Another key staff member who was there for the long, long process during which the Affordable Care Act was worked on by the House, by the Senate, by the White House with the Senate, and by the White House with the House and Senate as the two versions were combined and passed
adds his voice to the many who have refuted the central claim in
King v. Burwell. That's the suit the Supreme Court will hear next week that could be the unraveling of Obamacare.
Phil Schiliro is the former Director of Legislative Affairs in the White House, and was there for the whole process. He has a pretty simple explanation for the five-word phrase—"an Exchange established by the State"—that the challengers argue means Congress restricted tax subsidies just to states that created their own exchanges. The phrase doesn't say what the challengers say it says.
[T]he explanation for these words is actually not complicated. The concept of 50 state-specific exchanges is essential to the law. Regardless of whether a state operates its own exchange or the federal government does it for the state, each state will have its own distinct roster of insurance companies and rate options. The identifier "an Exchange established by the State" is a clarifying reference to a particular state-specific exchange, as opposed to the exchanges operating in other states (this is what's referred to as a "term of art"). When the IRS determines the appropriate tax credit, distinguishing between state-specific exchanges matters: Texans are supposed to get tax credits based on the cost of health insurance in the Texas exchange, not New York's or North Dakota's.
In the broader context, it's even clearer: one section of the law directs the IRS to take into account the rates charged in "an Exchange established by the State" in setting premium assistance, while another provides that federally run exchanges are "such Exchange within the State," and are to be treated as exchanges established by the states. It's just an attempt at statutory clarity. And it amounts to nothing more than that, no matter how creatively the law's opponents try to interpret those words.
The critical point here is that the health insurance market does vary wildly by state and even by localities, even on the federal exchange. Texans won't pay the same rates as Virginians who won't pay the same rate as North Dakotans. The subsidies have to take that into account, have to be based on the premiums charged not just within those states, but within the rating areas within those states. Where the phrase in question pops up is "in the definition of 'Premium Assistance Amount' in one sentence of a long and complicated law." Because it's talking about premium assistance—subsidies—the phrase is meant to clarify that the subsidies will apply state-by-state, or in "an Exchange established by the State" as opposed to "that other State."
Context is key here, and the Supreme Court is going to have to turn a very blind eye to the whole rest of the law if they're going to be swayed by the argument that the whole thing contained to those five words. They're also going to have to turn a blind eye to the whole legislative history of the law, and to congressional intent, to buy the argument that what Congress really meant to do with the law they called the "Affordable Care Act" was to make insurance affordable for just some. As Schiliro and many others who were in the negotiating rooms, the "notion that the law would base tax credits on whether states set up their own exchanges—and deny subsidies to American families as a result—never came up." Not at any point in the negotiations or when various outside groups were analyzing the bill, and then the law.
It's clear that this Supreme Court has pretty selective vision when it wants to, but it's hard to imagine it could really become this blind.