King v. Burwell is being touted by the popular press as a case of enormous import. It is, we are led to believe, an attack on the Affordable Care Act that, if successful, will undermine the entirety of that statute’s regulation of the private insurance market. Whether that is true or not remains to be seen. I have some doubts. What each state will do if faced with the prospect that its citizens will no longer get subsidies to buy insurance if it does not establish and operate an insurance exchange is entirely unknown. Moreover, even a victory by the government will hardly guarantee the ACA’s success in regulating the private insurance market. For one thing, a decision upholding the IRS regulation that authorizes subsidies even in states where the federal government operates an exchange might conclude that the statute is ambiguous and that the IRS is entitled to deference. (It is hard to imagine a decision upholding the regulation that would conclude that the statute is crystal clear.) If so, a subsequent administration that disagrees with the current interpretation could simply change it. If a decision favoring the plaintiffs would lead to the statute’s demise, so would a change in the regulation.
So King v. Burwell may not be quite as consequential for public policy as many would have us believe. It can, though, be quite important for the development of the law, and, more specifically, the “plain meaning” rule that requires that statutes generally be interpreted in accordance with their plain meaning. Two important issues are raised by the decision. First, how broad is the “absurdity” exception to the plain meaning rule? Second, to what degree and extent should the unusual factual circumstances that led to the ACA’s passage affect the operation of the plain meaning rule?
As to the first, the statute in question plainly provides that, in calculating the size of a subsidy, one must begin with the monthly premium of a qualified health plan offered in the individual market within a state that someone enrolled in “through an Exchange established by the State under Section 1311 [of the ACA].” “State” is a defined term under the Act and plainly does not mean the federal government.
The “plain meaning” rule, though, has a well-known exception that permits a court to depart from the plain meaning of a statute when the result would be an absurd one that Congress could not possibly have meant. The question, though, is how “absurd” a result must be before the exception kicks in. Generally speaking, the Court has kept the exception narrow, since, after all, a broad understanding of what is “absurd” would give courts more opportunities to second-guess Congress’s words.
In King, the federal government does not seriously argue that it would be absurd for Congress to limit subsidies to individuals in states that have state-operated exchanges (although it does argue strenuously that that is not what Congress meant). Rather, it suggests that there are other provisions of the ACA that would be rendered absurd if the phrase “Exchange established by the State” were given its plain meaning. (Whether an absurdity in a different provision should be sufficient to reinterpret a phrase away from its plain meaning in the relevant section is another question, and one that space precludes me from elaborating upon.)
For example, the government argues, Section 1312 of the ACA (42 U.S.C. § 18032) provides that “[a] qualified individual may enroll in any qualified health plan available to such individual.” That section defines a “qualified individual” as one who seeks to enroll in a qualified health plan offered through an exchange and “resides in the State that established the Exchange.” How can it be, the government argues, that only individuals who reside in states that offer state-run insurance exchanges can be “qualified individuals” and thus eligible to purchase a qualified health plan? Well, the answer goes, Section 1312 does not state that individuals who live in states with federally-run exchanges cannot buy health plans. It just identifies some of those in the states with state-operated exchanges who can.
Now, one might wonder why Congress would only identify eligibility requirements and/or choice rights for those living in states that have state-run exchanges. There are plausible answers to that question – perhaps the most plausible is that Congress expected the states to establish and operate exchanges and did not give as much thought to what would happen in the event that some did not – but even if there were not, it is not at all clear that the requirements of the absurdity exception would be met. Is it really absurd if Congress only set forth the requirements and rights for one group (people living in states with state-run exchanges) and not the other (people living in states with federally-run exchanges)? This, I think, would stretch the absurdity exception greatly. The fact that we may not fully understand why Congress said what it said does not make what it said absurd in the usual sense of that word or past precedent.
The second issue relating to the plain-meaning rule raised by King is whether the unusual legislative history of the ACA should affect its application. As many may remember, the House and Senate passed significantly different healthcare bills at the end of 2009. Many provisions were no doubt included with the assumption that they would be amended in negotiations between the House and Senate. But when Scott Brown was elected to the Senate from Massachusetts and the Democrats lost their filibuster-proof majority in that body, the supporters of the bill had a choice: try the reconciliation process anyway (either before or after Brown was seated) or pass one of the two bills already on the table. They opted for the latter. The House passed the Senate bill on March 21, 2010, and President Obama signed it into law two days later. Modest amendments were made through a budget reconciliation process that could not be filibustered but permitted only limited changes.
The government and supporters of the bill seem to argue that this history is a reason to reject the plain meaning of the statute. Everyone knows what we really wanted, they suggest, and it certainly was not to undermine the ACA by limiting subsidies. My organization, along with our co-counsel (Cooper & Kirk and The Judicial Education Project), representing various U.S. senators and representatives, took a different approach in the amicus brief that we filed. Our clients believe that the unusual nature of the history of the bill makes it all the more important to apply the plain meaning rule. Trying to figure out what supporters of the law might have done if they had had the votes to do it is a fool’s game. The plain words of the statute are the only things that members of the two Houses of Congress voted on, and it’s all that can govern an agency’s interpretation of the statute.