On Wednesday of next week, March 4th, the U.S. Supreme Court will hear oral arguments in the case of King v. Burwell. The Court will determine whether federal tax credits are authorized under the Affordable Care Act for individuals enrolled in health plans through federally-operated Exchanges. An IRS Rule interpreting the Act says the tax credits are authorized by the Act; the petitioners, King et al, say the tax credits aren’t authorized by the Act. The petitioners claim that the IRS overstepped its bounds in authorizing the tax credits because the “plain meaning” of the tax-credit language in the Act was to limit tax credits to individuals who enrolled in health plans through state-run Exchanges only.
The “plain meaning” rule is a doctrine of judicial restraint. Courts are supposed to stick to interpreting law not make law, which is Congress’s job. The same is true of Executive agencies, like the IRS. So, the question before the Court is whether the IRS overstepped its bounds or whether its interpretation of the tax-credit language in the Affordable Care Act is a permissible one? If it is, the Court must defer to the IRS’s interpretation even though the petitioners’ opposite interpretation is also plausible.
How can two opposing interpretations of the same language be plausible? When there are multiple meanings of the same word(s) used in the language being interpreted. This is the position that Maurice F. Baggiano, Esq., took in his amicus brief filed on January 28th with the Court.
The tax-credit language in the Affordable Care Act refers to “an Exchange established by the State.” It does not mention federally-operated Exchanges. The keyword is “established,” says Baggiano. “Establish” not only means “to make or create” but also “to bring about, to effect,” according to the Merriam-Webster Dictionary (and other dictionaries).
Under the Affordable Care Act, a state can make its own Exchange or do nothing, knowing that the federal government will step in and create the Exchange upon the state’s default. In the latter situation, the state knowingly brings the Exchange about, i.e., “establishes” it, through decisive inaction. In either case, Baggiano argues that a state “establishes” an Exchange, by definition.
Therefore, the Supreme Court should defer to the IRS’s interpretation and uphold the validity of the IRS Rule. If the Court does what it is supposed to do, tax credits will continue to be available to all individuals who enrolled in health plans through an Exchange, regardless of whether the Exchange is state-run or federally-operated.