Rule of Law

A Former Senator Just Dealt A Serious Blow To The Legal Case Against Obamacare

By Jonathan Cohn 


The former senator who nearly blocked Obamacare in Congress may have just helped save it from the Supreme Court.


By now, you may have heard about King v. Burwell, the lawsuit brought by some of the Affordable Care Act’s conservative and libertarian critics. If successful, the lawsuit would cut off tax credits to millions of people currently buying insurance through the law’s new insurance “exchanges.” Without those tax credits, most of those people would have to give up insurance altogether, while prices for others could rise.


The legal dispute, which the Supreme Court will hear in March, isn’t about lofty principles of constitutional law. Instead, it’s about what the text of the statute really says and what members of Congress really meant when they voted for it.


Under the Affordable Care Act, state officials face a choice. They can opt to build and operate their own insurance exchanges, or they can leave that work to the federal government. King’s plaintiffs say this choice carries severe consequences because of some ambiguous wording in one section of the legislation. The part of the law authorizing tax credits refers specifically to exchanges “established by the state.” It says nothing about exchanges established by the federal government.


In other words, if you live in one of the states running its own exchange — California, for example, or Kentucky — then you’re supposed to get those tax credits. But if you live in one of the states where the federal government did the work — Florida, Texas and a bunch of others — then you’re not.


Or so the plaintiffs say. One problem with their argument is that a provision restricting tax credits to certain states would create serious inconsistencies within the statute. Essential provisions, such as the guarantee of coverage for people with preexisting conditions, wouldn’t really work if people don’t have those tax credits — so why would Congress limit their availability? The answer, King’s plaintiffs have said, is that Congress intended to use financial assistance as an incentive for states to act on their own.


This is where Ben Nelson, former senator from Nebraska, enters the story.


Back in late 2009 and early 2010, a key dispute among the lawmakers debating health care reform was over whether to create one giant national exchange or 50 separate state exchanges. House Democrats, liberals in the Senate, and many administration officials felt a national exchange would be better. Nelson, a relatively conservative Democrat and ex-governor, was among those who strongly preferred state-based exchanges — and threatened to withhold his support, depriving Democrats of a filibuster-proof majority, if he did not get his way.


The Senate bill, which eventually became the law, was consistent with Nelson’s preferences. And, according to King’s plaintiffs, Nelson felt so strongly about the superiority of state-run exchanges that he wanted to cripple the federally run exchanges — denying them access to tax credits and, in the process, rendering many of the law’s other consumer-friendly reforms unworkable.


“For Nelson and some other Senators, it was important to keep the federal government out of the process, and thus insufficient to merely allow states the option to establish Exchanges, as the House bill did,” a brief by the lawsuit’s plaintiffs argues. “Rather, states had to take the lead role, which, given the constitutional bar on compulsion, required serious incentives to induce such state participation.”


Democratic Senate leaders and their advisers have repeatedly dismissed this theory as nonsense. And now it appears Nelson feels the same way. An amicus brief filed Wednesday by the Constitutional Accountability Center on behalf of the law’s congressional architects references a letter, sent recently by Nelson to Sen. Bob Casey (D-Pa.) and available publicly, in which Nelson states unequivocally that he never intended to penalize states that opted not to create their own exchanges. “I always believed that tax credits should be available in all 50 states regardless of who built the exchange,” Nelson, who is now CEO of the National Association of Insurance Commissioners, writes. “The final law also reflects that belief as well.”


Could Nelson be forgetting what he thought and demanded at the time of Obamacare’s enactment? Could he be lying? Sure. But the publication of his letter follows a series of revelations casting yet more doubt on the arguments of King’s plaintiffs.


A series of Republican state officials recently told The Washington Post’s Greg Sargent that they never thought their decision to let the federal government build their exchanges would mean losing out on the law’s tax credits. Comments and votes by Republican members of Congress — dug up in the last two weeks by The New Republic’s Brian Beutler and Salon’s Simon Maloy — suggest they, too, thought financial assistance should flow in all states.


Of course, what members of Congress actually believed during or immediately after Obamacare’s enactment may not ultimately matter. The ruling could turn entirely on the text itself — although here too, plaintiffs have a high burden to clear, because other passages of the law suggest the financial assistance should be available everywhere. Also, in cases where text is ambiguous, courts traditionally defer to the interpretation of executive branch agencies.


Whatever standard the justices decide to use when they hear this case, they’ll now have to reckon with the fact that a key authority in the plaintiffs’ case — in effect, the lead witness for the prosecution — says the lawsuit is bunk.