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Six Humpty Dumptys Playing Calvinball

June 26, 2015 in Economics

By Michael F. Cannon

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Michael F. Cannon

In King v. Burwell, all nine Supreme Court Justices agreed on one thing. The King challengers claimed the Patient Protection and Affordable Care Act (ACA) authorizes the Internal Revenue Service to issue tax credits and impose the related penalties only “through an Exchange established by the State,” and not through exchanges established by the federal government. “Petitioners’ arguments about the plain meaning of Section 36B are strong,” Chief Justice John Roberts wrote, and their interpretation is “the most natural reading of the pertinent statutory phrase.” Justice Antonin Scalia agreed, finding the meaning of that phrase “so obvious there would hardly be a need for the Supreme Court to hear a case about it.”

There was no dissent about the plain meaning of the phrase “through an Exchange established by the State.” All seven of the other Justices joined one of those two opinions. Nor was there dissent about the fact that that phrase, used repeatedly in the statute, is the only provision of the Act that speaks directly to the question presented. Not a single Justice lent credence to the government’s assertions that this was a meritless case, or one that the Court should never have accepted. Nor was there dissent about the consequences of that provision’s plain meaning in the face of broad state resistance to the ACA. All agreed that withholding tax credits in the thirty-four states with federal exchanges could lead to adverse selection in those states, with premiums climbing higher and higher in a “death spiral.”

A number of things stand out about the King v. Burwell opinion.”

Where disagreement emerged was over the question of whether the former should alter the latter — whether the potential for adverse consequences “compels” the Court to disregard the universally acknowledged meaning of the operative text. The Court split six to three in favor of rewriting plain text, and rendering the requirement “established by the State” a nullity. The Chief Justice wrote for the majority, Scalia for the dissent. The effect of the ruling is that this and future administrations must do what everyone agrees the plain meaning of the operative text does not permit: spend hundreds of billions of dollars and tax 70 million employers and individuals in those thirty-four states.

Others can speak with greater authority about what this ruling means for textualism, contextualism, purposivism, and other legal doctrines. I can speak as one who relied …read more

Source: OP-EDS

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