Anomalies in the Affordable Care Act that Arise from Reading the Phrase “Exchange Established by the State” Out of Context

Timothy Stoltzfus Jost & James Engstrand – The Supreme Court is currently considering in King v. Burwell whether residents of all States can receive premium tax credits under the Patient Protection and Affordable Care Act (ACA). The Plaintiffs-Petitioners brought this litigation as a challenge to the validity of a Treasury Department rule allowing all ACA health insurance Exchanges or marketplaces, including federally facilitated Exchanges (FFEs), to support and grant the credits. They invite the Court to focus solely on four words in two subsections of Section 36B of the Internal Revenue Code that they interpret as limiting tax credits to individuals who can use a State-operated Exchange to enroll in qualified health plans. If the Court follows existing precedent, however, it will look at the text of the statute as a whole, rather than at this single clause in isolation. If it does, the Court will see that reading “established by the State” as the limitation that Petitioners urge upon it makes it necessary for the Court to engage in endless rationalizations, evasions, and circumventions in reading the rest of the statute. Indeed, if the Court accepts their reading, at least fifty provisions of the ACA would be made anomalous, if not absurd.

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Citation: Timothy Stoltzfus Jost & James Engstrand, Anomalies in the Affordable Care Act that Arise from Reading the Phrase “Exchange Established by the State” Out of Context, 23 U. Miami Bus. L. Rev. 249 (2015).

 

5 thoughts on “Anomalies in the Affordable Care Act that Arise from Reading the Phrase “Exchange Established by the State” Out of Context

  1. Mike Voeltz

    What utter nonsense. If the Federal Tax subsidies were available if a state failed to set up an exchange, then there would be no reason for the states to set up an exchange. By setting up an exchange the states expanded Medicaid as part of the ACA. The Federal Government cannot force the states to expand Medicaid. That’s how the bill conformed to the Commerce Clause, as medical care is well held to be the responsibility of each state, to make it “interstate commerce” regulated by the Federal government state exchanges needed to be set up that expanded Medicaid. Of course if a state set up it’s own exchange then it could be considered the same as a Federal exchange.
    The writers of the bill expected most of the states to comply and set up their own exchange, however 2/3 did not, and Judge Roberts insinuated in his opinion validating the law as a tax that the actions of the states in setting up exchanges would either doom the law or make it succeed. The fact is that the failure of 2/3 of the states to set up exchanges dooms this disaster of a bill– the people have spoken.
    As for statutory construction, the context of the bill is that states would set up exchanges– the Federal government cannot force the states to expand medicaid. What about the rule that specific separate terms in a statute cannot mean the same thing, unless explicitly stated in the statute. “state exchanges” are only the same as “Federal exchanges” if the state sets up an exchange– clearly.

    This is a long winded piece of fluff that is easily defeated by truth and fact, and a lame attempt to rehabilitate an abortion. What is there to gain for this publication for that?

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  4. Perspecticus

    “This is a long winded piece of fluff that is easily defeated by truth and fact, and a lame attempt to rehabilitate an abortion. What is there to gain for this publication for that?”

    Then by all means, Mike, provide some “truth and fact.” Just saying “truth in fact” does not imply or mean that you’ve actually provided either. In fact, the only thing you’ve written above is a bunch of baseless assertions and what, I suppose, you consider common sense (see: “why would the states set up an exchange?). The answer to that, by the way, is “so the states can have a modicum of control over their program.” It is actually quite common for the feds to allow states to implement their own interpretations of a given law — within the confines of the law itself — in order to allow the state the ability to cater their program to the unique circumstances of the state and/or to see if maybe they can make the law work better. This has been particularly successful in welfare programs.

    Another answer to that is: States did set up their exchanges; and the ones that did not, received federal subsidies for their citizens without saying “boo” about it.

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