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Bến Tre Revisited (King v. Burwell, Part One)

It may be proper for me to offer some observations on the Supreme Court’s highly consequential decision in King v. Burwell. At a December 2010 presentation at the American Enterprise Institute in Washington, I explained that parsing Section 1401(a) of the Affordable Care Act, which added Internal Revenue Code Section 36B, revealed something dramatic: The amount of a premium tax credit is always equal to zero under Section 36B unless a qualified health plan is purchased by a member of the taxpayer’s immediate family through “an Exchange established by a State under section 1311 of [the ACA].”

At the AEI presentation, I also discussed the law’s Section 1321(c). It provides that the U. S. Secretary of Health and Human Services must establish and operate an exchange within a state if the state does not timely adopt certain regulations or make sufficient progress toward establishing an operational exchange. The term “State” is defined in the ACA to mean the states of the union and the District of Columbia. Thus, I assumed that the ACA contemplated two types of exchanges—state-established and HHS-established. Eventually, I was not alone in thinking so, as word of the presentation slowly spread. On this perhaps flimsy basis, I presume to offer the following thoughts:

1.Given the absence of ambiguity in the phrase “an Exchange established by a State under section 1311,” as it appeared not once but twice in Code Section 36B, it seemed to follow that premium-assistance tax credits could not be allowed based on purchases of coverage from an exchange established within a state by the Secretary of HHS. I interpreted Section 36B as a means to compel states to establish exchanges. I posited that Congress wanted to “partner” with the states regarding implementation of the ACA, just in case things went wrong. Subsequently, I argued that Section 36B therefore violated the principles of accountability to the electorate underlying New York v. United States (1992) and Free Enterprise Fund v. Public Company Accounting Oversight Board  (2010), among other cases.

2. Officially, the literal interpretation took the Internal Revenue Service and the Treasury Department by surprise. During the rulemaking process, the literal interpretation was rejected for reasons that never have been adequately explained. The IRS issued a final rule allowing premium tax credits based on coverage from both state exchanges and “federally-facilitated exchanges.” Soon thereafter the regulations were challenged under the Administrative Procedures Act in four cases, of which King was one.

The essence of the argument advanced by the plaintiffs in King and the other premium tax-credit cases was that the final rule was contrary to law in the most basic sense: The rule permitted premium tax credits under circumstances where the applicable statutory provision prohibited them. Thus, the plaintiffs urged the courts to apply step 1 of Chevron U.S.A. v. Natural Resources Defense Council, Inc. (1984) to the same plain meaning analysis that had led me to my conclusion regarding the availability of premium-assistance tax credits in “refusenik” states.

3. Last week, in an opinion penned by the Chief Justice, the Court utterly rejected the petitioners’ reading (and therefore my reading) of Section 36B. Thus, the issue in King has left the realm of argument and now belongs to the realm of analysis.

The beginning place for analysis, I think, is the Court’s acknowledgement that the interpretation that the petitioners and I had reached is “the most natural” reading of Section 36B. When the Supreme Court repudiates the most natural reading of the operative phrase in a statute in an APA case, a close textual analysis of the Court’s opinion is likely to be a worthwhile endeavor.

4. And so I propose to offer a close reading of the King opinion in several follow-up posts. For now, a word about methodology.

The tenor of my reflections on King might strike the reader as more literary than legal, and they  certainly will not rise to the heights reached by academic commentators. I ask the reader’s indulgence in that regard for what I think are sound reasons.

To begin with, King v. Burwell is fundamentally a case about statutory language, and therefore fundamentally a case about language, and language is the “stuff” of literature. Moreover, because King is fundamentally a case about statutory language, it presupposes a mode of thinking about statutory language. The mode of reasoning about statutory language evidenced in the King opinion is characterized by accepting some competing “suggestions” instead of others regarding the meaning of Section 36B’s operative language. Indeed, the opinion includes no fewer than five instances in which consideration of language is said to “suggest” a particular conclusion about that meaning. Remarkably, each of these five suggestions is at odds with “the most natural” reading, or if you will, the most natural conclusion about meaning. Yet the petitioners’  reading of the statutory language is “strong.”

Thus, the King opinion presupposes a competitive discourse between the most natural reading of the statutory language and the apparently stronger “suggestions” that underpin its opposite. Discursive reasoning designed to persuade the reader to favor one view over another is rhetoric, and therefore is in some respects a literary as well as a logical phenomenon. This, it strikes me, is particularly true when the rhetoric is meant to persuade the reader regarding the meaning of words and phrases, and in particular to persuade the reader to join in rejecting “the most natural”  meaning of words and phrases.

But how can “suggestions” overcome the strength of the most natural reading of Section 36B when they are pitted against one another? If the most natural reading of a statutory term would ordinarily have prevailed, could it be that the Court concluded it had to destroy the statutory language in order to save its meaning?

Considerations such as these lead me to think that perhaps the revolutionary character of King v. Burwell can be approached by studying the rhetoric of the opinion. I propose to begin that analysis in my next guest post.

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