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Economists' Arguments against Obamacare Lawsuits Backfire

September 24, 2014 in Economics

By Jonathan H. Adler, Michael F. Cannon

Jonathan H. Adler and Michael F. Cannon

Three years ago, we blew the whistle on the government behavior now being challenged in multiple Obamacare lawsuits, including Halbig v. Burwell and King v. Burwell. We performed much of the legal analysis underpinning those challenges. So it amused us when economists Henry Aaron, David Cutler and Peter Orszag tried to defend the government and counsel against Supreme Court review of King, yet inadvertently undercut the government on both counts.

Contrary to their characterization, plaintiffs Halbig and King do not challenge the Patient Protection and Affordable Care Act, much less attempt to “repeal or invalidate” it. The plaintiffs claim the clear language of the act exempts them from the law’s mandates, yet the government is subjecting them to those taxes anyway. They are asking the government to follow Obamacare, not strike it.

Nor are these cases “a joke.” The plaintiffs won before one appellate court (Halbig) and lost before another (King). Even the latter court found “a literal reading of the statute undoubtedly accords more closely with [the plaintiffs’] position,” and the government’s position is “only slightly” stronger.

Agree or disagree, the need for final resolution of these cases is obvious and pressing.”

Nor is the statute “vague.” Obamacare lets the government pay some people’s insurance premiums, and impose its mandate taxes on certain employers and individuals, but only in states with a health-insurance exchange that, quoting the law, was “established by the State.” There is nothing vague about that language, which Congress used repeatedly and consistently. There is nothing in the statute inconsistent with it, or suggesting Congress understood it to mean anything other than what it says. The plaintiffs live among the 36 states that did not establish exchanges. They are exempt from those taxes.

Nor does the statute support a contrary interpretation “when read in its entirety.” Tellingly, the economists cite no statutory language authorizing the government to tax the plaintiffs. Nor do they offer contemporaneous statements from the law’s authors supporting their reinterpretation.

Nor is the claim that Congress intended to withhold subsidies in those 36 states “absurd.” Withholding federal subsidies in uncooperative states is how Congress sought to induce states to implement Obamacare’s other major coverage expansion, too. As enacted, the legislation threatened to withhold 12 times as much funding — and to deny health coverage to the poorest of the poor — in states that did not expand their …read more

Source: OP-EDS

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