Balking at Balkinization’s Explanation of King v. Burwell

It should not fall on the judiciary to rescue ill conceived and overreaching legislation, but instead should be resolved by the body that creates the law – the legislator.

Despite a lot of interesting content on Prof. Balkins’ law blog Balkinization, the post “Plain meaning,” absurdity, and the (almost forgotten) Gregory/Bond federalism canon, in King v. Burwell” failed to convince me that the Government should win in the referenced case. It does admittedly improve at the end of the post with the Gregory/Bond explanation.  Following are some counterpoints to the post and an explanation of my hesitation in accepting this as an appropriate explanation of how King v. Burwell should play out. (This will not address every single point made by the author.)


Perhaps more worrisome than a single word derailing part of a bill is the desire to peer into the intent of the lawmakers (which are barely identifiable, not to mention the impossibility of identifying their intent) to determine the meaning of the bill.  However the article makes a good effort to make plain meaning sound hopeless.

There are over 400,000 words in the Affordable Care Act. The challengers in King v. Burwell rely upon a single one of those words—a simple preposition (“by”) buried in a provision (26 U.S.C. § 36B) setting forth the formula for individuals’ monthly tax credits—as the basis for an interpretation of the Act that would unravel Congress’s efforts to guarantee affordable health care for all Americans.

Right off the bat there appears to be a problem. Stating that a single word is undoing 400,000 words is an exaggeration.  The author appears to be making an argument for a rule of statutory interpretation known as an elephant in a mousehole. In Whitman v. American Trucking Association the Court explained, “Congress … does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions–it does not, one might say, hide elephants in mouseholes.” In short a single misplaced word or tangential element should not derail an entire regulatory scheme and  the plain language should be ignored.

However determining if this one word is an elephant in a mouse-hole shouldn’t be done by saying it is a matter of ratios, 1:400,000.  First the bill does a myriad of things. Not all of those words are dedicated to the essential elements of the Affordable Care Act, and many elements may be considered independent of the overall structure generally or the tax credits specifically.  Instead of focusing on one word among 400,000, at best, it should focus only on the parts of the law that set up the subsidies, not the entirety of the healthcare act (something the author does in the later half of his post).  The bill does so much more than what is absolutely necessary for creating a regulatory scheme. Anything not related to the regulatory scheme shouldn’t give weight to the argument to move away from a textual interpretation, and more specifically anything unrelated to the tax credits should probably not be considered. This eliminates a substantial amount of  the purported 400,000 words allegedly on the chopping block.

Even calling on the dissent’s words in NFIB v. Sebelius to make claim that the subsidies are necessary to the overall system is unconvincing.  The author quotes:

“[The Act’s] system of incentives collapses if the federal subsidies are invalidated.… With fewer buyers and even fewer sellers, the exchanges would not operate as Congress intended and may not operate at all.” 

This is only about the subsidies to exchanges not to the federal exchangeThis is not indicative that there is a requirement for State subsidies and the federal subsidy to be exactly the same. It actually appears to be neutral on that point.

It is also completely reasonable to only offer the subsidies to the states to show a preference for the State exchanges over the Federal exchange.  Permitting a tax credit for the states and not the federal exchange is a carrot approach that is very common in Federal legislation.  A significant amount of legislation uses financial incentives to compel States into action.  This approach is both familiar and expected from the Federal Government to institute any program.


For good reason, the challengers make little effort to demonstrate that any members of Congress, let alone majorities of both houses and the President, actually intended to put the States to such a terrible choice, with such ruinous consequences if a State chooses one of the options Congress has offered.(Indeed, such an argument would be belied by the fact that no legislators mentioned, or were aware, that they had done so–and that no one else realized it either, until an attorney stumbled upon the idea nine months after the law’s enactment.) 

This is indicative of a problem in the formation of legislation, but should not be legally relevant as the challengers properly stated.  The proposition that the legally relevant intent is held by those who voted on the bill is an impractical and unworkable rule.   The only way of discerning this intent in any realistic fashion would require legislative history, but this proposition that we just ask them if they were aware or not is subject to post hoc justifications and diverse opinions. (If all opinions did line up and agreed that the subsidy should be available to federal exchanges it would be strong evidence that those in favor of ACA are applying post hoc intents to the bill, which is not a legislative process. Intents are not ratified as law, but text is).

Another problem is that this is further evidence that the legislators are not properly involved in the process.  The text of the bill was a mystery to those who voted in favor of it.  Instead this bill was made in committee and written by experts such as Johnathan Gruber. This may be a good way to draft legislation if the legislators later engaged in a rigorous review of the bills up for vote. However the hurried manner and poor vetting that many bills receive should not later place a burden on the judiciary to decipher the intent or to make the regulatory scheme work or not work. This is requiring the judiciary to do what should have been done by the legislator.

The fact that a lawyer noticed the textual discrepancy nine months later is more indicative of the poor vetting of this bill than the intent of the legislative body.  Part of the delay is likely due to the size of the bill, and the other is likely a result of a presumption that the bill and the actions of the agencies and executive will likely mesh.  Additionally, nine months is not that long of a time frame in the world of legal challenges and arguments.

A reasonable explanation for having federal exchanges without federal subsidies is to create a middle ground where insurance may be purchased but only if the States had not taken the effort to set up their own exchanges.  The bill shows a preference to State subsidies by offering a tax credit but providing an option for those whose States take longer to establish exchanges, miss the deadline, or completely fail to do so.

Instead the argument offered that this single word will undo the entire law is based on a chain reaction of possible outcomes, primarily that States will choose not to be bound by the law and it will thus be undone. However, the law appears to be designed to influence the States and use them as the point man between the subsidies for healthcare coverage and the citizenry.


 For what it’s worth, however, the challengers should lose even under that test, because their reading is “objectively absurd.” In particular, if the challengers were correct that tax credits are unavailable for insurance purchased on a federally established Exchange, Congress’s directive to the Secretary of HHS to establish and operate such federal Exchanges in States that have failed to do so would make no sense at all, as the Solicitor General explains at pages 24 and 38-39 of his brief.

…It would be absurd, indeed, for Congress to have insisted that HHS to set up such dysfunctional Exchanges, without the tax credits that are crucial to their operation. As the SG puts it (p.24), “[a]n Exchange without credits would be a rump Exchange bearing little resemblance to its state-run counterpart—if it could operate at all.” This wouldn’t merely be Hamlet without the Prince; it would be Hamlet without the Danish monarchy . . . more like Rosencrantz and Guildenstern Are Dead.

The absurdity test as discussed above then should rely on what is objectively absurd, however this discussion is clearly pin-holing what absurd means by stating subjectively that it would be absurd for HHS to set up exchanges without the same benefit of the State exchanges.  This is an odd argument to make; if there are no subsidies it will not be exactly the same as the State run exchanges.  Not much there to say that is absurd. As explained previously there are likely many reasons to restrict the subsidies.  Further the inverse of the absurdity test would ask, is their a reasonable alternative or explanation for this language? As the reply brief put it:

“But it is irrelevant whether Congress subjectively intended to impose the condition; all that matters is that it objectively and reasonably did so. Moreover, the trumpeted negative effects stem not from § 36B’s plain language, but from the IRS’s rewriting of that language to eliminate states’ incentive to establish exchanges, predictably causing two-thirds to opt out. But it is irrelevant whether Congress subjectively intended to impose the condition; all that matters is that it objectively and reasonably did so.” [Emphasis added, but only some]

In other words, it must be reasonable to exclude the federal exchange, not the intent, not the outcome of the IRS rules, or as the reply brief mentioned not because of the the reaction to the IRS rules, but whether there is an objective reason to do so.  (This test is particularly enjoyable because it feels rather similar to a rational basis test but turned against the government).   Simply put to state it is absurd because you may find  the outcome to be absurd is both subjective and beyond the intents of the legislation.

Finally, a couple last reasons why Congress would want a Federal exchange as a half-way point between the state established exchanges and the no exchange at all:

First, it is less constitutionally problematic for there to be some alternative to the state exchanges even if the state exchanges are preferred.  Since the federal government cannot commandeer the state and force it to enact legislation it must then rely on spending power, taxing power or the commerce clause.  This is clearly an attempt to use the spending power to motivate states to act in a particular fashion, which is to establish health insurance marketplaces. To do so constitutionally it must not turn, South Dakota v. Dole, “cooperation into coercion.” This is largely ambiguous and it would be more than reasonable that the federal exchanges were established to prevent this law from being declared unconstitutional on coercive grounds.  (A problem that was not clearly avoided in NFIB v. Sebelius since the Medicaid expansion was said to be unconstitutional due to the do or die nature of accepting the expansion. In short, there was no middle ground.  A point which only bolsters the view that a middle ground would be necessary to keep this law from being found unconstitutional).

Second, it is completely reasonable to structure this differently than state exchanges to place political pressure on states to implement exchanges. If the money isn’t incentive enough perhaps the politics will be. (The stick in the stick and carrot approach, perhaps).

Ultimately the author is making an appeal for the Supreme Court  to ignore the text in favor of policy outcomes, or to avoid possible negative policy outcomes. This has Separation of Powers connotations, suggesting the Supreme Court should adopt policy preferences over interpretive rules and engage in pseudo-legislation.

It also creates poor incentives in the legislator, relying on the Supreme Court to step in when it does a sloppy job or implements broad and overreaching legislation.  In essence, this creates problematic incentives in the legislative and executive branches.  The bigger the impact of any  law, despite the text or even the constitutionality of said legislation, the less likely it should be overturned under this reasoning, meaning size and ambiguity would be an insulator against judicial review.

The Government’s (and their supporters’) arguments are only appealing because of the policy aims of the law, something that, in this instance, appears to be beyond the appropriate considerations of the Supreme Court.

James C. Devereaux is an attorney and freedom fanatic. Questions, complaints and hysterics can be sent to

Admittedly this is a not a full explanation and does not step into the Chevron analysis of the case (if it were to make it to that step in the analysis).

Facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

Leave a Reply

Your email address will not be published.