Commentary on the pending case to destroy subsidies for citizens who purchase insurance on the federal exchanges have all, amazingly, neglected the economic value of the insurance in their calculations of harm.
The government appears to be mounting a case that these plaintiffs are not harmed by the subsidies. But, there is a much more powerful case: that the value of insurance needs to be included in the calculations of economic harm. By that measure, all claims fail.
I, and others, have previously written about the absurdity of the anti-Obamacare litigation (King v Burwell) from the perspective of the entire law, the basis upon which real courts interpret statutes. The evidence that the Roberts Court is a real court and not just another political branch, however, is far from convincing.
Commentary on the case is disturbing because it appears to accept as a given two key premises: i) that plaintiffs' "ideology" precludes measuring their "injury" by their least costly alternative; and, ii) that the literal language of the challenged section itself justifies plaintiffs' case placing the burden on the government to overcome it.
Both premises are false. The Solicitor General should state so emphatically in his oral arguments.
1. Ideology is No Legal Basis for Plaintiff to Choose More Costly Alternatives.
Much has been made recently about, shall we say kindly, the "unusual" plaintiffs.
But, even if plaintiffs were not so "unusual", and they would indeed be subject to penalties, their claims of economic damages fail on their face.
The named plaintiff, for example, is David King, 64. [Spoiler alert: Mr. King is a Vietnam Veteran. He probably qualifies for medical care at the VA, in which instance he would have no standing, but that is not the point of this article].
It is not clear how the Act, as interpreted by the agency, injures him. He would receive subsidies of over $273/month to receive health insurance. That insurance has an actuarial benefit of $648/month. His out of pocket expenses are less than the actuarial value of the health care. What is the economic injury?
The response seems to be that Mr. King hates the president and hates the Affordable Care Act, and would not purchase coverage no matter what.
That may be, but that is his problem. It carries no legal weight as a basis for asserting economic damage when a less harmful, indeed economically beneficial, alternative is available to him.
I don't like the stop sign at the corner of my street. I can ignore the sign and pay $50 fines, or I can stop. I am not aware that I can get a traffic court judge to waive my fines because I hate the mayor, or do not believe in stop signs.
If no subsidies were available Mr. King would pay more for his insurance (i.e., he would be harmed by a favorable outcome to his own case, and that would disqualify him as an interested party under the "case or controversy" requirement of the US Constitution).
Or, if there were no subsidies available, he claims, he would not purchase insurance at all and would not pay a penalty if he did not. No money out, but also no insurance. Assuming he remains healthy, or he gets sick but cost-shifts to the rest of us, his net economic harm is zero.
In order to assess whether he is indeed injured by the subsidies, however, , the Court must consider only the minimum "economic harm" Mr. King suffers with the subsidies. If he would choose to subject himself to a greater harm, for whatever reason, that cannot be considered by the Court.
The Solicitor General should answer every hypothetical raised by Justice Scalia (e.g., "suppose he doesn't want to purchase insurance, the Act allows that choice") with the response that once plaintiff decides to take an alternative that is more expensive to him, he cannot claim that additional cost as harm of the Act.
So, what is Mr. King's minimum economic harm from the subsidies? One choice costs him $275/month and purchases health insurance worth $648/month. That cannot be assessed as an economic harm. Indeed, an economist would assess it as a net economic benefit. It may be an ideological injury, but the Court cannot take cognizance of that.
The other choice is not to purchase insurance at all. With subsidies available, he may be subject to a penalty. But, that penalty purchases him no insurance, and so an economist would assess that choice as more costly to him.
Here, then, are the economic calculations under different assumptions of Mr. King's actions with and without the subsidies:
i. With subsidies, and his choice not to purchase insurance, he pays a penalty.
ii. With subsidies, and his choice to purchase insurance, he has a net economic gain (actuarial value of the insurance MINUS his out of pocket premium costs).
iii. Without subsidies, and his choice not to purchase insurance, he has zero out of pocket expenses, and his economic gain/loss is zero.
iv. Without subsidies, and his choice to purchase insurance, his premium expenses and the actuarial value of the insurance are (arguably, if the insurance company is not bilking him) the same. His economic gain/loss is again zero.
The only basis upon which he can claim economic harm from the subsidies, compared to no subsidies, is either ignoring the actuarial value of the insurance in (ii) above, or the Court improperly indulging his choice for the more economically harmful alternative in (i) above.
The Court must consider the least costly alternative to determine whether Mr. King is harmed. Clearly, it would be to purchase subsidized insurance that provides him a net economic benefit. That does not mean the Court can, or should, order King to purchase insurance. It does mean that the Court must assess King's economic damages based upon his least harmful alternative--in this case, a net benefit.
The Government may be preparing to argue that Mr. King would owe no penalty because his subsidized insurance would cost more than the penalty. A more powerful argument is that he suffers no economic harm, unless he chooses to inflict it upon himself.
2. The Absence of "Only", "Solely", "Exclusively". Although depicted quite differently in the press, the challenged text never uses a limiting adverb such as these. Never, not once.
Congress knows how to make such a provision crystal clear, and has shown that in many other statutes in which it wants to limit the scope of a provision, it adds these or similar adverbs. There are likely thousands of such provisions.
Here are just two examples:
Section 501(c)4 of the Internal Revenue Code defines tax-exempt organizations as follows:
Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare. [emphasis added]
Section 271(e) of the "Hatch-Waxman" drug act, provides an exemption against infringement for companies testing patented drugs so long as the activities are:
Solely for the purposes reasonably related to FDA approval.[emphasis added]
So, Congress knows, and has known, how to make its intent known that the requirements of a law are to be narrowly interpreted by including the limiting adverbs. The IRS provision was crafted in 1951; the generic drug provision in 1984, strongly suggesting that Congress has institutional memory for this art of writing laws.
The contested language in the Affordable Care Act that subsidies were available to those enrolled on exchanges established by the states contained no such limiting adverb, suggesting Congress had no such intent. As the rest of law was clearly intended to be broad in scope reforming the health care market, the absence of such limiting adverbs speaks louder than the language itself.
But, there is more.
In 1959 the IRS interpreted the 501(c)4 provision that said, on its face, "exclusively" for the promotion of social welfare, to mean "primarily", i.e., 51%. This interpretation of a provision, even when the limiting adverb is used, has survived for more than half a century. It is the origin of dark money, because qualifying entities can maintain donor anonymity, and all one has had to do to qualify is to argue that 51% of the activities, not "exclusively", just "primarily", are for promoting social welfare.
Lest one thinks this is an anomaly, an agency run amok, the courts themselves have interpreted Section 271 (e) of the Hatch-Waxman Act very broadly, despite the use of "solely", because the purpose of the statute was to provide a "safe harbor" for generic producers to have a cheaper version of the same drug available on the day the owner's patent expires.
So, with respect to legal language embodied in laws, we have learned:
i) When Congress wants to limit a provision, especially in a law that speaks otherwise in its intent and scope, it knows how to do it, and has done it over decades, by using limiting adverbs: "solely", "exclusively", "only"; but,
ii) In the contested language of the Affordable Care Act, no such words were used; and,
iii) Even when the limiting adverbs are used, both agencies and courts have interpreted provisions in light of the law's broader context, indeed, largely ignoring the limiting adverbs if necessary.
The Solicitor General would do well to make this point at oral argument.
King v Burwell fails because plaintiffs can show no economic harm from the subsidies unless , best case for them, they decide to inflict it upon themselves rather than choosing a better alternative, odious though they may consider that to be. The Courts cannot take cognizance of an individual's ideological beliefs in assessing economic harm from choices offered him.
The textual challenge fails on its face, as Congress made no attempt to indicate its intent to limit subsidies to states by including, as it has in other statutes, limiting adverbs such as "solely", "only", exclusively"; and, there is plenty of precedent for agencies and the courts themselves to interpret language in the context of the law's intent and scope, even when such intent is expressed by Congress.
Of course, all of this is premised on the most tenuous of assumptions: that the Roberts Court is a real court, and not a third chamber of a Republican legislature.
Moreover, if SCOTUS deems choice based upon ideology to be legally cognizable as harm, the floodgates to lawsuits from all sides will be thrown wide open.