The below quoted language is Oklahoma's Attorney General, Scott Pruitt, writing in the Wall Street Journal in response to comments made by Justice Kennedy during Wednesday's Supreme Court case, King v. Burwell. The case hinges on wording in the 2010 Affordable Care Act stipulating that premium tax credits—i.e., subsidies for states like Oklahoma and 35 other states—are available for people who enroll in ObamaCare “through an exchange established by the State.”
This leaves us with the question: does "through an exchange established by the State" mean through an exchange established solely by the state or either by the state or federal government?
This is from Attorney General Pruitt:
... [In oral argument yesterday,] Justice Kennedy was asking, if Congress did in fact condition ObamaCare’s tax credits on a state having set up an exchange, does that amount to an unconstitutional coercion of the states? In short: no.
First, in the last ObamaCare case, NFIB v. Sebelius (2012), the Supreme Court said a statute is coercive only if it amounts to “a gun to the head” that “leaves the States with no real option but to acquiesce.” Here, we know that states had an option not to acquiesce in establishing health-care exchanges because they did not, as a matter of fact, acquiesce. Compare and contrast this with the Medicaid expansion at issue in NFIB v. Sebelius, where no state had refused the expansion, precisely because it was so coercive.
There is no merit to the argument that the states were unaware of the consequences of refusing to establish an exchange. Oklahoma, for example, where I am attorney general, sued the Internal Revenue Service months before making its decision to decline to set up an exchange, arguing that the ObamaCare tax credits and subsidies could not be given in Oklahoma. Oklahoma knew the consequences of its decision but was not coerced into cooperating with implementation of the Affordable Care Act.
Likewise, in January 2012, seven states, including Virginia, Maine and North Dakota, asked the federal government for “a written legal opinion from the Office of the Attorney General or a declaration from a federal court certifying that the federal government is authorized to establish an exchange under federal law, and detailing the authority of the federal government in all operational aspects of the exchange, including, but not limited to the authority to administer premium tax credits.” Those seven states were aware of the possibility that the IRS might have no authority to grant tax credits in states that declined to establish an exchange. ...
Second, there is no legal precedent for a finding of coercion based solely on the fact that a federal program does not work well when the states decline to assist in its implementation. This sort of “well, Congress did such a bad job that states have no choice but to step in and bail Congress out by acquiescing” argument is, as U.S. Solicitor General Donald Verrilli put it Wednesday, “novel.” That is precisely why the federal government never made this argument in any brief, and why Mr. Verrilli was quick to distance himself from it at oral argument.
Third, this sort of federal program isn’t antithetical to federalism, it is federalism. As we explained in our amicus brief to the court, this carrot-and-stick approach is found in dozens of federal programs sprinkled throughout the United States Code. The states are not children that the federal government must paternalistically “protect” from the consequences of their choices by rewriting statutes. In our constitutional system, states are free to make decisions and bear the political consequences, good or bad, of those choices.
Declining to establish a state exchange allowed Oklahoma to voice its strong political opposition to the Affordable Care Act as a whole, as well as to make a statement that it wanted neither the large-employer mandate nor the individual mandate to have effect within its borders. That was the trade-off. Oklahoma declined the premium tax credits, but freed itself of those mandates, and that was a choice the state was happy to make.
So to Justice Kennedy I say this: King v. Burwell isn’t about protecting the states from their choices, it is about allowing coequal sovereigns to make their choice and bear the consequences of that choice. ...
