District Court Upholds Obamacare Exchanges

Earlier today, Judge Friedman (D.D.C.) sustained an IRS rule to the effect that Obamacare’s subsidies and coverage mandates apply in all states with a health care exchange–not just those with a state-run exchange but also those with a federal or federally “facilitated” exchange. That is so, the judge held, despite statutory language that specifically refers to exchanges established by or ”a state.” The IRS (or for that matter HHS) is not a state but never mind. The opinion is here; news coverage here.

The judge’s opinion is (in my humble estimation) not a “let’s-save-Obamacare” blow-off: it wrestles with a serious problem of statutory interpretation—a Chevron problem. The judge says that the overriding purpose (universal coverage) is so blazingly obvious that in the context of the statute, the plaintiffs’ literal interpretation makes no sense. I think that’s mistaken (and I think I’d say that even if I weren’t affiliated with the Competitive Enterprise Institute, which helped to engineer this case), and I hope that it will be corrected on an already-pending appeal. But I think the real problem lies elsewhere.

All of AdLaw rests on the premise of Congress as a deliberative assembly that wants reasonable ends, reasonably pursued. Sometimes (Chevron says) Congress speaks with precision, and we courts follow; at other times, it delegates, and then we ask whether the agency acted within the statutory bounds, and reasonably.

That may make sense in the context of statutes that Congress actually thought about, like (say) the Clean Air Act at issue in Chevron (and now that I wrote that sentence, I want to shoot myself). But the ACA?? The basic design question—state or federal exchanges—has proved kind of important, don’t you think? But the harsh fact is that the Congress that enacted this statute had very specific intentions with respect to interest groups pay-offs (that’s why the ACA runs over 1,000 pages) but no discernible intent with respect to anything beyond that—except to cram it down our throats. The text could have committed the exchanges to Evita Peron or Mylie Cyrus: it still would have passed. Everyone knows that. The litigants and judges know it better than most; but none of them can say that.

The deep challenge here, and in an increasing number of cases, is to improvise public law rules for a nihilistic Congress and political process.