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Health Law Challenge 'Strains Credulity,' Administration Says

By Todd Ruger, CQ Roll Call

January 22, 2015 -- President Barack Obama's administration has submitted a full-throated defense of the health care overhaul law to the Supreme Court, arguing that challengers have a theory that at times is baseless, implausible, "strains credulity," and "does not respect the rule of law."

The brief, filed by Solicitor General Donald Verrilli Jr., and other administration lawyers, argues that the challenge "rests on an a contextual misreading of a single phrase in two subclauses" of the president's signature law, and "an implausible account of the act's design and history."

The case—King v. Burwell—questions whether the law should provide subsidies to low- and middle-income residents who buy health insurance in the 37 states that did not establish a state-run marketplace, called an exchange. The Supreme Court will hear oral arguments on the case March 4.

The central debate is about what Congress intended when crafting the health care overhaul law ( PL 111-148 , PL 111-152). The challengers focus on one key statutory phrase—"Exchange established by the State"—to argue that the law precludes an IRS rule providing tax subsidies to residents of states that rely on federally facilitated marketplaces.

"Petitioners largely ignore the contradictions, anomalies, and absurdities their reading would create in other provisions of the act," the administration states in the brief.

"It strains credulity to insist, as petitioners must, that Congress limited tax credits to states that establish exchanges for themselves . . . yet omitted that purportedly crucial limiting language from all of the act's myriad other references to the credits and subsidies available on exchanges," the administration wrote.

The administration states that the law was passed to provide "Quality, Affordable Health Care for All Americans." But the Obama administration argues the petitioners reverse-engineer a description of the law's design and history to fit their misreading of the phrase about exchanges.

Petitioners insist that Congress intentionally threatened to impose a dysfunctional regime on the states in order to pressure them to establish exchanges for themselves, and that Congress assumed that every state would comply," the brief states. "That notion is baseless."

To make their reading of "Exchange established by the State" fit with the rest of the law, the administration argues that "petitioners must rewrite so many of the act's provisions, and explain away or ignore so many textual incongruities and contradictions, that their argument collapses under its own weight—wholly apart from the havoc it would wreak on the act's structure and design."

Under the challengers' theory, insurance coverage for millions of residents of states with federal exchanges would be extinguished, the government said.

Enrollment for 2015 is still in progress, but already nearly 7 million customers have selected or been reenrolled in a plan through a federally facilitated exchange, and coverage through the exchanges is expected to continue to increase substantially in the coming years.

The case comes out of Virginia. In it, four Virginia residents argue that an IRS rule on the health care law runs contrary to the plain language of the statute. The case challenges the IRS rule that authorizes the subsidies for those who enroll in the federally run insurance marketplace,

The case marks the third time the justices have considered the legality of the health care law. The justices upheld the heart of the law in a 5-4 decision in June 2012. The high court struck down the law's contraception mandate as it applies to family-owned businesses in a 5–4 ruling in June.

The decision to accept the King case out of the U.S. Court of Appeals for the 4th Circuit comes as similar challenges are still moving through the lower courts. Those challenges are now on hold.

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