A Legal Analysis of post-King v. Burwell Options (which parallels some of my non-legal thoughts last July)

I've written a lot about the impending King v. Burwell Supreme Court decision, and some of my ideas have been batted around by Very Serious People® here and there. However, I'm not a lawyer, nor am I a Constitutional scholar or a Supreme Court scholar, so I'm not the right person to talk to about the actual legal/procedural side of things.

Fortunately, Nicholas Bagley (an assistant law professor at U of M) and David K. Jones (an assistant public health professor at Boston University) have written a lengthy, comprehensive legal analysis of just what the options would be for the federal government and/or the states in the event that the King v. Burwell plaintiffs win their case.

Be warned: It's a long read that gets deep into the weeds, but is well worth it to understand the seriousness of a potential plaintiff win.

There's one particular passage in it, however, which I want to call attention to on a personal level; it comes about 1/3 of the way in, and deals with the ability of the Obama administration to simply declare federally-facilitated exchanges to be state exchanges:

Could the administration deem some federally-facilitated exchanges to be state exchanges?

More controversially, the administration might attempt to deem the federally facilitated exchanges in some uncooperative states to be state-based exchanges. As it stands, a state exchange can only be established if HHS receives a declaration letter from the governor confirming the state’s election to establish an exchange.24 But the ACA does not define what it means for a state to “establish” an exchange. Instead, the ACA grants the Secretary of HHS the authority to “issue regulations setting standards . . . with respect to . . . the establishment and operation of Exchanges.”25 It further emphasizes that a “State . . . elect[ion]” to establish an exchange can be taken to occur “at such time and in such manner as the Secretary may prescribe.”26

This statement jumped out at me because, while my "Denny's Grand Slam" or "GoDaddy" solution itself received a decent amount of mulling over last summer/fall, a related point that I made in the same discussion last July doesn't seem to have received any follow-up from anyone...until now:

However, if the courts decide to look at the case on the "micro" level--parsing exact definitions of the word "State" (which seems to be the concensus as to how they're proceeding from the people I've talked to about it), then they'll also have to (or at least certainly should) also look equally closely at two other words: "Establish" and "Facilitate."

So, as I said, depending on how the court defines the terms "establish" (ie, to "establish" an insurance marketplace) and "facilitate" (as in, "facilitating" the purchase of insurance policies through the marketplace), it's conceivable that all it would take for any of the individual states to "establish" their own exchange would be to register a domain name at GoDaddy or wherever and set up a simple welcome/information portal site...which would then lead them to HC.gov for the actual purchase of the policy.

As petty and stupid as this may sound, it's no more petty and stupid than the plaintiff's case in the first place.

At the time, I was making my case for the "GoDaddy/Grand Slam" workaround (which Bagley thought might be viable initially but later dismissed as being completely unworkable), but Bagley/Jones are applying this to the next part of my post from last July. They go on to say:

Given these broad statutory delegations, HHS could revise its regulations and the Blueprint to provide that some states should be understood as having established an exchange, even if they never formally elected to do so. Consider, most notably, the fourteen states that conduct plan management functions for their federally facilitated exchanges. They include the seven “partnership” states (AR, DE, IL, IA, MI, NH, and WV) as well as seven others that did not apply for partnership status (ME, VA, OH, KS, NE, SD, and MT). These states already perform many of the core functions of an exchange. They are primarily responsible for certifying whether health plans meet federal standards for exchange participation; they monitor those health plans to assure their compliance with those standards; they oversee quality reporting requirements; and they collect data from the plans on their rates and benefits.27

This parallels fairly closely with my conversation in July with Jamey Harvey, the project team leader for the DC Health Link:

Jamey Harvey: The SBE sends unique identifier for the person, right upfront, and the IRS sends back estimated APTC based on previous year.

Charles Gaba: Thanks! So, again who "established" and "facilitates" the state markets? Even if the # since then is small it'd help me w/off-season projections

Jamey Harvey: Answer is different depending on whether state is SBE, Partnership, or FFM state. (or SBEs newly in "receivership"?)

Charles Gaba: (shrug) my "domain/repoint" was semi tongue-in-cheek but could conceivably be legit. interesting possibility...

Jamey Harvey: Well, I'm no lawyer, but I think its pretty wide open for interpretation. I like the idea, for states that are interested in cooperating. More problematic will be the red states that want to defect. To establish an SBE, states had to make a business case to CMS. Successful business cases resulted in "establishment grants". So, at a typical SBE the feds funded the establishment and the states executed the business plan submitted. Partnerships (8 in 2013) tried to get grants and but didn't get full funding or got stuck. Each does some SBE functions.

Charles Gaba: So in theory, if I was one of the 36 states w/out an SBE, I could "submit" a biz plan that simply said “I'll need just $10 for a domain, a hundred bucks to host a small website portal, & I'll redirect to HCgov after that"? For example, seems to me that @CoveredIllinois would meet the definition of "establishing" and "facilitating" a market, even if all the heavy lifting after that is done on the @HealthCareGov side.

Jamey Harvey: Partnerships include DE (too small) and IL (failed to pass R legislature). Safe imho, even usinghttp://healthcare.gov

Charles Gaba: So you're saying that my "$10 domain/splashpage" scenario could theoretically be a workaround for Halbig if it came to that?

Jamey Harvey: Partnership states, (IL included) having taken fed estab money & submitted business plans, imho should be in the clear,

Charles Gaba: Fascinating. How about other states going forward; i.e., say Michigan chose to do so this summer (or after SCOTUS ruled)?

Jamey Harvey: Leaves us with the FFM states... the ones that got establishment grants but then failed to launch... should be safe, right?

Charles Gaba: According to the last CMS report, that's 18 states? AZ, NJ, ND, AK, AL, FL, GA, IN, LA, MO, NC, OK, PA, SC, TN, TX, WI and WY

.Jamey Harvey: Many Federally Faciliated Marketplace (FFM) willfully tried NOT to implement ACA. Splashpage could only help the willing.

Charles Gaba: Oh sure, I know, but a few might change R to D in Nov & presume SCOTUS wouldn't rule until next year anyway. Just not sure if they'd already have to be in place or if they could do so after ruling (or between now and ruling); i.e., would SCOTUS rule be retroactive or only going forward (2016+)

Jamey Harvey: Sorry, I missed something. What are the 18 states? The ones that took money and then didn't launch?

Charles Gaba: Not sure; those 18 are listed as "FFM" on CMS report. Others are SBM, Partnership, Supported SBM, SB-SHOP or "Plan Mgmt"...there are only 18 actually listed as "FFM" specifically (pg. 13-16)

Bagley/Jones bring this back to my original point from last summer: The definition of "establish" and "facilitate" seem to be just as important here as the phrase "...by the state":

Could the regular performance of essential and substantial exchange functions, over time, constitute the establishment of an exchange? As relevant here, the term “establish” means “[t]o make or form; to bring about or into existence.”28 Arguably, that act of creation need not be intentional or formal. In common usage, a consistent practice can be said to constitute the establishment of whatever that practice entails. “Establish” simply connotes making something “stable or firm.”29 Just as habits, routes, and norms can be established over time through a regular course of conduct, so too might states establish exchanges.

I had addressed this exact same point in my prior entry a few weeks earlier by bringing up an actual example from my life:

The words "establish" and "facilitate" can be very slippery. When a movie wins Best Picture, the Oscar goes to whoever happens to be legally listed as the Producer of the film, not the director (unless it's the same person), even if the "Producer" didn't actually do a damned thing.

I have a client who had me develop a whole new version of their website, along with the hosting. However, the domain name is still legally registered to their former business partner, preventing the new site from going online. The client is trying to sort it out now to acquire control over the domain, but this raises the question: Who "established" the old website? Who "established" the new one? Who is "facilitating" either one?

Is it the former business partner? They registered the domain name and set up the old hosting which is necessary to "facilitate" visiting the site.

Is it the current owner/client? They hired me to develop the new site and hosting.

Is it ME? I'm the one doing the actual work and setting up the new hosting account, therefore "facilitating" the ability of people to visit the site...including the client.

A tiny example, but you get my point.

As a reminder, other people have come up with potential workarounds as well, including the "State Exchange Two-Step" and the "Proxy State Ringer" solution which could be worth exploring.

In any event, read the whole Bagley/Jones piece for the full picture.