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Econ 2: Spring 2014: UC Berkeley: Problem Set 4 Answers DRAFT

Afternoon Must-Read: Kevin Otterson: Cato Institute Calvinball

Kevin Otterson: The other oral argument on Tuesday: "To the Cato Institute, the tax credit cases (Halbig v. Sebelius and a related case in the Fourth Circuit, King v. Sebelius) represent their last shot to cripple the four-year-old law by wiping health insurance subsidies to millions of people in the 36 states that did not create state exchanges....

The amicus brief filed on Thursday March 20, 2014 by the Commonwealth of Virginia in King v. Sebelius... the Pennhurst doctrine, which requires Congress to give states “clear notice” if conditions on states are attached to federal spending.... Did Congress give “clear notice” that the penalty for failing to build a state exchange would be the loss of billions of dollars of health insurance subsidies?  When you put it that way, Cato’s argument collapses. From the brief:

For no one can reasonably claim that the federal government gave Virginia clear notice that its citizens would be denied premium tax-credit assistance as punishment for the Commonwealth’s decision to forgo building its own health insurance exchange.... [The Plaintiffs argue] that everyone in Congress silently but mistakenly assumed that every State would create its own Exchange. (Appellants’ Br. 6, 42.) That claim finds no support in the record....

The brief also notes that no Member of Congress expressed such a view and even the architects of this litigation (Cannon and Adler) were surprised by this “glitch” after the fact. The brief also reviews the official correspondence to and from the Governor on this issue; any notice whatsoever is lacking, much less “clear notice.” What bothers me the most about this litigation is Cato’s willingness to hurt millions of vulnerable people in order to score political points, even after losing the 2012 Presidential election and the first bite of the Supreme Court apple in NFIB v. Sebelius. The Virginia brief puts the emphasis on the people:

Two sovereign interests compel the Commonwealth of Virginia to file this brief. First, the Commonwealth represents the interests of the hundreds of thousands of Virginians who depend on federal premium tax-credit assistance to afford the health insurance that is now available under the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act” or “ACA”). Their interests are not represented by the Appellants here, four individual Virginians who do not want health insurance. Second, the Appellants’ legal theory contradicts the fundamental assumption on which the Commonwealth elected to forgo building its own health insurance exchange in favor of a federally-facilitated exchange: that doing so would not harm the interests of Virginians...

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