Obamacare Subsidies Rulings: It's the Theory of Statutory Interpretation, Stupid

Obamacare Subsidies Rulings: It's the Theory of Statutory Interpretation, Stupid

ObamaCare suffered a potentially existential legal blow last week when the U.S. Court of Appeals for the D.C. Circuit – often called the nation’s second highest court – struck down an IRS rule that extends federal subsidies for health insurance purchased on ObamaCare exchanges to the 36 states that rely on federal exchanges. The statute, the Patient Protection and Affordable Care Act (ACA), explicitly authorizes the subsidies only in states that set up their own exchanges.

Both sides in the case, Halbig v. Burwell, agree that if the decision stands on appeal, it would effectively gut the ACA in 36 states by ending subsidies and – through a series of interrelated statutory provisions – terminating the ACA’s employer mandate and, for millions of people, the individual mandate as well. However, the Obama Administration is expected to ask the full D.C. Circuit to review the three-judge panel’s decision.

ObamaCare supporters have taken solace in the presumption, shared by many ACA critics, that the full court – consisting of seven judges appointed by Democrat presidents and just four by Republicans – will agree to hear the case and rule for the Administration. 

The conventional wisdom assumes that virtually all the judges will vote for whichever outcome of the case serves their political affiliation or policy views, despite their sworn duty to rise above politics and “administer justice without respect to persons.” While this view is understandable – decades of judicial activism have produced a widespread perception of judges as only slightly removed from politics – it is a bit simplistic. 

Yes, judges appointed by Democrats are likely to vote to uphold the ObamaCare rule in question, and Republican appointees are likely to conclude that it is unlawful. However, the predictability comes not just from pure politics but from disparate approaches to statutory interpretation as well. Liberal and conservative judges approach statutes differently, just like they interpret the Constitution differently.

The liberal philosophy of statutory interpretation is summed up by Supreme Court Justice Stephen Breyer: “judges, in applying a text in light of its purpose, should look to consequences, including ‘contemporary conditions, social, industrial, and political, of the community to be affected.'” (quoting Justice Louis Brandeis). Breyer explains that “Law is tied to life, and a failure to understand how a statute is so tied can undermine the very human activity that the law seeks to benefit.”

Compare this “living statutes” philosophy – to coin a term based on the similar “living Constitution” theory urged by progressives – to Justice Antonin Scalia’s approach to statutory interpretation. He believes a judge’s task is “not to enter the minds of the Members of Congress … but rather to give fair and reasonable meaning to the text of the United States Code.” Scalia notes that “sometimes [that produces] a terrible result because that’s the terrible statute that Congress wrote.” 

A judge’s responsibility to adhere to a statute’s text even when that compels an undesirable result is precisely what Republican appointee Judges Thomas Griffith – joined by Republican colleague Raymond Randolph – had in mind when he concluded the Halbig majority opinion by writing:

We reach this conclusion, frankly, with reluctance… [O]ur ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still.

Despite their reluctance, Griffith and Randolph could not get away from the fact that the ACA provision they were interpreting was abundantly clear on its face. The provision says that the ObamaCare subsidy is available to individuals who purchase health insurance on exchanges that are “established by the State under section 1311” of the ACA.

“In case anyone missed the fact that the federal government is not a ‘State,’ Congress added ‘under section 1311’ – a section dealing exclusively with state-established exchanges,” points out Ken Klukowski, an attorney litigating the same issue in a separate case but speaking here as the senior legal analyst for Breitbart News. “The federal exchange is created by section 1321, not 1311. So this really is crystal clear.”

Accordingly, the majority’s textualist approach compelled only one result: “applying the statute’s plain meaning, we find that it unambiguously forecloses the interpretation embodied in the IRS Rule and instead limits the availability of premium tax credits to state-established Exchanges.” In his concurrence, Judge Randolph added, “To hold otherwise would be to engage in distortion, not interpretation.”

In dissent, Judge Harry Edwards, a Carter appointee, took the holistic approach to statutory interpretation favored by progressives. Applying what the majority called an “abstract form of legislative history,” Edwards rejected their reliance on the provision’s plain meaning because it “would destroy the fundamental policy structure and goals of the ACA that are apparent when the statute is read as a whole.” The result would be to create “disastrous consequences” such as “condemn[ing] insurance markets in States with federally-created Exchanges to an adverse-selection death spiral.”

Edwards goes on to assert that the contradiction between the ACA’s goals and the disastrous consequences that would flow from a plain reading of the relevant provision creates enough ambiguity about the provision’s meaning to justify giving deference to the IRS rule. Scalia would say that disastrous statutes create disastrous consequences, but Edwards, instead, applies Breyer’s rule that “judges … should look to consequences.”

UC-Irvine law professor Richard Hasen accuses the Halbig majority of using “unfeeling tools of interpretation,” but he manages a pretty accurate description of how liberal and conservative judges interpret statutes:

Republican presidents now appoint judges who stick to textualism even when it leads to harsh results while Democratic presidents are more likely to choose judges who will look at the big picture and the human costs, when they’re parsing the words of a law.

This article will not settle the long-running debate about whether courts should be more feeling – recall Obama’s promise to appoint judges with “empathy” – and sensitive to consequences when interpreting statutes. However, those favoring the holistic approach to statutory interpretation taken by Judge Edwards should be aware that it carries several of the same downsides associated with the “living Constitution” approach to constitutional interpretation, including tension with representative democracy and the danger of elevating the rule of judges over the rule of law. 

After all, notes Justice Scalia,

[If we are] governed by some judicial determination of [a statute’s] spirit … [j]udges can simply say, “Oh, yes, the text says that but that’s contrary to the spirit of the law and we’re going to go ahead and do whatever we like.”

That is why the Halbig majority concludes by reminding us that the “limited role” of ascertaining the plain meaning of a statute’s words “serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges.”

Curt Levey is a constitutional law attorney and president of the Committee for Justice. Follow him on Twitter at @Curt_Levey.


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