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Profs. Bagley, Adler Debate Role of Halbig & King in Defining PPACA Legality

By Jenny Whalen
Sept. 30, 2014

Challenge accepted.

Perhaps not the exact words with which Michigan Law Assistant Prof. Nicholas Bagley and Case Western Reserve University School of Law Prof. Jonathan Adler accepted the Federalist Society's invitation to debate, but certainly descriptive of the approach each professor took in delivering his argument Tuesday at Michigan Law.

View video of the full debate.

Opposing voices in the legal discourse surrounding the Patient Protection and Affordable Care Act (PPACA), Bagley and Adler squared off on two specific cases that could prove critical in future litigation of Obamacare—Halbig v. Burwell and King v. Burwell. Both cases challenge the lawfulness of an IRS rule authorizing tax credits and cost-sharing subsidies for health insurance purchased through exchanges established by the federal government.

Profs. Nicholas Bagley and Jonathan Adler debate legal issues surrounding Obamacare.

One of the leading arguments among challengers of this rule, and the focal point of Bagley and Adler's debate, relates to the literal versus contextual reading of text used in the PPACA and IRS rule. According to challengers, the IRS rule is illegal because the PPACA only authorizes tax credits and subsidies for insurance purchased on exchanges "established by the State," with "State" expressly defined as one of the 50 states or the District of Columbia.

Whereas Adler argues that this language was intentionally crafted to refer only to state exchanges, Bagley contends that in the context of the entire statute, including Sections 1311 and 1321, this language should be interpreted as covering exchanges set up by the federal government on behalf of a state as well.

Using Bagley's reasoning, individuals who purchase health insurance on a federally established state exchange would still qualify to receive tax credits authorized by the PPACA. Adler's reading suggests that they would not.

"Even if you don't agree with me about the best reading of the statute, it is ambiguous at best on this point," Bagley said. "If you're confused, the government wins this case."

While Adler said he generally agrees with Bagley on the government's penchant for ambiguity, he argued that this is not one of those cases. "It isn't just 'convenient shorthand,'" he said, refuting an earlier claim by Bagley. "Adding this language (about the states) actually made the statute longer," which suggests an intentional effort to be specific rather than vague.

Whether the U.S. Supreme Court will resolve this issue remains to be seen. The U.S. Court of Appeals for the D.C. Circuit recently granted a rehearing en banc in Halbig v. Burwell, while the case of King v. Burwell has already reached the Justices as a pending petition. The Court's fall term begins Oct. 6.

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