Late last year I wrote about the Halbig case, one of several lawsuits—brought by disgruntled independent business owners and defended by libertarian advocates—that challenged whether most states could get Affordable Care Act subsidies. The plaintiffs argued that the text of the ACA, which referred to subsidies for states that built health care exchanges, meant that the states without them could not receieve subsidies. The IRS, they said, overstepped its boundaries when it tried to do otherwise.
Well, Halbig was argued before D.C. District Court. Judge Paul Friedman has just sided with the government against the libertarians. From the decision:
Plaintiffs’ theory is tenable only if one accepts that in enacting the ACA, Congress intended to compel states to run their own Exchanges – or at least to provide such compelling incentives that they would not decline to do so. The problem that plaintiffs confront in pressing this argument is that there is simply no evidence in the statute itself or in the legislative history of any intent by Congress to ensure that states established their own Exchanges. And when counsel for plaintiffs was asked about this at oral argument, he could point to none…
Indeed, if anything, the legislative history cuts in the other direction and suggests that Congress intended to provide states with flexibility as to whether or not to establish and operate Exchanges… Nor does plaintiffs’ theory make intuitive sense. A state-run Exchange is not an end in and of itself, but rather a mechanism intended to facilitate the purchase of affordable health insurance. And there is evidence throughout the statute of Congress’s desire to ensure broad access to affordable health coverage.
Brian Beutler has more, calling the plaintiffs’ argument garbage, based on an “opportunistic” reading of the ACA; I asked Cato’s Michael Cannon, one of Halbig’s crusaders, what to make of the decision.
Halbig and its companion cases concern whether the IRS can impose a tax when doing so is the exact opposite of what the law permits the agency to do. Incredibly, a federal court has ruled the answer is yes. Today’s ruling merely highlights how untenable the IRS’s position is. It acknowledged the tax rules are clear, yet overrode that clear language based on the absurdity that an Exchange established by the federal government was in fact “established by the State.” In other words, this ruling will not be the last word.
Maybe, but there’d be heads exploding in the Obama administration if they’d lost this round.