Two federal appeals courts ruled this week on a key provision of the Affordable Care Act (also known as Obamacare). One ruled for the Obama administration; the other ruled against. Both courts agreed that the ACA is a poorly drafted, deeply flawed piece of legislation.

The judges who sided with Obama held that the government could disregard the plain text of the law when a literal reading would defeat the administration’s goals for the law; those who ruled against him held that the government had to follow the law as written.

Recall that the main goal of the ACA is to provide health insurance coverage to nearly all Americans. To that end, it mandates that every individual carry insurance, or pay a punitive tax. Most people will continue to get their health insurance through their employers or through Medicaid. Everyone else, though, has to buy individual coverage.

Improving this individual market was a key aim of the ACA, because individual coverage used to be very expensive and could be impossible to get. That was because of what insurers call “adverse selection”: The people who most want insurance are already ill. But if there is going to be enough money coming in to pay for all the treatments those people will need, premiums have to be high — so healthier people will opt out, which will make the insured population even sicker, which will drive premium prices up even higher, producing a vicious circle.

The ACA solves these problems by creating regulated insurance marketplaces in the 50 states and the District of Columbia — the “exchanges.” Insurance companies offering policies on the exchanges have to sell to everyone (“guaranteed issue”) and they cannot charge sick people in the same community substantially higher premiums than healthy ones (“community rating”). Even so, the cost of health insurance can be prohibitively expensive, and so the law provides subsidies to make health coverage more affordable and to defeat the problem of adverse selection.

Now we get to the controversial provision of the law.

The ACA literally says that tax subsidies will be available to low-income individuals who buy insurance “through an exchange created by the State under section 1311” of the ACA. Here’s the problem: 34 states, including Maine, have not created state exchanges; their exchanges were created by the federal government, which the ACA also allows. Read literally, the law denies subsidies to people in the federal exchange states, which also indirectly frees many of them from having to pay the punitive tax if they choose not to buy health insurance.

Was this a drafting mistake? Did Congress want to encourage all states to run their own exchanges? Who knows?

The Obama administration argues — correctly — that federal agencies generally enjoy wide discretion to interpret acts of Congress. When a statute is ambiguous, courts will accept the agency’s interpretation, so long as it is not totally unreasonable. The administration argues that the crucial phrase, “an exchange created by the State,” is ambiguous. Not because this one sentence is unclear, but because, in their view, it makes no sense in the context of the whole law.

Thus, the administration asks: How can guaranteed issue and community rating possibly work in the federal exchange states, if Congress is not going to make the individual mandate effective by offering the subsidies? Awkwardly for the administration, it concedes that ACA explicitly denies these subsidies, while mandating community rating and guaranteed issue, for some American overseas territories.

But the administration’s larger argument still has considerable force: To deny subsidies to individuals in federal exchange states would seem to undercut the main goal of the ACA, which was to get more people insurance coverage. In fact, most of the courts to have considered these arguments have embraced that argument. But the lawsuits are not yet over, and the Supreme Court may even have to make the final ruling.

No matter which way the courts ultimately decide, however, we the people have already lost something precious — the right of effective self-government through representative political institutions. The ACA is an extreme case, but the Congress regularly composes confusing and poorly drafted statues because it expects the unelected bureaucrats in federal agencies and unaccountable judges to make all the important decisions about their implementation.

If we want to have government of, by and for the people, the least we should expect is for the people’s representatives to write laws so that they are clear and make sense to the people who have to live under them.

Joseph R. Reisert is associate professor of American constitutional law and chairman of the department of government at Colby College in Waterville.


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