Did Congress Actually Intend to Withhold Subsidies From Federal Exchanges?

| Fri Jul. 25, 2014 1:24 AM EDT

In the Halbig case, the plaintiffs argued that the provision in Obamacare limiting subsidies to people enrolled through state exchanges was no typo. In fact, they claimed, Congress intended to limit subsidies to state exchanges as an incentive for states to set up their own exchanges instead of relying on the federal government. The problem with this theory is that literally nobody who was involved with the legislation or who covered it during its passage remembers anything of the sort, and the rest of the bill pretty clearly assumes that everyone gets subsidies regardless of whether they're enrolled via a state exchange or the federal exchange.

Today, however, Peter Suderman presents some evidence that this was indeed Congress's intent. It's not evidence from 2009-10, when the bill was being debated. Nor is it from anyone involved in Congress. It's from Obamacare expert Jonathan Gruber speaking to an industry group in January 2012:

What’s important to remember politically about this is if you're a state and you don’t set up an exchange, that means your citizens don't get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country.

I don't really know what to make of this. It's a very odd mistake for Gruber to make, because in January 2012 the IRS had already issued a preliminary ruling on this exact question and had already held a public hearing asking for comments. Gruber surely knew this, and therefore knew that (a) the final ruling hadn't been issued yet, but (b) the IRS had already signaled that it intended to rule that subsidies were allowed on federal exchanges. Maybe he misremembered the IRS's preliminary ruling, or maybe he was just mixing this up with something else. Who knows? Perhaps Gruber will tell us on Friday.

In any case, I doubt this changes anything too much. Although Gruber was a consultant on the law and intimately familiar with its details, he was neither a legislator nor a congressional staffer. The fact that he bollixed an audience question two years after the law's passage doesn't mean much. It's a nice gotcha moment, but probably not much else.