Major architect of ACA: "established by the State" is ambiguous (UPDATE x4)

So, this morning's big Halbig-related development is that Reason.com has dug up a video of a presentation by MIT economist Jonathan Gruber from January 2012. Gruber was one of the main architects of the health insurance law in Massachusetts (RomneyCare) and the national version (the ACA, aka Obamacare). In his presentation, Gruber states:

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 hope that that's a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this. [emphasis added]

OK, yup, that is indeed what he said at the time.

However, in more recent interviews, Gruber has stated repeatedly that the intent of the law was not to leave out the states which had their exchange established by the Federal Government:

Update: Earlier this week, Gruber was on MNSBC to address the Halbig ruling. He was asked if the language limiting subsidies to state-run exchanges was a typo. His response: "It is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it`s a typo, that they had no intention of excluding the federal states."

So, as the classic political attack ad goes, "was Gruber lying then or is he lying now?" The answer: He wasn't necessarily lying either time. I have no idea at what point the "established by the State" wording was placed into the law; perhaps it was the very first draft, perhaps it was one of the couple dozen (?) versions which were presumably written up, edited, modified, tweaked with, farted around with and generally mangled along the laws' long, torturous route towards final passage.

His interpretation of the law at the time could easily have been, upon reading the final version which was actually signed into law, "Oh, shit...they [Congress] screwed up...hmmmm...or maybe not, sounds like they did that on purpose so they could pressure the states into setting up their own exchanges. Smart political play!"

Then, after thinking it through further, he could easily have thought "Hmmm...hold the phone, that would be kind of stupid since there's 50 states (plus DC)...the odds are that at least a few of them will get dumped on the Feds, and there's no telling who the people of those states will blame for their high premiums...maybe it was just a stupid wording mistake after all."

Whichever of these interpretations was "correct" isn't the point. The fact that either of those thought processes could be a reasonable interpretation, depending on who's doing the interpreting, is the point.

In all the fuss and bother, the arguments, the debates, the angry attacks which flared across the nation during the laws' development and legislative process throughout 2009-2010, I don't recall ever hearing a single person ever bring up the "subsidies for the state exchanges, but not the fed exchange" once...certainly, to my knowledge, no one in Congress (the ones who actually vote on the law) did, anyway.

If any members of Congress or their legal advisors did bring it up prior to the laws' passage, I'm sure there's some transcript or recording of it somewhere or another, and no doubt Reason and other ACA opponents are furiously combing through their archives to dig that up even as I type this. Perhaps they will, perhaps they won't; it doesn't really matter in the end. What matters is that whether the wording was sloppy or deliberate doesn't change the fact that it's ambiguously written, which means you have to look at the context in the other thousand-plus pages of the law to figure out what the intent was...and the name of the law itself is the "Patient Protection and Affordable Care Act". "Affordable" is right there in the name...and screwing over people in 2/3 of the country by making them pay 3-4x as much for their insurance as people in the other 1/3 of the country isn't exactly "Affordable".

In fact, I'll go you one further: The exact wording of the passage is "enrolled in through an Exchange established by the State". Setting aside the question of whether the "S" in "State" was meant to be capitalized or lower-case, and even setting aside the fact that "State" could be interpreted as referring to either one of the 50 individual "United States of America" or to the sovereign "State" of the Federal Government, I'll throw one more at you: What about the District of Columbia's exchange?? D.C. is not a "State" by most interpretations of the word; it doesn't have voting U.S. Representatives or Senators, it doesn't have it's own Constitution and so forth. Yet their ACA exchange isn't being challenged by the plaintiffs in the Halbig case. Why not?

Furthermore, what about Virginia, Massachusetts and Kentucky? Technically speaking, as someone in the comments pointed out the other day, all three of these are "Commonwealths", not "States". Yet, again, the Halbig plaintiffs aren't challenging these three. Is the DC Circuit Court and/or the Supreme Court of the United States going to rule that they don't count as "states"? Will they be stripped of their Senators and Representatives like the District of Columbia? Will we have to change the children's song to "47 Nifty United States (and 3 Commonwealths)"?*

Of course they won't. Which means that "established by the State" is, by definition, extremely ambiguous. I have no doubt that if you were to ask everyone who was a member of the House or Senate at the time who actually voted on the ACA in 2009 or 2010, every Republican (they all voted against it, with 1 exception) would now claim that "of course the law intended to strip subsidies from those states!" while every Democrat (most of them voted for it) would now claim that "of course the law meant for people in every state to receive subsidies if they qualified!"

If the sentence had read, for instance, "established by the individual States but not by the Federal Government" then that would be pretty clear. Likewise, if it had read "established by either the individual States or the Federal Government" then that would also be equally clear.

Since neither of these is the case, it's highly ambiguous, and the surrounding context becomes far more significant...and the surrounding context is pretty damned clear that the idea of the law is to make healthcare Affordable for people living in every state...as well as the District of Columbia.

*CLARIFICATION: As my very next sentence notes, I'M KIDDING HERE...which is exactly my point. (Also, yes, Pennsylvania is technically a "Commonwealth" as well, but they're on the Federal exchange at the moment, so it didn't seem relevant.)

UPDATE: There's a raging Twitter debate in which various ACA opponents are stating that yes, the exact definition of "State" is indeed included in the ACA and so forth. Commentor RN below gives the specifics:

The law does define what they mean by "State." Sec. 1304(d) defines a State as "In this title, the term ‘State’ means each of the 50 States and the District of Columbia." It's really the other sections that make it clear that the Federal Government will step in if states are unable or unwilling to set up an exchange.

Fair enough, although it's ironic that the same people who were screaming non-stop about the ACA being "a 2,000 page behemoth!!" bla bla bla are now seemingly arguing that it should have been even longer (no doubt if Congress had added even one more word to the law they would have complained about even more "excessive regulation" and so forth).

The point is that there's wiggle room here. Perhaps the SCOTUS will, ultimately, side with the plaintiffs and 5 million people across up to 36 states will be screwed...but it's the same ambiguous wording of "established by" which is why my "domain + a splashpage" workaround is now being taken seriously by Serious People®.

UPDATE x2: Jonathan Cohn at the New Republic has already asked Gruber himself what the deal was. Gruber's response:

I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake. People make mistakes. Congress made a mistake drafting the law and I made a mistake talking about it.

Read the full piece.

UPDATE x3: Nicholas Bagley chimes in on parsing the definition of the term "established by the State": His conclusion:

Can I be completely, absolutely confident about Congress’s meaning here? No. Without question, the statute is a bit of a mess. What do you expect? It’s a big statute, drafted by a lot of different people working under immense pressure.

But here’s the thing. Adler can’t be completely confident in his interpretation either. At a minimum, Congress’s inconsistent use of the phrase “established by the State” gives rise to an ambiguity as to its meaning. And when you’ve got an ambiguity, it’s up to the agencies charged with interpreting the ACA to resolve that ambiguity. The tie goes to the government.

I'll leave it at that for the moment.

UPDATE x4: Some have accused me of trying to "walk back" my "Commonwealths don't count!" bit, saying that I'm only claiming to be joking now because I got busted not realizing that there really was a statute defining what "the State" means in the law. Wrong. I fully and completely take responsibility for not knowing that at the time: I didn't bother looking it up partly because I was indeed too lazy to bother, but mainly because I using that as an example of how stupid this sort of thing can get. So, score one for ACA opponents: My sarcastic "gotcha!" did indeed turn out to only "gotch" myself.

However, as Bagley notes in another update, there's still tons of ambiguity at play here:

But if you think what Gruber said is some evidence about what the ACA means, you can’t ignore other, similar evidence. That’s cherry-picking. So go ask John McDonough, who was intimately involved in drafting the ACA and is as straight a shooter as there is: “There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state, regardless of exchange status.” Or ask Senator Max Baucus’s chief health adviser, Liz Fowler. She says the same thing. Or ask Doug Elmendorf, the current CBO Director: “To 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 CBO staff had with a wide range of Congressional staff when the legislation was being considered.” Or ask Peter Orszag, then-OMB Director: “[A]s someone who was there, [there is] zero chance this was the intent (as opposed to typo/poor drafting).”

In other words, my own sarcastic example may have fizzled, but there's plenty of other evidence from people far more knowledgable about such things than I am to make the larger point.

Having said that, in the future I'll try to do a better job of researching the answers to my hypothetical questions before presenting them, snarkily or not.