Why Didn't the Court Address the Meaning of the Term "establish," Arguably the Most Important and Ambiguous Word in the Phrase -- "established by the State"?
King v. Burwell made it all the way to the Supreme Court based primarily on the interpretation of four words in the Affordable Care Act: “established by the State.” While there was some discussion at oral argument that focused on the words “by” and “State” we are left to conclude that the word “established” did not warrant any discussion then or later, in the Court's Opinion. Yet it may have been the most important (and ambiguous) word used in the four-word phrase. In my view it was, which is why I raised this issue in Part IV of my amicus brief, presented below.
IV. A State Establishes an Exchange Even When it Refuses to Establish an Exchange. No Matter What a State Does, Does Not Do, or Refuses to Do, It Establishes an Exchange under the Affordable Care Act. The Secretary of Health and Human Services MerelyFacilitates the Establishment of Exchanges. The States and Only the States Determine, by Their Actions, Inadequate Actions, or Inactions, How Exchanges Are to be Established in Their States.
. . . [T]he disputed language in the tax-credit statute, i.e., 26 U.S.C. §§ 36B(b)(2)(A) and 36B(c)(2)(A)(i), is "an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act." Is this disputed language susceptible to an interpretation other than that given to it by the petitioners, such as the interpretation given to it by the IRS, that "an Exchange established by the State under section 1311" includes an Exchange established by the Secretary of HHS under section 1321 of the Affordable Care Act? (As discussed above [*], the Act does not substantively distinguish the Exchanges.)
In order to answer this question, it is necessary to examine the operative term used in the phrase in question: "established." Neither the Fourth Circuit in King v. Burwell, No. 14-1158 (July 22, 2014) nor the D.C. Circuit in Halbig v. Burwell, No. 14-5018 (July 22, 2014) has addressed the meaning of this term directly in their Opinions, even though the term "establish" has more than one meaning.
The Merriam-Webster Dictionary provides the following definition of "establish":
1 to institute (as a law) permanently by enactment or agreement
2 obsolete: settle
3 a: to make firm or stable b: to introduce and cause to grow and multiply
4 a: to bring into existence: found b: bring about, effect
5 a: to put on a firm basis: set up b: to put into a favorable position c: to gain full recognition or acceptance of
6 to make (a church) a national or state institution
7 to put beyond doubt: prove
http://www.merriam webster.com/dictionary/establish.
Petitioners’ construction of the term "establish" seems to rest solely on the meaning "to make" or "to introduce and cause to grow and multiply." Pursuant to the petitioners’ interpretation, if the state did not make or create the Exchange, or introduce it and cause it to grow and multiply, then 26 U.S.C. § 36B does not allow a tax subsidy for an individual enrolled in a health plan. But there are other plain meanings of the term "establish," as the dictionary quoted above provides, that are as relevant to the disputed statutory language as the narrow meaning given to it by the petitioners, namely, "to bring into existence" or "bring about." The Affordable Care Act makes this clear by setting forth the process by which Exchanges will be brought about or into existence within states that fail to do so on their own initiative or that fail to do so in compliance with the Act.
Under the statutory scheme of the Affordable Care Act, the states are given the option to establish or "to make or introduce" Exchanges in their states, as the petitioners contend. It should be noted, however, that the Act does not give the states the option to prohibit the establishment of Exchanges within their states. The only option available to the states is how they may proceed in bringing about Exchanges in their states.
As every state is aware, if it elects not to establish an Exchange on its own; fails to establish an Exchange by January 1, 2014; or establishes an Exchange that fails to meet the requirements of the Affordable Care Act, the Secretary of HHS will establish and operate "such Exchanges" within the unwilling or noncomplying states under § 1321(c) of the Act. By its own wording, § 1321(c) of the Act, for all intents and purposes, incorporates by reference § 1311 of the Act, specifically section 1311(b)(1). Accordingly, it is not unfair to construe federally-facilitated Exchanges as "Exchanges established by the State under section 1311 of the Patient Protection and Affordable Care Act," since they are knowingly brought into existence by the states as a consequence of the states’ own conduct – inactions, actions, or inadequate actions.
In other words, the Act says that no matter what a state does, does not do, or refuses to do, it establishes an Exchange in its state; the state’s only real option is how it may go about establishing an Exchange within its state – on its own initiative, or through the Secretary of HHS. The Secretary merely facilitates the establishment of Exchanges; the states knowingly bring Exchanges about or into existence, i.e., "establish" them, directly or indirectly, i.e., by initiation or default, through their own conduct.