Exchanges are Exchanges are Exchanges

Exchanges are Exchanges are Exchanges under the Affordable Care Act. The Act Defines Exchanges Initiated by States, or Facilitated by the Federal Government, Simply as “American Health Benefit Exchanges.” The Act does not Distinguish between the Two and 26 U.S.C. § 36B Cannot Be Read to Allow Such a Distinction Where the Act Itself Does Not Create Such a Distinction.

This is how Iopened Part III of my amicus brief. In formulating this argument, I had asked myself, “Does the main body of the Affordable Care Act support the challengers' argument?”

It is, after all, a fundamental rule of statutory interpretation that two laws pertaining to the same subject matter must be construed together, i.e., in pari materia. In this case that meant to me that the tax credit-statute, i.e., 26 U.S.C. § 36B, and the main body of the Affordable Care Act must be read together, as a harmonious whole, not in isolation of one another.

As I pointed out in my brief, Section 1311(b)(1) of the Act declares that the term “Exchanges” refers to “American Health Benefit Exchanges” and § 1321 of the Act does not declare that Exchanges set up by the Secretary of HHS are something different; in fact, § 1321(c) refers to them as “such Exchange[s].”

Construing 26 U.S.C. § 36B to disallow tax credits to individuals enrolled in health plans through federally-facilitated Exchanges would, in effect, be construing the Affordable Care Act to distinguish between state-created and federally-facilitated Exchanges, in a materially important way, which the Act does not otherwise do.

As I stated in my brief, the impact of such a construction would result in the disparate treatment of citizens of the United States based on their state residence, not only with respect to their eligibility for the federal tax subsidies, but also with respect to their ability to obtain affordable health insurance under the Act. Such a reading necessarily implies that Congress intended to create a two-tier system of Exchanges but the main body of the Act makes no such distinction between state-created and federally-facilitated Exchanges. Both are referred to simply as “American Health Benefit Exchanges.”

Reading 26 U.S.C. § 36B and the main body of the Affordable Care Act in pari materia, therefore, made it clear to me that the IRS permissibly construed 26 U.S.C. § 36B in making tax subsidies available to all qualified individuals in all states regardless of whether the Exchange in a particular state is state- or federally-operated.

It was validating to see that a similar line of reasoning permeated Chief Justice Roberts' Opinion in this case.

26 June 2015. Maurice F. Baggiano, Esq., amicus in support of the government.