Harvard Health Policy Review 'ObamaCare_The Plot Thickens

7/27/2019 Harvard Health Policy Review 'ObamaCare_The Plot Thickens.'

http://slidepdf.com/reader/full/harvard-health-policy-review-obamacarethe-plot-thickens 1/6

36 Harvard Health Policy Review

Health Highlights

I.Exposition

he Patient Protection and AordableCare Act (PPACA) has had an interest-ing ride. Enacted over public opposition,1

it has survived numerous near-death experiencesboth beore and ater passage. Most notably, thePPACA lingered on death row or weeks ater veSupreme Court justices cast a preliminary vote tostrike down the entire law—until Chie Justice John Roberts apparently switched his vote.2 Amidsuch high courtroom drama, one could be orgiv-en or missing a concurrent and equally dramaticstoryline that is only now taking center stage.

Te PPACA authorizes up to $1.2 trillion o

health insurance subsidies over 10 years,3 to bedistributed through state-established health in-surance “exchanges.” Yet two-thirds o the stateshave declined to establish an Exchange, leaving that task to the ederal government..4 Tis unex-pected development has major consequences. TePPACA authorizes those subsidies only throughstate-established Exchanges, not ederally run Ex-changes. By reusing to establish Exchanges, stateshave thereore vetoed some $800 billion o new entitlement spending.

Without those subsidies, the PPACA will col-lapse o its own weight. Indeed, this developmentmakes the Act so vulnerable to repeal that theObama administration has hatched an audaciousplot to rescue it. In broad daylight, the InternalRevenue Service is attempting to tax, borrow, andspend that $800 billion—contrary to both theexpress language o the PPACA and congressionalintent. Tus in addition to other abuses that haverecently come to light,5 the IRS is attempting totax millions o employers and individuals withoutcongressional authorization.

A ew o those employers and individuals arechallenging the IRS’s illegal taxes in ederal court.I they succeed, they will also block the ull $800billion o unauthorized spending—which would

practically orce Congress to reopen, and possibly repeal, the PPACA. Yes, this story has everything, starting with…

II.IncitingActionOur tale begins in Nebraska, whose voters

re-elected moderate Democrat Ben Nelson to theU.S. Senate in 2006. As the Senate debated healthcare reorm in 2009, Nelson was leery o a ederaltakeover o health care, or at least the appearanceo it. He demanded that state governments ratherthan the ederal government administer the Sen-

ate bill’s new regulatory agencies, called healthinsurance “Exchanges.”6 Tese agencies wouldimplement or help to enorce the bill’s majorprovisions, including the ban on discriminationagainst people with pre-existing conditions andthe individual mandate. Crucially, Exchanges were also the conduit or more than $1 trillion inhealth insurance subsidies the bill would autho-rize. Te Senate leadership needed the supporto all 60 Democratic senators to break a Repub-lican libuster o the Democrats’ health care bill,so Nelson got his way.7 It didn’t hurt that othermoderate Democrats made the same demand.

While that solution solved Nelson’s political

problem, it created another problem. Congresscannot simply command states to implement ed-eral programs like a health insurance Exchange.Tat’s a constitutional no-no that courts call“commandeering.”8 Fortunately, a law proessornamed imothy Jost had a solution.

In early 2009, Jost proposed that Congressget around this problem “by oering tax sub-sidies or insurance only in states that complied with ederal requirements.”9 Congress can anddoes create these sorts o incentives or states allthe time.10 Te Medicaid program, or example,oers billions o dollars to states but only i they are willing to implement health care programsthat meet ederal specications. I not, states getnothing.

Senate Democrats liked this idea o creating such incentives or state cooperation so much,they incorporated it into both leading health carebills—one reported by the Finance Committee,the other by the Health, Education, Labor, andPensions (HELP) Committee.11 Te incentives were so large, and supporters were so certain thatall states would cooperate,12 no one thought twiceabout the act that Jost’s solution to the “com-mandeering problem” eectively gave each statea veto over the ederal subsidies the bills sought

to create. Supporters certainly had no incentive toherald the act that they were giving states vetopower over an essential element o the bills’ regu-latory scheme. Senate Democrats passed a mergedversion o Finance and HELP bills—dubbed thePatient Protection and Aordable Care Act—in a pre-dawn vote on Christmas Eve o 2009, with-out a vote to spare.13

House Democrats had earlier passed a bill would have created a single health insuranceExchange run by the ederal government,14 andthey were none too ond o the PPACA’s state-run

Exchanges. In a letter to House Speaker Nancy Pelosi and President Obama, eleven exas Demo-crats even complained the PPACA’s approach toExchanges would allow states to block the law’sbenets.15 President Obama reportedly sided withthe House negotiators in avor o a single, eder-ally run Exchange.16

But then, a somewhat implausible event trig-gered...

III.RisingActionIn January 2010, Massachusetts voters elected

Scott Brown (R) to ll the Senate seat vacated by the death o Edward M. Kennedy (D).17 Brown’svictory meant Senate Republicans would have just enough senators—41—to prevent a vote onnal passage o any House-Senate compromise.

While some observers declared health carereorm nished,18 Brown’s election actually letDemocrats with two options. Te rst was ailure.I they insisted on orging a compromise betweenthe House and Senate bills through “regular or-der,” the legislation would have died in the Senate.Te second option was or the House to approvethe Senate-passed PPACA as-is, while making limited modications through the “budget recon-ciliation” process. Passing the PPACA as-is wouldsend it immediately to President Obama’s desk. And under Senate rules, a simple 51-vote majority could approve the changes demanded by HouseDemocrats.

Supporters urged reluctant House Demo-crats to choose the second option. Making hissecond major contribution to this drama, Pro.

Jost organized a letter rom dozens o let-leaning academics and activists that described the Senatebill as “imperect” but implored, “Te House o Representatives aces a stark choice. It can enactthe Senate bill, and realize the century-old dreamo health care reorm…Pass the Senate bill, andimprove it through reconciliation.”19

Upon receiving assurances that SenateDemocrats would approve the House’s modica-tions through reconciliation, House Democratspassed both the PPACA and the reconciliationbill that amended it on March 21, 2010.20 Presi-dent Obama signed the PPACA, an achievementVice President Joe Biden (D) amously described

as “a big [expletive] deal,” on March 23.21

SenateDemocrats made good on their word by passing the reconciliation bill,22 which President Obama signed into law on March 30.23

At that point, our narrative reaches a…

IV.Plateau As a result o the political and constitutional

constraints congressional Democrats aced, Jost’srecommendation that Congress overcome thecommandeering problem “by oering tax sub-sidies or insurance only in states that complied

ObamaCare: The Plot Thickens

>>>Michael F. Cannon, MA, JM



37Spring 2013 Vol. 14, No. 1

Health Highlights

with ederal requirements” became law. Here’show it works, and how we know Congress meantit.

Te PPACA restricts eligibility or “premi-um-assistance tax credits” to individuals whopurchase health insurance through an Exchange“established by the State under Section 1311” o

the Act. I a state ails to establish an Exchangeitsel, Section 1321 authorizes the ederal govern-ment to establish one or the state. But the stat-ute nowhere authorizes premium-assistance taxcredits through ederally run Exchanges. On thecontrary, the PPACA explicitly, repeatedly, con-sistently, and unambiguously restricts eligibility or premium-assistance tax credits to residents o states that establish their own Exchanges.24

Tat language appeared in Senate FinanceCommittee chairman Max Baucus’ (D-M) rstdrat o his committee’s bill, was approved by theFinance Committee,25 was inserted into the nalbill by Senate leaders and White House ocials inSenate Majority Leader Harry Reid’s (D-NV) o-ce,26 and garnered 60 votes on the Senate foor.It then traveled to House foor, where HouseDemocrats approved it. When this languagelanded on President Obama’s desk, he eagerly signed it into law. Pro. Jost’s proposal made theentire journey rom the Finance Committee tothe U.S. Code without substantive alteration.Te PPACA thus creates a tremendous nancialand political incentive or states to implement thelaw, but also gives states the power to veto major

elements o its regulatory scheme. Just in case Pro. Jost’s contributions to the

legislative history and the HELP bill’s conceptu-ally identical provision were not enough to estab-lish that Congress meant exactly what it said, wealso have the word o the PPACA’s lead author.During a Finance Committee markup o the lan-

guage on September 23, 2009, Baucus admittedthat his bill conditioned premium-assistance taxcredits on states implementing an Exchange. In-deed, he admitted his bill had to oer tax cred-its only to states that established Exchanges and withhold them rom states that did not. Tepower to regulate health insurance resides withthe Senate’s HELP Committee; it lies outside theFinance Committee’s jurisdiction. Making eachstate’s establishment o an Exchange a precondi-tion o residents receiving tax credits was the only way the Finance committee could have jurisdic-tion to direct states to establish Exchanges in therst place.27

Te legislative history urther shows HouseDemocrats accepted the Jost language as-is. HouseDemocrats scoured the section o the PPACA containing the tax-credit eligibility rules, amend-ing it no less than seven times via the reconcilia-tion process. Yet despite their dissatisaction withthe PPACA’s approach to Exchanges, the Housemade no changes to the provisions restricting taxcredits to state-established Exchanges.28 Te rec-onciliation bill did add language providing thatExchanges established by U.S. territories would

be treated as state-established Exchanges underthe law,29 showing that House Democrats knew how to authorize tax credits in non-state-estab-lished Exchanges when they desired. Yet the rec-onciliation bill did nothing either to authorize taxcredits through ederal Exchanges, or otherwise toalter the language restricting tax credits to states

that establish their own Exchanges. House Dem-ocrats—including the eleven exas Democrats who complained about the Senate’s approach toExchanges30— approved the PPACA’s languagerestricting tax credits to states that established Ex-changes as-is, and declined to change it throughreconciliation.

Te clear, unambiguous language o thePPACA shows, and the legislative history o thestatute conrms, that Congress intentionally restricted tax credits to states that establish theirown Exchanges. Tis eature received little noticeamid the ceremony (and other controversies) sur-rounding President Obama signing such a “big [expletive] deal” into law. Had the PPACA’s ar-chitects been correct that states would be eager toestablish and operate health insurance Exchanges,this eature would have remained unremarkable.

Instead, we saw…

IV.MoreRisingActionContrary to supporters’ expectations, a total

o 34 states, representing roughly two thirds o the U.S. population, have opted not to establishan Exchange.31 In those 34 states, the premium-




Health Highlights

assistance tax credits and related subsidies would,i authorized, carry a total budgetary impact o $800 billion over the next 10 years.32 But underthe statute, those subsidies are not available inthose states.

It is dicult to overstate the threat this posesto the PPACA’s survival. Te purpose o the sub-

sidies is to shit the considerable costs o the law’shealth insurance regulations rom the premiumpayer to the taxpayer. Without that cost-shit, theull cost o the law would become palpable to con-sumers, employers, and particularly health insur-ance carriers. Insurers are the intended recipientso those subsidies. Without them, the PPACA threatens to destroy their business model. In thetwo-thirds o states that have reused to establishExchanges, these groups would likely demandthat Congress reopen and/or repeal the law. Asone trade publication reports:

I premium subsidies are notavailable in ederally established

exchanges, “No one would go tothose exchanges. Te whole structurecreated by the health care reorm law starts to all apart,” said Gretchen Young, senior vice president–healthpolicy at the ERISA Industry Com-mittee in Washington.33

Indeed, we have already seen such a collapse inanother part o the PPACA.

Te PPACA also created a long-term careentitlement program known as the CLASS Act.Congress imposed on this program the same in-surance “reorms” it imposed on private health in-surance markets—i.e., high-risk enrollees wouldpay the same premiums as low-risk enrollees—but without subsidies or a mandate to mitigatethe resulting adverse selection. Experts warned theCLASS Act would prove unsustainable.34 Aterits enactment, the Obama administration aban-doned any hope o implementing the program,and Congress and President Obama repealed it in January 2013.35 Te PPACA’s Exchange-relatedhealth insurance-market “reorms” would col-lapse and be repealed just as—and or the samereason—as the CLASS Act.36

As i that weren’t excitement enough, thencame the real…

V.Confict When it became evident that dozens o states

would reuse to establish Exchanges, the IRSsimply rewrote the law. In August 2011, the IRSannounced that it was planning to issue premi-um-assistance tax credits ederal Exchanges, eventhough the statute expressly orbids it.37 In May 2012 it nalized that policy.38

Amid heavy criticism rom think tanks, law proessors, and members o Congress,39 the IRSoered only perunctory and post-hoc rational-

izations or its rewriting.40 Te agency ailed tocite any part o the statute in support o its in-terpretation o the law until October 2012, our-teen months ater announcing it.41 Even then,the provisions the IRS cited ailed to support theagency’s position, or even to cast ambiguity on theclear language o the statute. Te sole piece o leg-

islative history the IRS has oered to support itsposition—i.e., the Congressional Budget Ocescore o the PPACA—crumbled when the CBOadmitted it had not done a legal analysis o therelevant provision.42 Te IRS’s position reducesto the absurdity that an Exchange established by the ederal government is the same thing as anExchange established by a state. It is little wonderthat the agency and its deenders—most notably and ironically, Pro. Jost—have failed about ornearly two years trying to square that circle.43

Te IRS’s attempt to spend some $800 bil-lion without statutory authority turns out not tobe a victimless crime. Due to interactions with

other provisions o the PPACA, the IRS’s illegaltax credits will trigger illegal taxes against millionso employers under the employer mandate, as wellas millions o individuals under the individualmandate.44

Tose victims are ghting back. In Pruitt v.Sebelius , Oklahoma attorney general Scott Pruittled the rst legal challenge to the IRS’s illegal taxcredits in ederal court.45 First, Oklahoma claimsthe issuance o illegal tax credits will trigger illegaltaxes against the state under the employer man-date. Second, Oklahoma claims that Congressgave states the exclusive power to decide whetherto embrace the taxes and subsidies that come withestablishing an Exchange, yet the IRS is usurping that power and thereore inringing Oklahoma’ssovereignty.46 In a separate lawsuit, Halbig v. Se-belius , several private employers and individualcitizens have asked the U.S. District Court orthe District o Columbia or relie rom the IRS’sillegal taxes and other injuries.47 Legislators inOhio and Missouri have introduced legislationthat would eectively block both the IRS’ illegaltax credits and illegal taxes on employers in thosestates.48

Tose court cases and that legislation are stillin the early stages, which leaves observers wonder-

ing when will we arrive at the…

V.Climax Te IRS stands a very real chance o a rebuke

rom the ederal courts. Te non-partisan Con-gressional Research Service writes:

a strictly textual analysis o theplain meaning o the provision wouldlikely lead to the conclusion that theIRS’s authority to issue the premiumtax credits is limited only to situationsin which the taxpayer is enrolled in a

state-established exchange. Tereore,an IRS interpretation that extendedtax credits to those enrolled inederally acilitated exchanges wouldbe contrary to clear congressional in-tent…and likely be deemed invalid.49

No less an authority than Harvard Law Re-

view has urged the Supreme Court to clariy whether the IRS’s decision is the sort o “majorquestion” that courts should not allow agenciesanswer themselves:

In each o the major questionscases, the Court was skeptical thatCongress would implicitly delegate a signicant determination. Viewed inthis light, a reviewing court may havediculty believing that Congress, without a clear directive, intended todelegate the determination o whethermillions o Americans may receivebillions o dollars to purchase health

insurance.50

It’s actually hundreds o billions o dollars,but you get the point.

Tese legal challenges, and the outcome o the Ohio and Missouri legislation, will unold atthe same time the ederal government is imple-menting the PPACA’s major provisions. Te Actprovides that its trillion-plus dollars o tax creditsand subsidies, as well as the penalties under theemployer and individual mandates, will begin totake eect on January 1, 2014. Te health insur-ance Exchanges must be open or business evensooner, by October 1, 2013. Tere is considerabledoubt whether the Exchanges will be operation-al by that date, and able to oer Americans thehealth insurance they will be legally required topurchase. Baucus predicts “a huge train wreck.”51

A ruling against the IRS—whether a nal judgment or even a preliminary injunction— would reveal the ull cost o the PPACA to con-sumers, employers, and insurance carriers, andcould generate to a groundswell o support or de-laying, reopening, or even repealing the statute.52 Te consequences could be so catastrophic thatvulnerable Democratic Senators and even Presi-dent Obama could come to view repeal as theace-saving option.

It bears stressing that such a catastrophe would be the result o implementing the PPACA exactly as Congress intended. Te lawsuits do notseek to undermine the PPACA. Tey seek to orcethe Obama administration to obey the statute,and to prevent the administration rom taxing,borrowing, and spending $800 billion in clearviolation o the law. I implementing the PPACA as Congress intended would lead to catastrophicresults, the ault lies with the PPACA itsel.

Nevertheless, the outcome o those lawsuits is where the real action is. Teir eect on the PPA-



39Spring 2013 Vol. 14, No. 1

Health Highlights

CA is merely…

VI.Denouement I ederal courts uphold the clear, unambigu-

ously expressed will o Congress, it is dicult tosee how the PPACA could survive.

Sure, health insurers and the health care in-dustry would pressure those 34 states to establishExchanges and thereby lit the vetoes they have

exercised over major provisions o the law. Yet oneo those provisions is the employer-mandate pen-alties. Tus employers would likely exert counter-vailing pressure, and urge those 34 states not toestablish Exchanges. Employers may even pressthe 16 states that have established Exchanges toun-establish them.

Few Washington-based groups would becontent to wait or the states to act. Some groups,most notably insurers, would no doubt pressCongress to authorize tax credits through ederalExchanges. But the chances o the Republican-controlled House o Representatives rescuing the PPACA by expanding its scope are slim. Te

only real question would be how much o the law House Republicans would demand be jettisonedin return or their support o a legislative x. Giv-en their unanimous support or ull repeal,53 they may demand no less than that.

Were the IRS to prevail, the PPACA may survive yet the catastrophe would be greater. AnIRS victory would mean the executive branch o the U.S. government will have succeeded in tax-ing, borrowing, and spending roughly $1 trilliondollars not only without congressional authoriza-tion, but contrary to the clear, unambiguously

expressed will o Congress. An IRS victory wouldmean that Te Law is not the statutes that Con-gress enacts, but the arbitrary decrees o unelectedgovernment ocials. Te Law will be neitherlegitimate nor predictable, but discretionary andarbitrary. Whatever legal pretext allows the IRSto prevail will not conne itsel to this case, orto health care. It will be applied in other areas by government ocials o all political ideologies. A

court ruling that allows the IRS to tax and bor-row and spend where it is explicitly orbiddento do so by statute would lend credence to boththe perception that the government is no longerbound by the law and the corollary conclusionthat thereore neither are the people.54

Which brings us to our…

VII.TemeOur tale, though scripted and set in America’s

ongoing health care debate, is not actually abouthealth care at all. It is about whether governmentocials are subject to democratic constraints.

In this still-unolding narrative, the Obama

administration’s actions are triply anti-democrat-ic. First, the IRS is violating a direct constraintthat popularly elected legislators placed on theexecutive branch. Second, it is violating that duly enacted statute or the purpose o denying popu-larly elected state ocials the vetoes Congressgave them over certain provisions o the statute. And third, it is violating the statute because ad-ministration ocials either cannot athom or will not accept that Congress meant to do whatit clearly did.55

Obama administration ocials continu-

ally emphasize that the PPACA is “the law o theland.”56 Tat remains to be seen, in more waysthan one.

Te author would like to thank Meinan Goto and Pragya Kakani or their assistance with this article.

References 1.“Obama Health Care Law: Favor/Oppose,” Hungton Post, March 2013, http://elections.hungtonpost.com/

pollster/us-health-bill#!selectedpoll=17177 ( a c -cessed June 6, 2013).2. Jan Craword, “Roberts Switched Views to Up-hold Health Care Law,” CBS News , July 1, 2012, http:// www.cbsnews.com/8301-3460_162-57464549/roberts-switched-views-to-uphold-health-care-law/.(accessed June 6, 2013)3. Congressional Budget Oce, CBO’s February 2013Estimate o the Eects o the Aordable Care Act on HealthInsurance Coverage , 2013, Washington, DC; p. 24. “State Decisions For Creating Health Insurance Ex-changes, as o May 28, 2013,” Kaiser Family Foundation,http://k.org/health-reorm/state-indicator/health-insur-ance-exchanges/ (accessed May 29, 2013).; “o Date,23 States & DC Plan to Expand Medicaid Eligibility in 2014, 19 Will Not Expand, and the Remainder Are

Undecided,” Avalere Health, http://www.avalerehealth.net/news/spotlight/20130524_Medicaid_Expansion.pd (accessed May 29, 2013); “Where the States Stand,May 24, 2013; 26 Governors Support Medicaid Expan-sion,” Te Advisory Board Company, http://dl.ebmcdn.net/~advisoryboard/inographics/Where-the-States-Stand71/story.html (accessed May 29, 2013).5. Daniel Strauss, “Republican Lawmakers Hear Com-plaints about Wider Abuses rom IRS,” Te Hill , May 24,2013, http://thehill.com/blogs/on-the-money/domestic-taxes/301911-gop-lawmakers-hear-complaints-about- wider-abuses-rom-irs (accessed June 6, 2013).6. Carrie Budo Brown, “Nelson: National Exchangea Dealbreaker,” Politico, January 25, 2010, http://




Health Highlights www.politico.com/livepulse/0110/Nelson_National_exchange_a_dealbreaker.html (accessed June 6, 2013).;Patrick O’Connor & Carrie Budo Brown, “Nancy Pe-losi’s Uphill Health Bill Battle,” Politico, January 9, 2010,http://www.politico.com/news/stories/0110/31294.html(accessed June 6, 2013).7. Patrick O’Connor & Carrie Budo Brown, “Nancy Pelosi’s Uphill Health Bill Battle,” Politico, January 9, 2010,http://www.politico.com/news/stories/0110/31294.html(accessed June 6, 2013).8. Printz v. United States , 521 U.S. 898, 925 (1997)(“the Federal Government may not compel the statesto implement, by legislation or executive action, ederalregulatory programs”).9. imothy S. Jost, “Health Insurance Exchanges:Legal Issues,” O’Neill Institute For National and Global Health Law at Georgetown University, April 27, 2009,http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=1022&context=ois_papers (accessed June 6,2013).10. See Jonathan H. Adler, “Cooperation, Comman-deering or Crowding Out? Federal Intervention and StateChoices in Health Care Policy,” Kansas Journal o Law and Public Policy, 20 (2011), http://papers.ssrn.com/sol3/pa-pers.cm?abstractid=1791834 (accessed June 6, 2013).

11. America’s Healthy Future Act o 2009, S. 1796,111th Cong. (2009); Aordable Health Choices Act, S.1679, 111th Cong. (2009).12. Robert Pear, “U.S. Ocials Brace or Huge ask o Operating Health Exchanges,” New York imes , Aug.4, 2012, A17, http://www.nytimes.com/2012/08/05/us/us-oicials-brace-or-huge-task-o-running-health-exchanges.html?pagewanted=all&_r=0 (accessed June18, 2013). (“When Congress passed legislation to expandcoverage two years ago, Mr. Obama and lawmakers as-sumed that every state would set up its own exchange.”);Elise Viebeck, “Obama Faces Huge Challenge in Setting Up Health Insurance Exchanges,” Te Hill , Nov. 25,2012, http://www.thehill.com/blogs/healthwatch/health-reorm-implementation/269137-obama-aces-huge-challenge-in-setting-up-health-exchanges (accessed June

6, 2013). (“It’s a situation no one anticipated when the Aordable Care Act was written. Te law assumed states would create and operate their own exchanges…”). State-ment o Kathleen Sebelius, Departments o Labor, Healthand Human Services, Education, and Related Agencies Ap- propriations or 2011, Hearing Beore the H. Comm. on Appropriations, 111th Cong. 170–171, Apr. 21, 2010,http://www.gpo.gov/dsys/pkg/CHRG-111hhrg58233/pd/CHRG-111hhrg58233.pd (accessed June 6, 2013).(“We have already had lots o positive discussions, andStates are very eager to do this. And I think it will very much be a State-based program.”).; Barack Obama, “Re-marks on Health Insurance Reorm in Portland, Maine,”White House , April 1, 2010, http://www.whitehouse.gov/the-press-oce/remarks-president-health-insurance-reorm-portland-maine (accessed June 18,2013) (“[B]y 2014, each state will set up what we’re calling a health

insurance exchange.”).13. United States Senate, “Vote Summary: On Passage o the Bill (H.R. 3590 as Amended ),” December 24, 2009,http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cm.cm?congress=111&session=1&vote=00396 (accessed June 6, 2013).14. Aordable Health Care or America Act, H.R. 3962,111th Cong. (2009); House o Representatives, Oce o the Clerk, “Final Vote Results or Roll Call 887,” Novem-ber 7, 2009, http://clerk.house.gov/evs/2009/roll887.xml(accessed June 6, 2013).15. “U.S. Rep. Doggett: Settling or Second-Rate HealthCare Doesn’t Serve exans,” My Harlingen News , January 11, 2010, http://www.myharlingennews.com/?p=6426.

(accessed June 6, 2013).16. Lori Montgomery and Michael D. Shear, “WhiteHouse Nears Deal on Health Care,” Washington Post , January 14, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/01/14/AR2010011404837.html?sid=S2010021904088 (accessed June 6, 2013).17. Stephanie Condon, “Scott Brown Win ShakesUp Health Care Fight,” CBS News , January 20, 2010,http://www.cbsnews.com/8301-503544_162-6119035-503544/scott-brown-win-shakes-up-health-care-ight/(accessed June 6, 2013).18. Andrew Malcolm, “Does Scott Brown’s ElectionDoom Healthcare?” Los Angeles imes , January 20, 2010,http://latimesblogs.latimes.com/washington/2010/01/does-scott-browns-election-doom-health-care.html(accessed June 6, 2013).; Robert Laszewski, “Stick a Fork in It! Te Democratic Eort to Pass a Health Bill isDead,” Health Care Policy and Marketplace Review , Janu-ary 19, 2010, http://healthpolicyandmarket.blogspot.com/2010/01/stick-ork-in-it-democratic-eort-to.html(accessed June 6, 2013).19. Henry J. Aaron et al., “Letter to Speaker o theHouse Nancy Pelosi et al.,” January 22, 2010, http://graphics8.nytimes.com/images/2010/01/22/health/adopt_senate_bill_nal.2.pd (accessed June 6, 2013).

20. Greg Hitt and Janet Adamy, “House Passes HistoricHealth Bill,” Wall Street Journal , March 22, 2010, http://online.wsj.com/article/SB10001424052748703775504575135440191025592.html (accessed June 6, 2013).21. Sheryl Gay Stolberg and Robert Pear, “Obama Signs Health Care Overhaul Bill, With a Flourish,”New York imes , March 23, 2010, http://www.nytimes.com/2010/03/24/health/policy/24health.html (accessed June 6, 2013).22. David M. Herszenhorn and Robert Pear, “Final Votesin Congress Cap Battle on Health Bill,” New York imes ,March 25, 2009, http://www.nytimes.com/2010/03/26/health/policy/26health.html (accessed June 6, 2013).23. Peter Baker and David M. Herszenhorn, “Obama Signs Bill on Student Loans and Health Care,” New York imes , March 30, 2010, http://thecaucus.blogs.nytimes.

com/2010/03/30/obama-signs-bill-on-student-loans-health-care/ (June 6, 2013).24. Jonathan H. Adler and Michael F. Cannon, “axa-tion without Representation: Te Illegal IRS Rule toExpand ax Credits under the PPACA,” Health Matrix 23, No. 1 (2013): 119-195, http://law.case.edu/journals/HealthMatrix/Documents/23HealthMatrix1.5.Article. AdlerFINAL.pd (accessed June 6, 2013).25. America’s Healthy Future Act o 2009, S. 1796,111th Cong., Sec. 1205 (2009); Carrie Budo Brown,“Senate Finance Committee Approves Health Care Bill,”Politico, October 13, 2009, http://www.politico.com/news/stories/1009/28235.html (accessed June 6, 2013).26. David M. Herszenhorn and Robert Pear, “WhiteHouse eam Joins alks on Health Care Bill,” New York imes , October 15, 2009, http://www.nytimes.com/2009/10/15/health/policy/15health.html?_r=0

(accessed June 6, 2013).27. Executive Committee Meeting to Consider HealthCare Reorm: Beore the S. Comm. on Finance, 111thCong. 326 (2009), http://www.nance.senate.gov/hearings/hearing/download/?id=c6a0c668-37d9-4955-861c-50959b0a8392 (accessed June 6, 2013).; E xecutive Committee Meeting to Consider an Original Bill Providing or Health Care Reorm: Beore the S. Comm. on Finance ,C-SPAN (starting at 2:53:21) (Sept. 23, 2009), http:// www.c-spanvideo.org/program/289085-4 (accessed June6, 2013).28. Jonathan H. Adler and Michael F. Cannon, “axa-tion without Representation: Te Illegal IRS Rule to Ex-pand ax Credits under the PPACA,” Health Matrix 23,

No. 1 (2013): 119, 162.29. Health Care and Education Reconciliation Act, Pub.L. No. 111-152, § 1204, 124 Stat. 1029, 1055 (2010).30. House o Representatives, Oce o the Clerk, “FinalVote Results or Roll Call 165,” March 21, 2010, http://clerk.house.gov/evs/2010/roll165.xml (accessed June 6,2013).31. Kaiser Family Foundation, “State Decisions For Cre-ating Health Insurance Exchanges, as o May 28, 2013,”State Health Facts , http://k.org/health-reorm/state-indicator/health-insurance-exchanges/ (accessed June 21,2013).32. Congressional Budget Oce, CBO’s February 2013Estimate o the Eects o the Aordable Care Act on HealthInsurance Coverage , 2013, p. 2.33. Jerry Geisel, “Oklahoma Lawsuit argets Pre-mium Subsidy Provision o Health Care ReormLaw,” Business Insurance , October 28, 2012, http:// www.bu sine ss in surance. com/ar ti cl e/ 20121028 /NEWS03/310289979#ull_story (accessed June 6, 2013).34. Richard S. Foster, “Estimated Financial Eects o the‘America’s Aordable Health Choices Act o 2009’ (H.R.3962), as Passed by the House on November 7, 2009”(2009), p. 11; American Academy o Actuaries, Critical

Issues in Health Reorm: Community Living AssistanceService and Supports Act (CLASS) (2009); Richard S.Foster, “Estimated Financial Eects o the ‘Patient Protec-tion and Aordable Care Act,’ as Amended,” (2010), p.15; Dep’t o Health and Human Services, Oce o theCLASS Actuary, “Actuarial Report on the Developmento CLASS Benet Plans,” (2011), p. 35. (“It is not a co-incidence that many experts have maintained that adverseselection is the major obstacle or the CLASS program. Any workable design must address it in order to receivecertication as an actuarially sound plan.”).35. American axpayer Relie Act o 2012, Pub. L. 112-240, Sec. 642, 126 Stat. 2313(2013).36. Julie Appleby and Mary Agnes Carey, “CLASSDismissed: Obama Administration Pulls Plug On Long-erm Care Program,” Kaiser Health News , October 14,

2011, http://www.kaiserhealthnews.org/stories/2011/october/14/class-act-implementation-halted-by-obama-administration.aspx (accessed June 6, 2013).; Americanaxpayer Relie Act o 2012, Pub. L. 112-240, Sec. 642,126 Stat. 2313, 2358 (2013).37. Internal Revenue Service, “Health Insurance Pre-mium ax Credit Proposed Rule,” Federal Register 76, No.159 (August 17, 2011): 50932, http://www.gpo.gov/d-sys/pkg/FR-2011-08-17/pd/2011-20728.pd (accessed June 6, 2013).38. Internal Revenue Service, “Health Insurance Pre-mium ax Credit,” Federal Register 77, No. 100 (May 23,2012): 30378, http://www.gpo.gov/dsys/pkg/FR-2012-05-23/pd/2012-12421.pd (accessed June 6, 2013).39. David Hogberg, “Oops! No ObamaCare axCredit Via Federal Exchanges?” Investors Business Daily ,September 7, 2011, http://news.investors.com/090711-

584085-oops-no-obamacare-tax-credit-via-ederal-exchanges-.htm?p=1 (accessed June 6, 2013).; Jonathan Adler and Michael F. Cannon, “Another ObamaCareGlitch,” Wall Street Journal, November 16, 2011, http://online.wsj.com/article/SB10001424052970203687504577006322431330662.html (accessed June 6, 2013).;Rep. David Phil Roe, “Letter to Douglas Shulman,Commissioner, Internal Revenue Service,” November4, 2011, http://roe.house.gov/UploadedFiles/Letter_to_IRS_Commissioner_regarding_tax_credits_under_PPACA_-_11.03.11.pd (accessed June 6, 2013). ; Sen.Orrin G. Hatch, “Letter to imothy Geithner, Secretary,Department o the reasury and Douglas Shulman,” De-cember 1, 2011, http://nance.senate.gov/newsroom/



41Spring 2013 Vol. 14, No. 1

Health Highlightsranking/download/?id=d8c3533-132c-4cec-be10-8008402c21d8 (accessed June 6, 2013).40. Douglas H. Shulman, Commissioner, Internal Rev-enue Service, “Letter to Rep. David Phil Roe,” November29, 2011), http://roe.house.gov/UploadedFiles/IRS_Re-sponse_to_letter_on_PPACA_Exchange.pd (accessed June 6, 2013).; Centers or Medicare and Medicaid Ser-vices, “State Exchange Implementation: Questions and Answers,” November 29, 2011, p. 8, http://cciio.cms.gov/resources/les/Files2/11282011/exchange_q_and_a.pd.pd (accessed June 6, 2013).41. Mark J. Mazur, Assistant Secretary or ax Policy,reasury Department, “Letter to Rep. Darrell Issa,” Oc-tober 12, 2012 (on le with authors).42. Douglas W. Elmendor, “Letter to Rep. Darrell Issa,”December 6, 2012, http://www.cbo.gov/sites/deault/les/cboles/attachments/43752-letteroChairmanIssa.pd (accessed June 6, 2013).; Michael F. Cannon, “O States and Health Insurance Exchanges,” Reuters , De-cember 18, 2012, http://blogs.reuters.com/great-de-bate/2012/12/18/o-states-and-heath-insurance-exchang-es/ (accessed June 6, 2013).43. For example, Michael Cannon and Jonathan Adler,“Te Illegal IRS Rule o Expand ax Credits UnderTe PPACA: A Response o imothy Jost,” Health A-

airs Blog , August 1, 2012, http://healthaairs.org/blog/2012/08/01/the-illegal-irs-rule-to-expand-tax-cred-its-under-the-ppaca-a-response-to-timothy-jost/ (accessed June 6, 2013).44. I.R.C. § 4980H(a)(2) and I.R.C. § 5000A(e)(1).45. Pruitt v. Sebelius, No. CIV-11-30-RAW (E.D. Okla 2012).46. Response to Motion to Dismiss Amended Com-plaint, Pruitt v. Sebelius and Geithner, No. CIV-11-30-RAW (E.D. Okla 2012).47. Michael F. Cannon ,”Michael Carvin on Halbig v.Sebelius,” Cato Institute , June 1, 2013. <http://www.cato.org/blog/michael-carvin-halbig-v-sebelius>(accessed June 18, 2013).48. Michael F. Cannon, “Ohio, Missouri Introduce theHealth Care Freedom Act 2.0,” Cato@Liberty , April 9,

2013, http://www.cato.org/blog/ohio-missouri-intro-duce-health-care-reedom-act-20 (accessed June 6, 2013).49. Jennier Staman and odd Garvey, CongressionalResearch Service, “Legal Analysis o Availability o Pre-mium ax Credits in State and Federally Created Ex-changes Pursuant to the Aordable Care Act,” July 23,2012: Washington DC http://www.statereorum.org/sites/deault/iles/premium_credits_and_ederally_cre-ated_exchanges_copy.pd (accessed June 6, 2013).50. “Recent Regulation: Statutory Interpretation—Pa-tient Protection and Aordable Care Act—Internal Rev-enue Service Interprets ACA to Provide ax Credits orIndividuals Purchasing Insurance on Federally FacilitatedExchanges.—Health Insurance Premium ax Credit, 77Fed. Reg. 30,377 (May 23, 2012) (to be codied at 26C.F.R. pt. 1),” Harvard Law Review 126, (2012): 663(“While the debate surrounding this rule has largely

concentrated on whether the text and legislative history support the IRS’s interpretation, the political saliency andeconomic impact o the rule may provide an opportunity or a reviewing court to clariy the limits o the majorquestions exception to the doctrine o judicial deerenceestablished in Chevron U.S.A. Inc. v. Natural ResourcesDeense Council, Inc.”).51. Jennier Haberkorn, “Max Baucus Worried AboutHealth Law ‘rain Wreck’,” Politico, April 17, 2013,http://www.politico.com/story/2013/04/max-baucus- worried-about-health-law-train-wreck-90215.html(accessed June 6, 2013).52. See Jerry Geisel, “Oklahoma Lawsuit argets Premi-um Subsidy Provision o Health Care Reorm Law,” Busi-

ness Insurance , October. 28, 2012, http://www.busines-sinsurance.com/article/20121028/NEWS03/310289979(accessed June 6, 2013). (‘‘I premium subsidies are notavailable in ederally established exchanges, ‘No one would go to those exchanges. Te whole structure cre-ated by the health care reorm law starts to all apart,’ saidGretchen Young, senior vice president-health policy at theERISA Industry Committee in Washington.”).53. Clerk o the U.S. House o Representatives, “FinalVote Results For Roll Call 154, H.R. 45, o Repeal TePatient Protection And Aordable Care Act And HealthCare-Related Provisions In Te Health Care And Educa-tion Reconciliation Act O 2010,” http://clerk.house.gov/evs/2013/roll154.xml (accessed June 6, 2013).54. See Glenn Harlan Reynolds, “A revolution inthe works? Column,” USA oday , February 4, 2013,http://www.usatoday.com/story/opinion/2013/02/04/americans-unhappy-government-convention-col-umn/1887593/ (accessed June 6, 2013). (“According toa Pew poll released last week, more than hal o Ameri-cans view government as a threat to their reedom. Andit’s not just Republicans unhappy with Obama, or gunowners araid that the government will take their guns:38% o Democrats, and 45% o non-gun owners, see thegovernment as a threat. Add this to another recent poll

in which only 22% o likely voters eel America’s govern-ment has the ‘consent o the governed,’ and you’ve gota pretty depressing picture -- and a recipe or potentialtrouble. Governments operate, to a degree, by orce, butultimately they depend on legitimacy. A government thata majority views as a threat, and that only a small minority sees as enjoying the consent o the governed, is a govern-ment with legitimacy problems.”); Glenn Reynolds, in-terviewed by Russ Roberts, “Glenn Reynolds on Politics,the Constitution, and echnology,” Econalk , February 13, 2013, http://www.econtalk.org/archives/2013/02/glenn_reynolds.html (accessed June 6, 2013). (“Guest[Glenn Reynolds]: Here’s the problem with public o-cials…deciding to ignore the Constitution. I you are thePresident, i you are a member o Congress, i you are a SA agent, the only reason why somebody should listen

to what you say instead o horse-whipping you out o town or your impertinence is because you exercise powervia the Constitution. I the Constitution doesn’t count,you don’t have any legitimate power. You are a thie, a brigand, an ociant busybody, somebody who should betarred and eathered and run out o town on a rail ortrying to exercise power you don’t possess. So…i we aregoing to start ignoring the Constitution, I’m ne withthat; the rst part I’m going to start ignoring is I haveto do whatever they say. [Host] Russ [Roberts]: But hisargument is that we already ignore the Constitution. It’snot really much o a binding document. Guest: Oh, wellthen I’m ree to do whatever I want. And actually, that isa damning admission. Because what that really says is: I you believe [Louis Michael] Seidman’s argument, i youbelieve that we already ignore the Constitution anyway is that in act the government rules by sheer naked orce

and nothing else. I that’s what you believe, all this talk o revolution suddenly doesn’t seem so crazy and seemsalmost mandatory. ”)55. imothy Stoltzus Jost, “Yes, the Federal ExchangeCan Oer Premium ax Credits,” Health Reorm Watch,September 11, 2011, http://www.healthreormwatch.com/2011/09/11/yes-the-ederal-exchange-can-oer-premium-tax-credits/ (accessed June 6, 2013). (“But now we seem to be stuck with the textualists delight: a statute whose words clearly say what Congress clearly did notmean.”).56. om Howell Jr., “Sebelius: ‘Help us Speed up’Health Care Rollout,” Washington imes, February 4,2013, http://www.washingtontimes.com/news/2013/

eb/4/sebelius-obamacare-here-stay-needs-states-help/(accessed June 6, 2013).

Image 1: Image courtesy o 401(K) 2013

Image 2: Image courtesy o winiredxoxo via Flikr

Michael F. Cannon is the Cato Institute’s director o health policy studies. Previously, he served as a do-mestic policy analyst or the U.S. Senate RepublicanPolicy Committee, where he advised the Senate lead-ership on health, education, labor, welare, and the Second Amendment. Cannon has appeared on ABC,CBS, CNN, CNBC, C-SPAN, Fox News Chan-nel, and NPR. Cited by the Washington Post as “aninfuential health-care wonk at the libertarian CatoInstitute,” his articles have been eatured in Te Wall Street Journal, USA oday, the Los Angeles imes,the New York Post, the Chicago ribune, the Chi-

cago Sun-imes, the San Francisco Chronicle, Hu-ington Post, Forum or Health Economics & Policy,Health Matrix: Journal o Law-Medicine, and the Yale Journal o Health Policy, Law, and Ethics. Can-non is the co-editor o Replacing Obamacare: Te Cato Institute on Health Care Reorm and coauthor o Healthy Competition: What’s Holding Back HealthCare and How to Free It. He holds a bachelor’s degree in American government (BA) rom the University o Virginia, and master’s degrees in economics (MA) and law & economics (JM) rom George Mason University.