Four Words That Imperil Health Care Law Were All a Mistake, Writers Now Say

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WASHINGTON — They are only four words in a 900-page law: gestablished by the state.h

But it is in the ambiguity of those four words in the Affordable Care Act that opponents found a path to challenge the law, all the way to the Supreme Court.

How those words became the most contentious part of President Obamafs signature domestic accomplishment has been a mystery. Who wrote them, and why? Were they really intended, as the plaintiffs in King v. Burwell claim, to make the tax subsidies in the law available only in states that established their own health insurance marketplaces, and not in the three dozen states with federal exchanges?

The answer, from interviews with more than two dozen Democrats and Republicans involved in writing the law, is that the words were a product of shifting politics and a sloppy merging of different versions. Some described the words as ginadvertent,h ginartfulh or ga drafting error.h But none supported the contention of the plaintiffs, who are from Virginia.

gI donft ever recall any distinction between federal and state exchanges in terms of the availability of subsidies,h said Olympia J. Snowe, a former Republican senator from Maine who helped write the Finance Committee version of the bill.

gIt was never part of our conversations at any point,h said Ms. Snowe, who voted against the final version of the Senate bill. gWhy would we have wanted to deny people subsidies? It was not their fault if their state did not set up an exchange.h The four words, she said, were perhaps ginadvertent language,h adding, gI donft know how else to explain it.h

Former Senator Jeff Bingaman, Democrat of New Mexico, said there may have been gsome sloppiness in the draftingh of the bill. Mr. Bingaman, who was a member of both committees that developed the measure, said he was surprised that the lawsuit had reached the Supreme Court because the words in dispute appeared to be a gdrafting error.h

gAs far as I know, it escaped everyonefs attention, or it would have been deleted, because it clearly contradicted the main purpose of the legislation,h Mr. Bingaman said. He added, gIn all the discussion in the committees and on the floor, I didnft ever hear anybody suggest that this kind of distinction between federal and state exchanges was in the bill.h

When the Supreme Court offers its judgment, it could affect more than 7.5 million people now receiving subsidies through the federal exchange and a health care industry that accounts for 17 percent of the nationfs gross domestic product.

The plaintiffs say the law allows subsidies only where marketplaces have been gestablished by the state.h It is a distinction that those who drafted the law say they did not intend to make.

The story of the four words has its loose origins in Mr. Obamafs campaign pledge in 2008 to overhaul the health insurance system, something presidents had tried to do for decades.

After he offered broad guidance on what the plan should include, two Senate panels — the Health, Education, Labor and Pensions Committee and the Finance Committee — began working on the legislation in summer 2009. Staff members began reconciling many complex and competing imperatives.

The idea of denying subsidies to people who bought insurance through the federal exchange gwas never discussed,h said Charles M. Clapton, a lawyer who worked on both committees for Senator Michael B. Enzi, Republican of Wyoming. Mr. Clapton said he had difficulty accepting the argument advanced by the plaintiffs because it was gso contrary to the intenth of those who had written the legislation.

At the Finance Committee, which thrashed out its version of the bill in September and October 2009, senators initially assumed that all states would set up exchanges, so they added a section to the Internal Revenue Code to provide subsidies, in the form of tax credits, for insurance purchased through an exchange.

But senators and staff lawyers came to believe that some states — gfive or 10 at the mosth — would choose not to set up exchanges, said Christopher E. Condeluci, who was a staff lawyer for Republicans on the Finance Committee.

At that point, senators authorized a backup plan to allow the federal government to establish an exchange in any state that did not have its own, but they failed to include that language in the section of the tax code providing subsidies. gWe failed to include a cross-reference to the federal exchange,h Mr. Condeluci said. gIn my opinion, due to a drafting error, we overlooked it. It was an oversight. Congress, in my experience, always intended for the federal exchange to deliver subsidies.h

Russ Sullivan, the staff director for Democrats on the Finance Committee, gave a similar account. The language in the law providing tax credits through state exchanges was ga holdover from what we had in the Finance Committee,h which originally assumed that gevery state was going to set up an exchange,h Mr. Sullivan said.

The idea of a federal backstop came later, he said, when people started asking what would happen if some states did not set up an exchange.

Consistent with its usual practice, the Finance Committee voted on a detailed conceptual description of the bill. The actual legislative language was not available at the time of that vote.

In the Finance Committee bill, the sections setting up exchanges were separate from the section providing tax credits.

The words were written by professional drafters — skilled nonpartisan lawyers — from the office of the Senate legislative counsel, then James W. Fransen. It appears that the four words now being challenged were based on the initial premise and were carelessly left in place as the legislation evolved.

The language of the Finance Committee bill was written largely by Mr. Fransen and a tax expert, Mark J. Mathiesen, while much of the health committee version was written by William R. Baird, a public health expert. The two committees worked on separate tracks.

When Mr. Fransen retired in December 2014, after working in the Senate for nearly 40 years, Senator Harry Reid, Democrat of Nevada, who was majority leader at the time, praised his impartiality and said he understood the tax code gperhaps better than anyone in Washington.h Mr. Fransen did not respond to a message seeking comment, and other attempts to reach him were not successful.

Still, there were substantial differences between the two committeesf versions of the bill, and the task of merging them in October and November 2009 fell largely to Mr. Reid. Both bills called for insurance exchanges and provided subsidies to lower-income people, but the health committee measure clearly allowed subsidies in all states. The Finance Committee version was not so explicit.

In stitching together the final legislation, Mr. Reid took the language on tax credits from the Finance Committee, and he generally followed the health committee in allowing the secretary of health and human services to operate a federal exchange.

But in borrowing from the health committee bill, Mr. Reid did not adopt an important provision that could perhaps have avoided the current fight. That provision said that a state with a federal exchange gshall be deemed to be a participating state,h and that its residents could receive federal subsidies to help pay premiums.

gI remember meeting after meeting in which we went through the language of the legislation line by line,h said Robert D. Greenawalt, who worked as a senior tax adviser to Mr. Reid. gI do not recall any discussion of a distinction between federal and state exchanges for the purpose of subsidies.h But Mr. Greenawalt said: gIn merging two bills that were so big, itfs possible that something got left out. It would have been accidental.h

Douglas W. Elmendorf, director of the Congressional Budget Office at the time, and his staff reviewed every version of the bill so they could estimate the cost. If subsidies were unavailable in some states, the cost would presumably have been lower.

gTo the best of our recollection, the possibility that those subsidies would only be available in states that created their own exchanges did not arise during the discussions C.B.O. staff had with a wide range of congressional staff,h Mr. Elmendorf said.

Senators — notably Max Baucus, Democrat of Montana, who was chairman of the Finance Committee — also were mindful of the politics of health care.

Jon Selib, Mr. Baucusfs chief of staff, said senators had never discussed the question now before the justices. Mr. Baucus, gfrom the red state of Montana,h would never have agreed to an arrangement that jeopardized tax credits for his constituents, he added.

Senate Democratic leaders said they had several reasons for highlighting the role of state exchanges. They wanted to make clear that states could decide for themselves whether to set up exchanges because that made the bill more palatable to conservative Democrats. In addition, they wanted to contrast their bill with one passed in November 2009 by the House, which called for a national insurance exchange.

The Senate bill was on the floor for 25 consecutive days before it was approved on Christmas Eve 2009 by a party-line vote of 60 to 39. Senators always assumed that their bill would be polished and refined in negotiations with the House. But the expected conference between the two chambers never occurred. Democrats switched their plans after Scott Brown, a Republican, won a special election in January 2010 to fill the seat long held by Senator Edward M. Kennedy, Democrat of Massachusetts, who had died the previous year.

Having lost a filibuster-proof majority, Democrats believed they could not afford to make significant changes in the Senate bill; it was then approved by the House and sent to the president, with an agreement that lingering questions could be answered separately. Some were, though these four words were unaddressed.

The Obama administration contends that the gtext, structure and historyh of the Affordable Care Act all support its position. Even if the court agreed on the intent of Congress, that would not necessarily ensure a victory for the administration.

A powerful line of judicial thinking holds that courts do not have a license to disregard or revise the clear language of a law.

What matters, Justice Antonin Scalia has said, is gnot what Congress would have wanted, but what Congress enacted.h