Another Hole in the Halbig Verdict

Much attention has been paid recently to the contradicting decisions issued on the Halbig and King cases, which challenged the Obamacare subsidies offered to individuals purchasing insurance on federal exchanges. In a piece for Politico MagazineAbbe R. Gluck finds a weakness in the Halbig plaintiffs’ arguments, in their own words. As Gluck writes:

What’s less known, however, is that in the 2012 constitutional case, these same challengers filed briefs describing Obamacare to the court in precisely the way they now say the statute cannot possibly be read. Namely, they assumed that the subsidies were available on the federal exchanges and went so far as to argue that the entire statute could not function as written without the subsidies. That’s a far cry from their argument now that the statute makes crystal clear that Congress intended to deny subsidies on the federal exchanges.

I am not a fan of the “gotcha” flavor that some aspects of this case have taken on, but the challengers’ 2012 statements are relevant as a legal matter because what the government has to prove to win—as a matter of black-letter law under the Chevron doctrine—is that the statute is ambiguous. (Chevron says that federal courts defer to the relevant agency’s reading of the statute when a federal statute is unclear—here, that agency is the IRS.)

The challengers have spent more than a year arguing that no reasonable reader of text could construe the statute in any way other than denying federal subsidies to insurance purchasers on exchanges operated by the federal government. But what about their statements from 2012—statements then echoed by Justices Scalia, Kennedy, Thomas and Alito in their joint dissent to the Supreme Court’s ruling in the constituitional challenge, NFIB v. Sebelius?

You can read more, including the relevant passages from the NFIB v. Sebelius briefs, here.

Government seeks en banc rehearing in Halbig

Today the government moved for en banc rehearing in Halbig, as expected.  (HT: Rachana Dixit Pradhan @ insidehealthpolicy.com.)  I have not had the chance to review the petition but thought I would share it.  (For those looking to brush up on some of the blog debate on the case before reading, see here and here.  For more details on the en banc process see my earlier post here.)

The Government argues that rehearing en banc is warranted because the “disruption threatened” by Halbig makes the case one with exceptional importance.  One interesting bit did catch my eye, in light of that assertion.  It is footnote 7, which offers the Government’s view on the impact of the ruling in Halbig, and might be taken as sort of a cf.:

“The panel majority suggested that its ruling would apply nationwide, Op. 41-42, but it did not squarely hold as much or address the many reasons why relief should not extend beyond the named plaintiffs. The panel’s decision does not control in other circuits, just as the Fourth Circuit’s King decision does not control here.”

Here is the petition: Halbig En Banc Petition

The D.C. Circuit Got it Wrong. Congressional Intent on Exchange Subsidies Is Clear, If You Know Where to Look

By Robert I. Field

Why would Congress have limited Affordable Care Act subsidies to residents of only some states – those that establish their own insurance exchanges? The law authorizes credits for the purchase of insurance “through an Exchange established by the State under section 1311.” The D.C. Circuit found that this wording excludes federally established exchanges and that Congress might have intended this to induce states to establish their own exchanges rather than letting the federal government take over.

But the Court acknowledged that there is no evidence of such intent in the legislative history. And such a purpose would conflict with the ACA’s overall goal of extending health insurance access to all Americans.

With no legislative history as a guide, is there another plausible explanation of Congressional intent? Is the best answer to the D.C. Circuit’s opinion that the phrase was a drafting error, as the dissent seems to imply? Why else would it have found its way into the law?

Inartful though it may be, the wording can be seen to serve a different purpose that is consistent with the rest of the ACA. It can be understood not as a way to distinguish exchanges established by a state from those established by the federal government but to distinguish those established publicly from those created privately.

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The Problematic Jurisprudence of Halbig v. Burwell

By Leslie Francis

Like the recent Supreme Court decision in Hobby Lobby, the D.C. Circuit’s ruling earlier this week in Halbig v. Burwell is being hailed by conservatives and bemoaned by liberals as a death knell for Obamacare.  Unlike the decision in Hobby Lobby, however the D.C. Circuit’s ruling is not the end of the matter, and many liberals are finding hope in the ruling of the 4th Circuit the same day, the probability of an en banc hearing in the D.C. Circuit, and the ultimate possibility of a favorable Supreme Court decision.  In an earlier post in HealthLawProf, I decided to take seriously the possibility of damage control from a limited reading of Hobby Lobby.  It is pretty much universally agreed—and I believe correctly—that it is not possible to do similar damage control by giving a limited reading to Halbig v. Burwell.  If the ruling stands, that tax subsidies are not available to people purchasing coverage through the exchanges in the states that are letting the federal government do the work, many important other provisions of the ACA will be untenable, including the penalties for large employers not offering insurance whose employees receive subsidies and likely the individual mandate itself.  But I think it is possible to undermine Halbig in a way not generally recognized by the liberal critics who argue (correctly) that the statutory provision at issue is ambiguous:  argue that the jurisprudence of the majority opinion in Halbig is internally inconsistent.  Here’s how. Read More

A Mixed Message on Obamacare from Two Federal Circuits

By Greg Curfman and Holly Fernandez Lynch

It was as if lightning had struck twice in the same place.

On Tuesday two pivotal federal circuit court opinions that could dramatically impact the future of Obamacare were unexpectedly issued within hours of each other. And what’s more, the two opinions reached opposite conclusions on the same question, setting the stage for further appeals and possible Supreme Court review, potentially bringing the Affordable Care Act (ACA) before the high court for the third time since its passage.

At issue in both circuit court cases was the legality of providing subsidies in the form of Internal Revenue Service tax credits for the purchase of health insurance on the federal exchange (Healthcare.gov).

In a decision that stunned Obamacare supporters–but elated opponents–a three-judge panel of the Federal Appeals Court for the DC Circuit ruled in Halbig v. Burwell that the purchase of health insurance on the federal exchange may not be subsidized by IRS tax exemptions. This judgment would leave millions of Americans with earnings between 133% and 400% of the federal poverty level without affordable health insurance, and it would also threaten the viability of the employer mandate.

In contrast, in a unanimous (3-0) opinion in a nearly identical case, King v. Burwell, the Federal Appeals Court for the Fourth Circuit in Richmond, VA, came to the opposite conclusion.

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Don’t Buy the Cooperative-Federalism-Makes-Halbig-Logical-Argument

By Abbe Gluck

Cross-posted at Balkinization and Election Law Blog

I had hope to take a day off blogging about Halbig and King (the ObamaCare Subsidies cases), but I cannot allow another new, and inaccurate, narrative about ObamaCare to take hold. Over at Volokh, Ilya Somin argues that the holding in Halbig is not absurd because Congress uses statutory schemes all the time that try to incentivize states to administer federal law (and penalize them if they don’t).  It is true we see schemes like that all the time–Medicaid is a prime example–but the insurance exchange design at issue in these cases is NOT one of them.  This federalism argument was made before the D.C. Circuit and even Judge Griffith didn’t buy it in his ruling for the challengers.  I tried to dispel this myth back in March, when I wrote the following on Balkanization. As I said there, this isn’t Medicaid—it’s the Clean Air Act.

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Obama Administration to Revise Contraceptives Coverage Accommodation

In response to the SCOTUS decision granting Wheaton College a preliminary injunction against having to comply with the terms of the HHS accommodation available to non-profit religious organizations who object to covering contraceptives for their employees (i.e., submitting a form to their insurance providers), the Obama Administration has announced that it will revise the terms of that accommodation. Instead of requiring objecting employers to provide the form and notice to insurers or third party administrators of self-insured health plans so that they can jump in to provide free coverage directly to employees, HHS will issue new regulations in short order, the details of which remain to be worked out, but will likely allow nonprofit institutions to write a letter stating their objections, rather than filling out the form (see the WSJ story here). This will leave the government to make sure employees are not left without contraceptives coverage.

I may be oversimplifying things, but I think this extended accommodation really isn’t such a big deal.  It seems to just add the government in as a middleman between the objecting employer and the insurer or third party administrator that was responsible for providing coverage under the original accommodation.  In other words, before, nonprofit religious employers with an objection had to fill out the form and give it directly to their insurers; after the modification, those employers could just let the government know, and presumably the government will notify their insurers.  A bit more bureaucracy, but shouldn’t be too big of a problem – probably just a drop in the bucket of the massive ACA bureaucracy, and potentially unnoticeable by the women seeking free contraceptives.  That is unless the employers claim that even this approach leaves them complicit in violation of their religious beliefs.

Since SCOTUS’s substantial burden test as applied in Hobby Lobby focused on the hefty fines for noncompliance, rather than the extent to which the employers’ religious beliefs were directly v. indirectly burdened, the complicity point is an important one to keep an eye on.  Will religious employers be satisfied with simply adding another link to the causal chain?  Perhaps (and I hope).  Technically, all they would be asked to do is announce to the world that they have a religious objection.  What the government does with that information is beyond their control.  If this works out, the revised accommodation could also be extended to the closely held for-profit corporations with religious objections to contraceptives coverage that SCOTUS determined could not be forced to comply with the mandate, such that their employees too could retain access.

So let’s see what HHS can come up with.  Haters gonna hate, as they say, so I’m sure there will be more litigation on this, but hopefully we’re nearing a solution – and I think a good compromise.  The bigger issue will be dealing with all those other services that must be included as essential benefits or preventive services to which religious employers may object, and to which insurers are likely to object to providing free coverage.  But let’s see if the ACA lives to die another day after Halbig and King.

The ObamaCare Subsidies Rulings–and the D.C. Circuit’s Disappointing Misreading of the ACA

By Abbe R. Gluck

As most readers know by now, two federal appeals courts on Tuesday reached the opposite conclusions about the validity of the critical financial subsidies on the ACA’s federal health insurance exchanges. The Fourth Circuit in Virginia upheld the subsidies—indicating the government had the better argument, but regardless applying the longstanding rule that when a statute is not clear, courts defer to the agency administering the statute (in this case, the IRS). The D.C. Circuit, however, ruled the other way, reading one provision of this massive and complex federal law out of context. That opinion not only misinterprets the statute—with enormous practical consequences—but also does a deep disservice to conservative jurists and lawyers who have spent the last 30 years arguing that text-based interpretation is sophisticated, not literalistic, and serves democracy.

The stakes are enormous: If the D.C. Circuit’s opinion ultimately carries the day, more than $36 billion dollars in financial relief will be denied to the approximately 7 million people expected to be insured with the help of this financial assistance. It also places Republicans in a real dilemma, especially as the election cycle heats up: The result, if the ruling stands, would be massive red-state/blue-state disparity, as millions of middle-class Americans are deprived in red states of access to medical care, because it is mostly the red states whose subsidies are now at issue.

As I wrote yesterday on Balkinzation, the opinion is terribly disappointing from a statutory interpretation perspective. It relies in part on irrelevant legislative history (from the HELP committee, whose bill wasn’t even the basis for these provisions–the Finance committee’s was) and gets it wrong anyway (as I argued here); it bends over backwards to come up with reasons why Congress might have intended this result (which we all know it certainly did not); and it attaches far too much significance to a line in the statute that expressly deems exchanges in the territories to be state exchanges and does not replicate the special deeming language for the federal exchanges. The territories language is boilerplate language used by Congress when talking about territories in statutes even beyond the ACA, and should have been attached no significance here.

For a more detailed legal and political analysis, check out my op-ed on the cases.

Health Insurance & Patient Responsibility, Part I

By Deborah Cho

With the implementation of the Affordable Care Act, many consumers can now (or eventually…) head to HealthCare.gov to compare health insurance plans to find one that fits their needs.  Health insurance plans, however, can be complicated and fraught with exceptions and exclusions that consumers learn of only when it is too late and medical bills have already started to pile up.  Consumers are directed to consult member handbooks to learn their plan’s terms and conditions, but these handbooks are often nearly a hundred pages in length and densely packed with information.

Nonetheless, patients are held responsible for understanding and abiding by the terms of their plans, even if those terms are confusing and hard to fully appreciate.  For example, patients are expected to know what types of medical care require prior authorization from their insurance carriers and that they must obtain approval before receiving that care.  If these steps are not taken in the correct order, payment can be denied and the patient may be left to foot the bill for the services.  Similarly, patients must understand that their policies may fully cover only in-network providers and must additionally know who is in-network and who is not.  Because the member handbook and/or benefits document allegedly provide adequate notice, the patient is out of luck if he is not aware of these conditions.

The outcome is similar even when a medical provider or the provider’s staff does something to indicate that the medical care in question is covered by the patient’s insurance plan.  This can be as simple as suggesting a specific procedure to help with the patient’s condition or even merely referring the patient to a particular specialist.  A patient may accept care on the understandable yet incorrect assumption that an action recommended by his treating physician is automatically covered by his insurance plan. Though providers often verify that costly care will be covered by a patient’s insurance in order to ensure proper compensation, the instances when this does not happen can be financially devastating to patients.

So who should be responsible for knowing the ins and outs of these health insurance policies?

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