Maybe should have used pencil.

Photographer: Chip Somodevilla/Getty Images

Obamacare's Intent? Just Read the Law

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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By the end of next month, the Supreme Court will have released its decision in King v. Burwell, the case that will determine whether subsidies will be available for insurance purchased through a federally operated exchange. The plaintiffs say this is impermissible, because the law provides for subsidies only for policies purchased on exchanges "established by the state", probably inserted in the law as an inducement to states to set up exchanges. The defenders of the status quo argue that this is insane, because they'd never structure the system so as to risk having needy people lose subsidies, and because no one who actually worked on the law remembers having any such intention.

Robert Pear airs both of the defender's points for the New York Times, interviewing political folks who were there during the negotiations, and staffers who helped draft the legislative language. Naturally, given my continuing opposition to Obamacare, a number of Obamacare supporters have asked me what I thought of this, with veiled hints that I should find this totally devastating to the arguments in the King case. My actual reaction is as follows:

1. This is not new.

2. This is incomplete.

3. This is not legally relevant, for good reason.

4. If it were legally relevant, it would not be as helpful to the case as liberals think.

This is not the first time a media outlet has talked to folks who were involved in the process, and recorded them saying that they never, no way and no how, intended to deny subsidies to states--or reasoning, like Olympia Snowe in Pear's article, that they couldn't have set it up this way, because it would be crazy to choose a structure that threatened subsidies for people in states that didn't set up exchanges.

These articles, however, often don't provide important counterarguments. For example: Congress indisputably chose exactly that crazy, insane, totally inconceivable structure for the Medicaid expansion passed in the same law. In fact, it was considerably more coercive: if you didn't expand, you lost all your Medicaid funding, not just the new stuff. Why would Congress choose a structure that might result in a net loss of insurance coverage? We can sit around and speculate, but ultimately the correct answer is "Who cares? They did."

Or consider the "drafting error" interpretation that many politicians have offered. Here's a puzzle about that, noted by Jonathan Adler and Michael Cannon in their amicus brief supporting the King plaintiffs: At several points during the drafting process, people kept adding the phrase "established by the state" to the middle of "exchange established under Section 1311," which Cannon and Adler say was unnecessary unless they saw some distinction between exchanges established under Section 1311, and exchanges established by the state under that section. This language survived the process of merging and reconciling bills, even while other sections were amended to ensure parity of requirements on federal and state exchanges.

Pear does offer a possible explanation: As I read it, he's saying that the drafters meant it initially, but they they realized that some states might not establish exchanges, so they set up a federal backstop, then forgot to change the relevant sections about subsidies. But legally, that's not as helpful as people seem to think.  

The government has not made this "drafting error" argument in either its brief or oral argument; instead the defendants argue that "exchange established by the state" is a term of art that includes exchanges not established by the state. There's good reason for this. The "drafting error" argument requires admitting that at some point "established by the state" was deliberately written into law to mean, well, exchanges established by individual states, something that the government has no interest in saying, because contrary to apparently popular belief, "drafting error" is not a magic word that forces the Supreme Court to give you a mulligan. As Adler points out, Elena Kagan recently wrote in another case that, "This Court has no roving license, in even ordinary cases of statutory interpretation, to disregard clear language simply on the view that (in [the IRS’s] words) Congress 'must have intended' something broader." 

However, even if this were accurate, and even if the court were inclined to broadly rewrite statutes to what the legislators wanted them to be, none of Pear's interviews would carry any weight toward that end. The Supreme Court isn't much interested in post-hoc statements of legislative intent. As Justice Antonin Scalia wrote in Pittston Coal Group v. Sebben: "Since such statements cannot possibly have informed the vote of the legislators who earlier enacted the law, there is no more basis for considering them than there is to conduct post-enactment polls of the original legislators."

This strikes a lot of people as crazy, including, obviously, many reporters. I mean, you have the legislators and staffers right there! Why not just ask them what they meant, rather than trying to puzzle it out from the statutory language?

Actually, this is not crazy, but very wise. Memory is incredibly fallible, especially about stuff you're highly motivated to believe.

We now have two cases of wonks who were closely connected to the drafting process, who said at one point that the King interpretation of the statute is insane to anyone who followed the construction of the law ... and can be found on tape at an earlier point (in one case, during the legislative process) advancing exactly the theory that they subsequently declared completely and obviously insane. Do I think that their later argument was a strategic lie? No, despite conservative shouts that I am being naive. Scout's honor, cross my heart and hope to die, I think that they simply forgot what they'd earlier believed.

Memory is so very terrible, and this law is so very complex. Anyone who tells you that they have a full and accurate memory of the evolution of the various moving parts is lying -- at least to themselves. They are incapable of being accurate about what must have seemed like a minor point in a law that was drafted five years ago . That's why the Supreme Court largely ignores post-hoc statements, and we should too. That is also why we should give a whole lot less credence to eyewitness testimony in trials, by the way, but that's a column for another day.

In the absence of a clear record of legislative intent, which we don't have, we have to go back to where we should have been in the first place, the place from which the Supreme Court is going to rule: the text of the law. 

That doesn't mean I know how the court will rule next month; cases rarely end up at the highest court of the land unless there are at least two plausible readings of the words. But I do know what won't help them decide: shouting that Congress couldn't possibly have done something so crazy, or spelunking for improbable claims of accurate recall.

  1. Minor? You ask. How could it be minor? It's a major court case!

    Well, look how few people were noting during the negotiations that states which failed to expand Medicaid would lose all their funding--something that became a key issue during the 2012 Supreme Court case. Obviously, if it had happened, this would have been a huge story--but I presume we all assumed that 100 percent of the states were going to do the expansion rather than lose funding. Or maybe not, because guess what? I don't remember what we were thinking. It's obvious, however, that whatever we were thinking, it was not "major story."

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To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Philip Gray at philipgray@bloomberg.net