King v. Burwell and the Rise of the Administrative State

Abstract

The Patient Protection and Affordable Care Act (ACA) is a complex law totaling nearly a thousand pages in length. The litigation now before the Supreme Court in King v. Burwell presents, on the surface, a simple issue of statutory interpretation. However, that surface has a very thin veneer. If the Court allows administrators carte blanche to change the very words of a statute, we will have come a long way towards governance by bureaucrats. Over the years, Congress has delegated many of its powers, but it has never delegated the power to raise taxes or spend tax subsidies in ways that no statute authorizes.

For example, the ACA recognizes provides that territories of the United States (e.g., Guam) are “States,” for purposes of this law. Section 1323 provides states that if a “territory” creates an Exchange, it “shall be treated as a State” under this law. Congress knew how to define “state” to include more than “states.” It did that when it defined “territory” as “State.” It also says that the District of Columbia is a “State” for subsidy purposes. A section provides, “In this title, the term ‘State’ means each of the 50 States and the District of Columbia.” However, no section of the law defines “State” to include the Federal Government. An earlier version of the bill — one that Congress did not enact — provided that “any references in this subtitle to [any] Health Insurance Exchange…shall be deemed a reference to the State-based Health Insurance Exchange.” That would treat Federal Exchanges the same as State Exchanges. Congress did not enact that version.

If the IRS has this broad power to amend the statute to say that “federal” means “state,” we will have come a long way from rule by an elected Congress to rule by unelected bureaucrats.

Keywords: Patient Protection and Affordable Care Act, ObamaCare, Internal Revenue Service, Health Benefit Exchange, Commerce Clause, King v. Burwell, Chevron Deference, Massachusetts v. EPA, Utility Air Regulatory Group v. EPA, statutory interpretation

JEL Classification: E62, H51, D73, K39, K23