Congressional Intent Is Clear: Congress Intended Subsidies Only For State Exchanges

By Grace-Marie Turner

Health policy analyst Tom Miller of AEI has a post reporting on new evidence that shows congressional committees had and discarded language explicitly authorizing tax subsidies in the federal exchanges.

The newly-uncovered analysis by an independent attorney shows that senators who were merging two committee bills in 2009 had language in front of them to would have allowed health insurance subsidies to flow through the federally-established fallback exchanges. But they took out that language in the final bill that went to the floor. This gets to the core legal issue of “congressional intent.”

There are few principles of statutory construction that are more compelling than evidence showing Congress had the language before it to achieve a stated goal but discarded the language in the final legislation.

That issue is front and center before the U.S. Supreme Court in King v Burwell: Did Congress mean for subsidies to flow only through “an Exchange established by the State under [section] 1311of the Patient Protection and Affordable Care Act” as the law says numerous times? Or could the tax subsidies also flow through the federal fallback exchanges, as the Obama administration contends, even though the law does not explicitly allow that? The government argues in that the IRS had the authority to write a rule allowing subsidies in the federal exchanges because Congress clearly wanted subsidies to be available to citizens of all of the states.

But that is not what the legislative history shows. The bill that went to the Senate floor and which ultimately was enacted was the product of a number of meetings to reconcile the Senate Health, Education, Labor, and Pensions and Finance committee bills.

The HELP bill, S. 1679, explicitly tied the availability of premium credits to its federal fallback exchange, called a “Gateway.” According to a new analysis, there was “clear and explicit authorization that premium tax credits were also available through a ‘Gateway’ established by the Secretary of Health and Human Services.” But that language was subsequently not included in the final version sent to the floor by the Senate Finance committee as S. 1796. The Finance Committee version only explicitly authorized subsidies to flow through exchanges “established by the State.”

That is the point that MIT economist Jonathan Gruber made when he famously said: “If you’re a state, and you don’t set up an exchange, that means your citizens don’t get their tax credits.”

Miller explains that several amici briefs examine the legislative history. Jonathan Adler and Michael Cannon of Cato “examine how an earlier version of the ultimate bill was approved by the Senate HELP committee and deliberately took away tax credits from any exchange in a state that failed to comply with various new federal insurance rules. Another amicus brief filed in late December by the Mountain States Legal Foundation hits some of the edges of this legislative history issue as well.

“However, another astute Washington, DC-based attorney recently pointed out to several critics of the ACA, including me, how that isn’t the end of this legal story,” Miller writes.

He goes on to quote the analysis, providing legal and other citations:

The first Senate version of what was to become the ACA was reported from the Senate Committee on Health, Education, Labor, and Pensions (“HELP”) on September 17, 2009, as S. 1679, the Affordable Health Choices Act.   In that bill the States were given a 4-year period following enactment to establish a “Gateway”—a Health Insurance Exchange.  If a State failed or refused to establish a “Gateway” at the   end of that period the Secretary of Health and Human Services was directed to establish and operate a Federal Fallback “Gateway” in that State.

Expressly stated in S. 1679’s Federal Fallback established by the Secretary was a direct stipulation that the residents of that State “shall be eligible for premium credits” to pay for qualified health plans under certain conditions.  See S. 1679, proposed Public Health Service Act section 3104(d)(1)(D).  The bill explicitly tied the availability of the premium credits to the Federal Fallback “Gateway” and closely expressed then what is now only imagined to be included in the statutory text at issue in King v. Burwell.

That clear and explicit authorization that premium tax credits were also available through a “Gateway” established by the Secretary of Health and Human Services was subsequently not included in the version of theACA later reported from the Senate Committee on Finance on October 9, 2009, as S. 1796, the America’s Health Future Act.  The Senate Finance Committee version only authorized the establishment of Exchanges by a State and the availability of premium tax credits through Exchanges “established by the State”.

The explicit language from S. 1679 also was not included in the “federal fallback” provision of the Senate Amendment to H.R. 3590, adopted on December 24, 2009, and that became the Patient Protection and Affordable Care Act. Comparing these three prominent versions of the ACA considered during the legislative process demonstrates that the opportunity and need to expressly address the treatment of premium tax credits in Exchanges established by the State or by HHS was self-evident but was not acted upon by the Congress.

The Senate Amendment was the product of marathon “merger” meetings between the Senate Finance and HELP committees, the Senate Majority Leadership, and White House staff to reconcile the bills reported from each committee. See, McDonough, Inside National Health Reform (2011) at 89. Pertinent to King v. Burwell, the Senate Amendment was a deliberate “merger” of the two committee proposals consisting mostly of the Finance bill and adding the HELP federal fallback but without the premium credit tie-in language.

The issue in King v. Burwell initially is all about whether the Court can read into a law any statutory language that was earlier considered by the Congress but was not adopted in the subsequently enacted final version of that law. The Supreme Court has said in the past that there are few principles of statutory construction that are more compelling than the proposition that Congress does not intend to enact as statutory language provisions that it has earlier discarded in favor of other language. See Doe v. Chao, 540 U.S. 614, 622 (2004).

The question is not what Congress would have wanted but what Congress actually enacted.  The Court’s role is to interpret the statutory language of the law as it is enacted by the Congress and to presume that the legislature has said what it means and means what it says, and to not alter the text to satisfy a policy preference. For the ACA, if the language of S. 1679 was intended to be included, then the proper remedy is to seek amendment to the statute from the Legislative Branch. Congress had the language and knew what to say but did not say it.

This is the smoking gun. Congress had the language on the table that allowed subsidies through the federal exchanges and, for whatever reason, legislators discarded it before sending the bill to the floor. That shows this is not a problem that the IRS had authority to remedy. Only Congress can fix the problem that the IRS created with its illegal rule.

Originally posted on Forbes, February 26, 2015

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