timely and important book that will be widely read and cited for decades to come.
What do you call it when a federal court stays a case while a Catholic priest’s canon law proceeding continues?
I kid. But this actually kinda happened. A priest asked a federal bankruptcy court to hold off on a ruling”premised upon an anticipated ruling in a Canonical action.”
In a column I wrote in October 2013, shortly after the launch of Obamacare, I offered an attempt to understand the winners and losers of the new law. Without a doubt, there would be those who benefit from the law. Healthcare was now more affordable for some, due to the Medicaid expansion (in some states), cost controls, and generous tax subsidies. Without a doubt, the uninsured rate would decrease. People who never had insurance before would now be able to afford insurance. A study by the New England Journal of Medicine found that 10.3 million new people have health insurance, decreasing the number of uninsured people from 21% in September 2013 to 16.3% in April 2014. These are all great things. But, as we learned with Halbig, context is everything.
What are the costs of this law on the other millions of Americans? Who are the forgotten men (and women) of Obamacare:
At the forefront of all social welfare programs are the people being helped — the poor, the sick, the disadvantaged. The beneficiaries of such laws are obvious. Who are really forgotten are those who are being harmed by the law. And those harmed by the law are not merely the super wealthy, or those paying higher taxes. In the case of Obamacare, the harm will be felt most severely, not by the wealthy, but by those forgotten men and women squeezed in the middle.
First, there are also those who were covered by their employers’ plans, but were dropped, and forced onto the insurance exchanges. Second, and even more pernicious, are those who are dropped from full-time employment to part-time employment because their employer cannot afford to pay for Obamacare’s more expensive plans. Obamacare perversely creates incentives for employers to do both of these things.
Third, there are those who had individual plans, which their insurers cancelled. Obamacare rendered many cheaper plans with less coverage illegal, so insurers simply stopped offering them. Fourth, those who live in states where insurers exit the markets will have less choice, and higher prices. This flight is especially prominent in rural areas where low populations do not justify the costs of participating in the exchanges. Insurers shrugged.
Fifth, there are those who will have to pay higher premiums, and more out-of-pocket costs, to cover the cost of insuring the poor and sick. The director of Covered California admits as much. “People could have kept their cheaper, bad coverage, and those people wouldn’t have been part of the common risk pool. We are better off all being in this together.” Obamacare helps the winners (makes their health care more affordable), by penalizing the losers (makes their health care less affordable).
Now, we are beginning to realize the costs of the law, beyond those who have gained insurance. A new CNN poll suggests that barely 1 in 5 are better off under Obamacare, and many more are worse off.
Eighteen percent of Americans, or fewer than one in five, say they or someone in their family is better off because of the Affordable Care Act, according to a new poll by CNN. Nearly twice that number, 35 percent, say they or someone in their family is worse off. A larger group, 46 percent, say they are about the same after Obamacare as before.
In nearly all demographic categories — age, income, education, etc. — more people say they are worse off because of Obamacare than say they are better off.
For example, one might expect respondents with incomes below $50,000 to be somewhat likely to say Obamacare has helped them. And that is the case: 21 percent say they are better off because of the Affordable Care Act. But 35 percent say they are worse off. (Forty-four percent are the same.)
Likewise, one might expect young respondents to report benefits from Obamacare. And they do: 23 percent say they’re better off. But 33 percent say they’re worse off. (Forty-three percent are the same.)
In other categories, the gap between better off and worse off is larger. In just one demographic group, nonwhites, is the group of those who say they are better off, 29 percent, bigger than the group who say they are worse off, 17 percent. (Fifty-four percent say they are the same.)
The “worse off” numbers will continue to grow, as millions of Americans are thrown off their employer plans and put onto the Obamacare exchanges. Remember, within a decade, nearly 80% of Americans will be on the exchanges. Plus, the unpopularity rate of the law holds steady at 59%.
We cannot lose sight of the fact that this law was sold on a series of dangerous lies about how this would affect people. “If you like your plan, you can keep your plan.” As I noted back in October, if the Administration had been forthright about the impact of this law, it would have never passed.
Maybe our collective empathy for the plight of those helped by the law should reduce our concerns for the middle-class. Perhaps that would have been an important national debate to have had in 2010, or during the 2008 election. But Americans never had the conversation that would sanction such a radical transformation of our society. Arguably, we had the conversation in the early 1990s with HillaryCare, and the American people spoke decisively against it.
Obamacare was sold to the American people with the promise of helping both groups. In addition to promising that the poor and sick would be helped, everyone else was promised that they could keep their doctors. They were promised that health care costs would go down. They were promised that there would be no new taxes (the administration reversed this position as soon as the litigation began to defend Obamacare’s constitutionality). None of these things proved to be true.
Had the full picture of this law been understood back in 2010 — the impact on both the winners and losers — rather than the sugarcoated version rammed through Congress on a straight party-line vote, it is doubtful the law would have ever been passed.
But now, we are stuck with Obamacare, and its 2010 veneer is quickly decaying into its 2014 reality.
One of the main accusations of supporters of the ACA is that challenges to the law are “mean-spirited,” and are aimed at depriving millions of health insurance. Perhaps another way of looking at this dynamic is that challengers of the law recognize that the ACA is a boondoggle that will make things worse of in the long run for countless more Americans, and this is a last-ditch effort to avert disaster.
On my book tour, I frequently am asked the same question: will the Court take the opportunity to strike down the mandate in Halbig? My answer usually goes something like this. Chief Justice Roberts could have invalidated the entirety of the Affordable Care Act in 2012, before anyone relied on it. He didn’t. Why would he do so in 2015, when millions are relying on it. (Though it is far from clear whether there are more winners than losers under the law).
Kevin Walsh has an astute post that challenges some of my own thinking. First, he notes that unlike NFIB, which involved serious doctrinal developments, Halbig is a fairly straightforward application of statutory interpretation, that will not change any constitutional doctrine (other than the fact that the Administration can’t arbitrarily rewrite the law).
First, a ruling for the individual mandate challengers required the development of constitutional doctrine in a way that a ruling for the ACA subsidies challengers would not. The political branches have long been on fair notice that text of enacted law controls, whereas they may have been lulled into complacency by the Court’s own latitudinarian constructions of the scope of congressional authority under Article I over time. Second, there is no statutory inseverability issue in the ACA subsidies challenge. The decision in NFIB v. Sebelius was made under the shadow of potential statutory inseverability, such that a newly formulated limitation on congressional power could be used to take down the entire ACA in one judicial ruling. While the practical effects of invalidating the IRS regulation in the ACA subsidies could be severe, the legal ruling would itself be much narrower by comparison
Kevin’s latter rationale, focusing on the rule of law, is much more persuasive in my mind.
Nor can one discount the possibility that, over time, Chief Justice Roberts has come to view President Obama’s commitment the rule of law in a manner similar to how Chief Justice Marshall understood President Jefferson’s commitment to the same.
This is exactly right.
Since 2012, a lot has changed. The President has unilaterally rewritten the law nearly 40 times (by my rough count). He sees no bounds to his ability to change the law, and has even taunted Congress to “sue me.” So here we are, in Court. To the extent that these issues present close issues, the government should not receive its normal presumption of constitutionality. To the contrary, the reckless and lawless manner with which this law has been drafted, enacted, and implemented, should deprive the government of this benefit of the doubt. Specifically, with respect to Halbig, the United States notified the D.C. Circuit in a letter brief that they would effectively not comply with an invalidation of the IRS rule.While the Chief may have thought a saving construction was warranted in NFIB, a similar favor may no longer be warranted.
For some time, I have toyed with the idea of filing a brief in one of the Obamacare cases focusing on the rule of law. This may present the right opportunity.
There is an odd sense of deja vu with the current Obamacare litigation.
In the early days of the individual mandate debate, a common ploy was to label arguments about the individual mandate’s constitutionality as “frivolous.” Then, when courts began to invalidate the mandate, the arguments, in the words of Jack Balkin went from “off the wall” to “on the wall.” Then, supporters of the ACA had to develop sophisticated legal arguments as to why these arguments were wrong. At this point, there was a serious legal debate. But, this effort was augmented by the standard parade of horribles, which I document at some length in my book. If the Court strikes down the President’s signature piece of legislation of a 5-4 vote in an election year it will delegitimize the Court. If the Court strikes down the mandate, millions will lose their health insurance. The supporters of the law were playing games with people’s lives. And so on.
Let’s review the Halbig litigation, which has followed an eerily similar pattern. For nearly two years, virtually all scholars argued that the argument advanced by Jon Adler and Mike Cannon was “frivolous.” Yet, by my count, 5 out of 6 Judges (including 3 Democratic-appointed Judges) agreed that the government can’t win at Chevron Step 1. 5 out of 6! Only one judge, Judge Davis, found that this case was open and shut at Chevron step 1.
I should remind you that Judge Davis was on the 4th Circuit panel in Liberty v. Geithner, and was the only judge who reached the commerce clause issue–the other two judges on the panel resolved it at the taxing power. He basically reached the issue, even though he agreed with the taxing power analysis. So much for judicial restraint.
Only by applying the uber-deferential Chevron Step two did 4 out of the 6 judges find that the IRS’s position was reasonable. The government being forced to win by the graces of Chevron Step 2 means this position is not frivolous. This is even less impressive than beating the rational basis test. Now, as Rick Hasen noted, this argument is now “on the wall.”
There is another parallel with Obamacare. I could not find a *single* person who argued in 2009 and 2010 that the Affordable Care Act imposed a tax on those who do not have insurance. No one. One government lawyer I interviewed for Unprecedented assured me this was how the Administration viewed it. But I could not find any contemporaneous evidence to substantiate this. Ditto for the legislative history of the issue in Halbig. As Adler and Cannon note in their WSJ Op-Ed:
If that were Congress’s intent, certainly one should be able to find some statutory language to that effect. Or contemporaneous quotes from the law’s authors explaining that they intended the Affordable Care Act to authorize subsidies in federal exchanges. The president’s supporters have had three years to find such evidence supporting their theory of congressional intent. They have come up empty.
Again, 5 out of 6 Justices agreed on this point. I suppose this is what happens when you ram a 3,000 page law through the process without any meaningful reconciliation or conferences. This was necessary because of Scott Brown’s election, as Megan McCardle recalls. They passed the law. And now, we found out what is in it.
Now that the argument is on the wall, debates are raging between textualism, purposivism, contextualism, and so many other -isms. The canons of construction are firing away at full blast. All this argumentation is evidence that the argument is not, nor has ever been “frivolous.”
And, following the pattern we saw with Obamacare I, the parade of horribles has commenced. For those of you on the ConLaw Prof list-serve, the barbs were charged at a very high level yesterday, with accusations of mean-spiritedness being thrown around vividly. Andy Koppelman, in a post titled “Halbig and hurting the innocent as a political tactic,” asks:
Q. What’s the difference between a Ukrainian rebel with a rocket launcher and a lawyer challenging the Obamacare subsidies?
A. The Ukrainian doesn’t intend to hurt innocent people.
Too soon? Koppelman piles on in a piece in TNR titled “Obamacare Opponents Are Hurting 4.5 Million Workers to Win a Political War.” Beyond the legal merits of the case, people will lose their insurance if the challengers win.
But merits aside, the case raises important questions about the ethics of political warfare. When is it acceptable to deliberately aim to harm huge numbers of people in order to score a symbolic point? The point here is to discredit Obamacare; the casualties are simply a means to that end….
If the argument is ultimately accepted by the Supreme Court, then about 4.5 million low- and middle-income workers in those states who are already receiving assistance from Obamacare will abruptly lose their benefits—not because they did anything wrong, but because this destruction furthers the political war. Their personal disasters are not unintended side effects of the litigation, but the very goal that the challengers are seeking.
The opponents of Obamacare have from the beginning found themselves driven by the logic of their position to make arguments that are increasingly morally repulsive. This was on display in the Supreme Court argument in March 2012. The government argued that the state legitimately could compel Americans to purchase health insurance, because the country is obligated to pay for the uninsured when they get sick. Justice Antonin Scalia responded: “Well, don’t obligate yourself to that.”
Echoing that charge is Tim Jost, who in the early days called both the mandate argument, as well as the Halbig frivolous.
Should the plaintiffs ultimately win, millions of Americans will lose their premium assistance and probably their health insurance. The individual health insurance markets may collapse in several states. This is mean-spirited litigation, intended to deny health insurance to those who Congress intended to help. It is to be hoped that in the end the courts will interpret the law as it was meant to be interpreted, and uphold the IRS rule.
Soon enough, the full-court press on Chief Justice Roberts will commence. As I said, deja vu.
Before this week, I was weighing against writing another book on the Affordable Care Act. Now, I am leaning towards continuing my work on “Unraveled,” focusing more broadly on executive power in the age of Obama. Hobby Lobby, Boehner, Halbig, Immigration, Libya, Bergdahl, etc. There’s more than enough important facts to chronicle for the ages. My article, “Congressional Intransigence and Executive Power” provides the basis of my theories.
Yesterday I wrote two posts concerning the timing of the appeals in Halbig (CADC) and King (CA4). I then engaged with an extended twitter dialogue with Steve Vladeck and Ian Millhiser (that cost me way too much cruise wifi money). Here, let me add some additional thoughts.
The plaintiffs in both Halbig and King are represented by Mike Carvin at Jones Day (who represented NFIB in NFIB v. Sebelius). It would behoove Carvin to file, as soon as possible, a cert petition. The United States will be filing, not quite as soon, a petition for rehearing en banc in the D.C. Circuit. The United States will certainly oppose the cert petition, and ask the Court to let the Circuit split ripen. (Translation, let the nuclear panel eliminate the Circuit split).
Under normal circumstances, this would be the prudent course of action. Let the full En Banc D.C. Circuit take a stab at it, and then review that cert petition.
But we aren’t in normal circumstances. This is Obamacare. Four justices were very, very bitter that the Chief upheld the mandate in NFIB. Four justices now have the opportunity to strike down–effectively–the mandate in 36 states. Four votes are all you need for certiorari. Plus, even if the United States requests a extension, this case would still be argued during OT 14. If en banc goes forward, the decision would come OT 15, right before another presidential election.
In fact, I had this odd premonition that if the Court grants cert on King before Halbig en banc proceedings, there may even be a dissent from the grant of certiorari (Sotomayor), arguing that this case should be allowed to ripen. (Remember Justice Breyer did something like that two years ago in a campaign finance case from Montana).
Gerard Magliocca offers similar thoughts at Balkin:
First, I think that there are four Justices who will be waiting on the front steps of the Court for the certiorari petition from the Fourth Circuit (which ruled in favor of the Administration on the same issue yesterday). Thus, the question of whether the DC Circuit will go en banc in Halbig is, to my mind, largely beside the point. In an ordinary case, one would expect the Justices to wait and see if a circuit split could be healed before acting, but this is not an ordinary case. The Justices who lost in 2012 on the individual mandate challenge would love to get another at-bat.
All this talk about the nuclear option is besides the point. The 4 NFIB dissenters will hold the key to when this case reaches the Supreme Court.
Update: Harry Reid continues to extoll the benefits of the nuclear option:
Asked by reporters if his decision to employ the nuclear option to fill the circuit was vindicated, Reid said based on “simple math, you bet.”
Senate Majority Whip Richard J. Durbin, D-Ill., said he wouldn’t be surprised if the full court ruled in the White House’s favor.
“There was a strong conservative Republican majority on the D.C. Circuit until we filled the vacancies,” Durbin said. “Now it’s a balanced circuit, so since one of the Republicans of the three who ruled was on our side I wouldn’t give up on a…ruling coming our way, toward the administration.”