Rule of Law

Supreme Court case on key Obamacare provision takes up this senator’s account

By Robert Barnes


The challengers in the latest Supreme Court battle over the Affordable Care Act point to former Nebraska Sen. Ben Nelson as evidence of their claim that Congress intended that tax credits go only to qualified recipients in states that had established their own insurance exchanges.


Nelson, a Democratic holdout as Congress debated the bill, insisted that states take the lead in establishing the exchanges. And the challengers use that to support their theory that Congress was using the tax credits to induce states into establishing the exchanges, rather than having the federal government do it.


But Nelson, who announced his retirement in 2011, speaks for himself in a brief filed by Democratic congressional leaders and others.


“I always believed that tax credits should be available in all 50 states regardless of who built the exchange, and the final law also reflects that belief as well,” Nelson wrote in a letter to Sen. Bob Casey (D-Pa.) who sought Nelson’s view.


The question of “what-does-Ben-Nelson-want” has always been a part of the ACA controversy. To win his vote in 2009, Senate Majority Leader Harry Reid offered Nelson a deal that would give Nebraska full federal funding of a proposed Medicaid expansion indefinitely.


During the Supreme Court’s 2012 arguments over the constitutionality of what has become known as Obamacare, Justice Antonin Scalia mentioned the controversy over the “Cornhusker Kickback.” Scalia was apparently unaware that the deal had become so controversial that it was removed from the bill before passage.


The current Supreme Court case, King v. Burwell, which will be argued March 4, is different, but Nelson still figures prominently in the briefs.


ACA opponents say that the clear language of the law allows tax credits to qualifying low- and middle-income Americans who purchase insurance only on exchanges established by states. The tax credits are seen as essential to making the coverage affordable, but only about a third of the states have created exchanges. Elsewhere, federal authorities have established the exchanges.


Although the law says the subsidies go to those who purchase insurance on exchanges “established by the State,” the IRS has interpreted the law to mean Congress wanted all Americans who purchase through an exchange to get the credits.


The Obama administration says it would make no sense for Congress to pass a bill meant to provide insurance coverage to all Americans and then restrict the tax credits that make the plan workable. But challengers say the provision was intended to induce states into building the exchanges, since it could not force such action.


The brief of Virginia residents challenging the law, filed by Washington lawyer Michael A. Carvin, notes Nelson’s role in opposing federal authorities establishing the exchanges. That was part of the House’s bill, and Nelson said it was a “deal-breaker.”


“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,” Carvin wrote. “Rather, states had to take the lead role, which, given the constitutional bar on compulsion, required serious incentives to induce such state participation.”


The Obama administration, in its brief filed by Solicitor General Donald B. Verrilli Jr., responded that it would have been “perverse” for senators such as Nelson, concerned about federalism, to “insist on pressuring states to participate in the implementation of a federal statute.”


The amicus brief by the Constitutional Accountability Center on behalf of Reid, House Minority Leader Nancy Pelosi and others, features an exchange of letters from Casey and Nelson. 


Casey asks Nelson to clarify whether he and other senators meant for the subsidies to be inducements to the states.


Nelson said he wanted only for the exchanges to be tailored to the needs of each state.


“In either scenario—a state or federal exchange—our purpose was clear: to provide states the tools necessary to deliver affordable healthcare to their citizens, and clearly the subsidies are a critical component of that effort regardless of which exchange type a state chooses,” Nelson responded.


The brief was filed on behalf of 125 congressional and state officials who disputed the challengers position that the language on the subsidies was mean to apply pressure.


“Just as amici members of Congress never sent states the message that they needed to set up their own exchanges for their citizens to qualify for the tax credits, amici state legislators never understood Congress to be sending that message based on their review of the statute and the legislative record,” the brief states.


“To the contrary, amici state legislators understood that tax credits would be available to their citizens regardless of whether their states set up their own exchanges.”