>> thank you for hosting this. the lead-in took away some of what i was going to point out. let me incorporate things as part of my own lead-in. i am almost sorry that you mentioned by ten years in the federal government with the senator and vice president dan quayle. the federal government is not a well loved institution and the congress even worse. so i don't know. i guess it was kind of a dean i. it wasn't your attorney general. but i think i have resolved my checkered past by suing the federal government a number of times and that is very popular in the state of indiana.

when i come to washington i have to explain a little bit about the states. what you have read in the books and what people think about the states in washington often is not exactly true. so first of all it's true all states are sulfur and yet, all states are not alike. since we are sovereign we have our own ability to create our sovereign government in the way that we choose. indiana is one of six states that has chosen what is a little bit more conservative path from our history and we've created the office of the attorney general as a statutory office. the other states are all constitutional officeholders but i serve as the indiana indiana attorney general under the statutory authority and that the distinction is one that i think merits some attention because if

you are a constitutional officer you have some of the patriarchs which would allow you to do things based on the need of the population you serve. if you are a statutory office are coming you represent the state government. so defending the sovereign state we don't have the same expansive role to be able to represent the people as individuals, so i think it's a distinction that plays out in this area. a little more history in the lead up to the passage of the affordable care act our senator richard lugar recognized that under the statute of the attorney general by office was having to do research so this

dates back to the days when the senators represented the state legislators under the senate before the 17th amendment. so does senator see in the coming of the affordable care act asked my office to do a report and months later we created a 55 page report that told by senator but there were some substantial constitutional issues being raised. it's unlikely everybody assumed that it would be changed when it went through the house and back to the senate. so i said that if it passed its current state i would feel compelled to challenge the constitutionality. so i already anticipated what would happen but i didn't realize that they were passed in

the same form. what it did pass there were a number i think 13 attorneys general that filed maybe minutes after the signature. indiana wasn't one of those. the original and since again i don't represent individuals in that same capacity my office made like standing to bring a claim based on the individual rights of the citizens as opposed to the authority of the state. so in the first amendment first amendment complaint was filed, we added the complaint dealing with the expansion of medicaid under what we felt was a coercive mandate from the federal government to the sovereign state.

so we joined in the lawsuit on the relationship between the federal government being coerced to expand the medicaid programs to lose what was correctly in the previous deal with the federal government. so i think that as you look through the courts decision of chief justice roberts i will throw a shout out to the supreme court justice they were made somewhere in the decision decision to put limits on the commerce clause i think many states were glad to see that they finally reached the cabin in functions to the commerce clause and a second they did

strike down the mandatory expansion of the decayed and again i think that it was his word that a gun to the head is the type of conversion that isn't allowed in the constitution. finally, in saving the constitutionality of the case in the affordable care act it was implemented in which they had authority to have a tax penalty. so when you look through the history since the passage and the supreme court's decision, all of the states have now made their choice whether to create an exchange. i think there are 16 now that have their own exchange. there's eight that have come up with a hybrid between a state and several exchange and the remaining 26 states including indiana have only a federal exchange.

now that was the decision of the sovereign case based on our authority it's not mandated by the federal sovereign but it was something that each states chose. it's not the way that it was written because if you look at the first few paragraphs it says this is an act of the commerce clause authority. that's what we defended against. that is what we challenged. i will admit we were all a little bit surprised about the saving under the tax penalty that the real issue if you think about it from the perspective of indiana and one of six states, it is a question of whether the federal government now has authority to regulate the state sovereigns under the taxing

authority. we know that the federal government can regulate states as employers under the commerce clause authority which again the first two paragraphs make it pretty clear that congress thought they were exercising that authority. so you have the supreme court precedent that says since the state's higher employees out of the stream of commerce they are subject to federal regulation under the fair standards act so that commerce clause authority goes back to the national league of cities where the states actually won the under the 5-for both saying that we were not subject to federal regulation under the commerce clause. then garcia over turn that against 5-for saying that the federal government can require states as employers to be subject to those fair labor

standards act as and terms and conditions of employment. i am still not happy about garcia and i would like another shot because 5-for is not a permanent rule that the federal government can regulate my state and all sovereign states under the commerce clause authority but again it's the current rule even without liking it but the question remains with the chief justice roberts says that this is not an exercise of commerce clause authority, it is a tax penalty. so now the question under the rule of law is whether the federal government has the liberty through the irs to regulate my sovereign state under attack. what has been taught in law schools all around the schools

is that as they are not subject to federal taxation we don't have a tax form that we fill out so i point that out to demonstrate that under our challenge it's not so much just to explain from the constitutional officers positioned to focus on challenging the act. it's a somewhat draconian tax penalty and the masses that you count math is that you count of how many employees you have

computed the state of indiana has 28,000 employees and you multiply $2,000 times your workforce and that is your tax penalty even if you were just too miss a few employees being covered under the affordable care act. as of again this is that threatening coercion that doesn't fit in the relationship between the sovereigns. the school corporations that joined was talking to a few people in the hall they usually aren't standing next to me during my election process. it's a part of our sovereign government that has been structured we have a school board that he liked the people and use part-time workers so

it's bus drivers, teachers aide, the people that work in the cafeteria under indiana's law, 30 hours or 37 and a half, anything less than that is part-time. a lot of our schools are run by part-time employees under our statute. we have a whole process of moving people down to 30 hours or less. the nature of this draconian tax penalty when they came to me with their complaints i said that i would be perfectly willing to defend if they were sued under a tax penalty as i am willing to defend my state but as i thought about it that

wasn't enough to wait to be penalized but to challenge in advance so i think the idea of the declaratory action as it would raise this to the courts so that before we restructure the sovereign governments and employment structure to comply with the federal dictate and the federalism and the sovereignty i thought it was better to challenge in advance and again it's not a challenge over all of obamacare as it has been kind of labeled but it really reflects the fact that whether the federal government can require a sovereign state as an employee or under the taxing authority to be subject to the same as if it were under the commerce clause so the $56 million right is a

tax penalty that i didn't want to wait to defend. we are now at the point that we've had our oral argument but at stake is the intergovernmental tax immunity that we have lived with as part of our federalist society. i've joked among our legislators we could have a 100% reciprocal tax. if we are going to break the

deal between the sovereigns of the governmental tax immunity that the federal government has a tax penalty authority does that mean that the states as sovereign as themselves might have some right over our federal players. the issue is that we raise for people's consideration and i know there's a number of people from the academy if you contend that states are taxable entities and can be taxed as an employers is not about health care or obamacare but it's the question

of federalism and what is left of federalism if they have the ability to regulate the states into the taxing authority. so with that question i will conclude by saying it is the obligation of states to check the federal government. i often complain that we haven't done enough and we often accept the federal funds in the century we have sold part of our sovereignty and we complain about the strings but we have entered into a deal with a sovereign subject of rules and regulations. i do think that it's time that states do more in the role of checks and balances that are our constitutional authors thought we could play and we no longer have the ambassadors of the

states in the world's greatest deliberative body but i do think that without a senate that will check the federal government on behalf of states it's going to be left to the attorneys general in that state governments to do more in terms of being sovereign and challenging the acts of our friends when they get out of line. with that i don't conclude. >> are there people with questions? right there please wait for a microphone to get to you so that everybody can hear and please give your name and affiliation. >> competitive enterprise institute. with regards to the video it was discovered a few days after the

rulings were handled it down and by the way i don't know if richard is here in the audience. he ought to be thanked for having been the first to find and post it on the web and for the well-deserved notoriety but my question is if you look at the oklahoma ruling that has a very interesting discussion of the video and i wondered to what extent if any it played a role in the more recent briefing or hearing in your case. >> it was an unusual argument in the district court. the judge asked for it because he did have questions he thought would help so we are still at the district court level and district court level and we are not the briefing and arguing in front of the court of appeals so it was limited in his questions

and i think that it really didn't explore anything like i saw come out of the oklahoma case that went to the court of appeals. in that case we are exactly on time. let me simply ask the panelists to come up here.

>> [inaudible conversations]

good morning. my name is bob barnes. [inaudible] my job will be to give them a science they've gone too long and move things along to help with your questions when you have some and also if i find that the panelists are agreeing too much. memorial professor of law come a director for the center of business law center of business law and regulation of the case western reserve university

school of law. the supreme court economic review of "the wall street journal" and usa today specified before congress congress about ten times as the work has been cited in the u.s. supreme court. he's contributing editor to the national review online and a regular contributor to the popular legal blog the conspiracy which is hosted at the "washington post".com. he is the co-author of the taxation without representation the illegal tax credits under the ppa ca which appeared in the journal health matrix and is credited with being responsible to the callback litigation. they worked for the honorable david in the u.s. court of appeals in the dc circuit and

from jail and george mason university school of law professor david is the lecture at the university of washington school of law and teaches that legal analysis, statutory interpretation, persuasive writing and brief writing. he was a kansas caller, executive manager of the columbia law review and after law school he clerked for gerard lynch for the southern district of new york and the chief judge dennis jacobs for the second circuit before entering academia he practiced the civil vacation in seattle white-collar criminal

defense and civil litigation in new york. i hope i said this right. i'm trying so hard is the constitutional accountability center of public counsel. he joins from private practice which was the counsel in the supreme court and appellate practice. prior to joining, she was an attorney advisor in the office of legal counsel at the justice department. she also served as a clerk for justice stephen breyer. her academic writings appeared in the journal, the duke journal, when northwestern law review, the washington review, the american university review and yale law and policy review and is one of the drafters of the amicus brief filed on behalf of the members of congress and the state legislatures. she received her jd from yale law school and from every

adversity. last but not least, the professor is the university professor of constitutional law and policy at vanderbilt university and also the director of the health policy center at vanderbilt. she was an m.a. from yale and a degree from yale. the elected member of the institute of medicine at the national academy of sciences served as a member of a committee on the adequacy of the nurse staffing at hospitals and nursing homes in december of the advisory panel and a study of defensive medicine and use of medical technologies. the tennessee dedicated program. he also litigated constitutional issues in state and federal court in coding brentwood academy and the tennessee secondary school athletic association.

i was particularly grateful for that lawsuit because it allows me to write about high school football and cover the supreme court at the same time. he wrote about the expanded medicaid component of the affordable care act the supreme court's testified about the issue whether the subsidies under the aca could accrue to the income of the persons who purchased the clincher in on that early one exchanges. as you've heard one of the cases, the appeal in the fourth circuit is currently at the supreme court. at least it was. i didn't check this morning but we expect it to be on the private conference west the court takes up tomorrow. we don't find out right away what the court will do about

this. there's been a pattern as you know note that the court decides to take the case. there's a way there is a way to announce that supposedly to look to see if there are any flaws they didn't see the first time or the court of course could decide not to take the appeal or simply hold onto it for a while. so while there is some action plan for tomorrow is unlikely that we will find out right away what the court decided. >> thank you very much. vanderbilt law school. and i'm divided to be here. i want to give a shout out to

michael cannon in a john who are the stars of the issues that we will be talking about. whose work has been crystallized and michael and jonathan have pursued not just within intellectual and academic background but with a real sense of mission. tom miller who will be on the second panel is also extremely important and working on this issue and i wish the competitive enterprise institute as well. this case in the issue was pooh-poohed in the beginning and as we stated in the introduction, the case is now, or at least one of the cases in virginia is now pending before the supreme court would decide whether to take up the case or if the case would be reviewed

and it's all. it reminds me of a story that i like to tell about the danger of jumping to conclusions and being too sure and taking measures that are not programmed and it is a story of a man that calls home, the woman answers the phone and doesn't recognize and she says who is this and he says i'm with the new cleaning service. would you please put my wife on the phone and she says i'm sorry that he's unavailable. why is she unavailable and he says really how would you like to earn some money and he said how much? a lot of money $10,000. what do i have to do and he said i want you to take the gun that on the table, go upstairs and shoot my wife and the man she's with. she she's a $10,000, you have a deal. so here's the drawer opening, walking up the steps come he

hears her open the door and the shot rings out, too shocked, she comes back down and says i shot your wife into the man she's with where do you want me to dispose the body. he said i want you to drag them in the patio and she said the patio, and he said i want you to dump them in the pool. she said i'm sorry there is no pool here. he's ..

because the mandate that is triggered by the law is triggered when one employee receives a federal subsidy so if there's no subsidy that's available than the mandate the employer mandate does not kick in. the affordable care act, and there has been a lot of sophisticated discussion and really excessively in my view complicated discussion but the basic point is this, the affordable care act makes provision for two types of exchanges where persons can purchase medical care and medical insurance. section 1311 of the statute says

that stage show and it uses the mandatory language, establish the exchange under principle principle coffee anti-commandeering principle. so when this was drafted somebody who had basic constitutional law one looked over this and decided that this is not a workable solution. but, typical of this very large law folks did not go back and change the language in section 1311 so you have language that clearly contemplates that states should be the source of exchanges but realizes that constitutionally cannot be done that way. because of the anti-commandeering principle. then you have section 1321 that talks about if states don't elect, while there's nothing in 1311 that talks about states electing. clearly the idea was for the states to do this but sectio

section 1321 is a fallback provision with what i call that provision. 1311 cannot mandate that states set up an exchange. 1321 provides the federal government shall set set up an set up and exchanged it for state alex not to set up such an exchange. this is by any stretch sloppy drafting because one would think that if you have a provision that allows for the election of states not to set up an exchange the language shell and 1311 would have been changed but that's not the case. so the shell language of 1311 as a constitutional matter could not be enforced and 1321 does the right thing and says that the states do not set up an exchange in the federal government and the use of the word shall, shall set up such an exchange. section 1401 of the affordable care act provides for subsidies for income qualified persons in the range of 100 to 400% of

poverty. the 100 to 400% of poverty means that if you have under 100% of poverty income you do not qualify for a subsidy. many states have not expanded medicaid as a result of the nfib decision being one of them and as a result there are folks who have incomes under 100% of poverty who do not qualify for medicaid. they don't get any subsidies. they don't qualify for subsidy. so, one of the requirements for a subsidy under section 1401 there are basically two. exchange must be established by a state and secondly it must be established by estate under its authority under section 1311. both elements by estate and on behalf of the state under

section 1311 are expressly enumerated in limiting terms in section 1401. there is no comparable subsidy provided for those enrolled in an exchange established by the federal government under section 1321. so at the end of the day that really is all i should need to say. i can sit down and really end the discussion but that's not the end of the case. the irs as was stated earlier but federally run in state-run exchanges even though there is no express statutory authorization for that and quite the opposite. so what is the plaintiffs claim in these cases, the core claim? subsidies are provided for state-run exchanges under section 1311 and not for federally run exchanges under

section 1321. and there are several rationales for jonathan adler and michael cannon have put forth important work, thorough scholarly work that the limitation of the subsidies was in fact purposef purposeful. when the federal government realized it could not mandate that the states establish an exchange the policy goal was still to have the states run exchanges but since coercion was not possible bribery is and therefore the subsidies would decide to encourage the states to set up the exchanges for the gatekeepers and that the legislative history supported this. this was an inducement on the part of the federal government to encourage the states to set up an exchange. you can't enforce them but you can incentivize them. he would be a good place for the gruber clip. michael cannon has been promoting this.

we are going to play the longer click here. can you run the gruber clip four s.? >> the states don't provide the federal backstop for the federal government is slow in putting out facts partly because they want to squeeze the states to do it. i think what's important to remember politically about this is if you are a state and you don't have an exchange that means citizens don't get a tax credit. i hope that's a blatant political rally we bet they are our billions of dollars at stake here but once again the politics can get around it. >> gruber was one of the architects of the structure and plan and the economic model was simple and shall in driving this but we don't need jonathan gruber to read the statute. any person could read the statute. the idea was section 1311 states you run exchanges and indicated the federal government cannot

force the states to do it and so the incentive structure was put in place to encourage it and strongly incentivize the states but the state still serve as gatekeepers. now another and this is my view in this, is the fourth circuit said the language says what it says. it is what it is for many important philosophical principles. the affordable care and provide subsidies for one exchange in a says nothing about a subsidy for another exchange. what the congress did is the k key. we don't psychoanalyze the congress. it's what it did. there's a case called railroad retirement board against threats which justice rehnquist famously says we look at the statute and we determine what the statute did. we don't go to the background to look at the purpose. in broader terms and ethereal terms we look at what it actually did. in this case what congress did

is not what it is intended as the critical part in judge griffith in the d.c. circuit picked up on this and basically said if there's a gap in the statute then it's really for congress to use separate powers issue. i'm going to come back and make closing comments about that point. so what was their rationale? this is their rationale that developed with what describes colleagues in the constitution about -- accountability center my old friend cy lazarus and that is section 1321 allows for the federal government to stand in the shoes of the state government and if they stand in the shoes meaning under section 1321 the federal government can set up such an exchange as contemplated by section 13.

excuse me, 1311 but this is somewhat problematic because there is an express provision for subsidy for state-run exchanges and no such comparable provision exclusively for federal exchanges under 1321. it appoints language of an established private stay with the concept of established on behalf of the state. those are not the same things from a textual point of view and also from the point of view of who gets to decide. the state governments are incentivized and the federal government is now standing in the shoes but it's very different read it means that the federal government has authority to set up an exchange. it says nothing about the subsidy itself. i find this to be an awful lot of analytical weight on a very small term. in the courts have looked at the broader intent. this is what i call the earlier the psychoanalysis to subsidize. this is problematic also. it is sure to bet the language

in the affordable care act, there's a goal of establishing moving towards universal coverage but intent is not in this abstract notion is not very satisfying. it proves too much and here's the example. clearly congress wanted to cover and expand medicaid and in fact acted to core states to expand medicaid by tracking them with the loss of medicaid, they did expand medicaid. in the nfip case the supreme court 7-2 found that was coercive and i'm enforceable. now we have situations where w we -- half the states are not expanding medicaid and yet the subsidy structure is such that only folks with incomes in the 100 to 40% of poverty ranged qualify for subsidies. in states like tennessee where there's no expansion of medicaid you have folks who are too poor for the subsidy.

this is a totally irrational situation. if you're in the 100 to 400% of poverty rate you qualify but if you are not unmedicated new fall under one of% of poverty there's no federal subsidy for you. we are going to look at abstract intend why can't the iris issue a rule that says if you are not a medicaid you have incomes under 100% of poverty you qualify for subsidy on the exchange. certainly if you look at the broad intent that the congress would have wanted because they thought everyone would fall under medicaid. under the nfib case that's not the case. states are the gatekeepers of the expansion of medicaid congress, the iris come in and say well congress really wanted to cover as many people as possible in the language in the law says 100 to 40% of poverty but never contemplated that states would refuse to expand medicaid and never contemplated the nfib case and therefore we have administrative agency's regulatory body can infect expand those subsidies.

no one has even thought that would be possible and yet under the principle of looking at the overall intent that is where we go. why would that not be valid under the circumstances even the language of the statute limits the subsidy from 100 to 400% of poverty. so this is problematic. further there's no provision in the statute that suggests that the iris as a specific gap filling role. in order for there to be a gap filling role it's not enough to look at the overall context of the statue. you have to look at the particular issues the supreme court said with a particular context and the particular concept -- context contact initiatives nothing suggest that congress contemplated it gap filling role for the irs under the circumstances. so then the question is what if in fact adler and canon are not right that this was not an intentional strategy but in fact was in uggs provision in

something that congress had sloppy drafting about. i would argue even under those circumstances which is the best-case scenario for the government that is not the role of the government to fill in the gap of this type with a sloppy draft. sloppy drafting should be geared by congress not by the agency and not by the executive branch. this is what legislatures do. and certainly the supreme court has said this a number of times that of the statute doesn't play out exactly the way some of its proponents would have liked it to play out than the right way to do this is to go back to congress and get a change or a fix. so what are the effects? let me just conclude by talking about the effects. if the plaintiffs prevailed in the battle of the state the number 5 million as has been suggested that there will be a battle in the states. there will be a lot of pressure on states like tennessee and others that have not established

an exchange to establish the state so that's not a static situation. there will be tremendous pressure to do that and the issue will be business climate on one hand versus subsidies for poor folks. then in terms of broad issues i mentioned the separation of powers and that is what this is really about, who gets to decide what about the fact the republicans have control of the house? we will have a stronger president position in the senate and made them control the senate. this is a stronger reason not to allow the agency to intervene. the politics of not help on the affordable care act. the democrats and the other contents exceed those in the senate. a wide majority in the house. the people voted and there were narrower margins in the senate and the dems lost control of the house. the new deal was institutionalized. people don't remember this, when they were successful challenges brought in president roosevelt's

first term but he had a landslide in 1936 and was able to implement, have a second term enough for a lot of the deal was ultimately institutionalized. the political process has moved in a different direction and the courts should in this case construe the law and enter into a dialogue and basically require the advocates of the affordable care to negotiate and require the republicans to negotiate with the democrats because of the plaintiffs when it would be politically unsustainable position. on this third question mark to be decided tomorrow i think there's no purpose in waiting. i will talk about this if we have questions. i will conclude about that. >> professor adler we will let others talk about why you may be wrong so you tell us why you are right. >> i think i have some slides. there we go. it's a pleasure to be back here. i want to start off by telling

you a little bit about how i got involved in the issue. back in early 2011 i presented a paper on health care policy at the university of kansas looking at federal and state interaction of the affordable care act. i did quite a bit looking at the way the federal government and state government interacted and other regulatory programs such as in the environmental context where the federal government tried various tools whether additional funding, whether it's conditional branch in our conditional tax treatment to induce state cooperation. preparation for this conference i did what one would think you would do. i sat down and read the statute of one of the reasons i mention that it's because of some of you may recall in late 2009 early 2000 there were actually quite a few folks who said when it came to legislation and evil when it came to the specific law that people including members of

congress should read the statu statute. the times actually had an item entitled don't read the bill and the fact that we are here at think is perhaps a consequence of the fact that sometimes people didn't read the bill. i read the bill and the paper stated that the statute is plainly written where talking authorized by congress or the iris only has the authority to recognize tax credit as congress authorized it to do so are authorized for exchanges established by state under section 1311. in a room filled with health care law expert state officials including the state insurance commission federal health no one thought this was controversial in february 2011. the irs has yet to promulgate a rule rule or suggestible, get a rule authorizing changes and

moreover no one really thought that states are going to refuse the settlement. the assumption was that states would fall in line much like the assumption was that states would fall in line with medicaid and no one ever contemplated that something like this could be litigated. it was only after the irs promulgated a rule after folks challenged the authority issue of the rule and the prospect of litigation that people try to come up with arguments about why a statute can work. in fact the iris is promulgating its rule offer no meaningful justification. no citation of statutory authority, it gave just a very general paragraph which in future years will probably be wiped in most cases the court in the d.c. circuit routinely rejects as an insufficient

statement or explanation of the statutory interpretation and rule and explanation that would have been rejected in any other case but one of the significance. jim has very talked about the language video section 1311 talking about state shall establish exchanges. section 13. saying if the state fails to take other steps to implement a lot that hhs shall establish and operate. why is that important? congress congress of the difference between establishing and creating an authorizing and initiating and creating this and that they -- entity and running it. throughout the statutory establishes to identify who's entity it is creating something or under whose authority is created. section 1401 authorizes tax credits and exchanges established by states, language used repeatedly in section 1401, language that was added to

section 1401 at different times during the drafting. we really should be able to stop the language. to express language in section 1401 there is an additional case of an across reference cross-reference is one in the definition of the premium assistance amount of the average a lot of coverage. in the coverage month precision that was added late in the drafting process. the reference established by the state in a premium on this language after comes out of a sentence finance committee but later on in the process the senate leadership including that of senator majority leader harry reid are sitting around the table fine-tuning adjustments and going through it line by line. they add established by the state again in section 1401. it's merely referencing exchange the same as saying the changes

by the state they would have been no reason for them to do this. if they were the same there would be no reason to do this. if the 1311 exchange is by definition a change established by the state there would be no reason for them to do this yet they did it and let the government and irs's roma failed to come up with is an explanation of why this would happen and why it would be there. the best acclamation has been its convenient shorthand that's longer and would require members to add additional language that multiple times in the drafting process. that's just not credible. it's not taking language seriously. it's not taking the fact that every place in the every place in the stat you were established by used to modify exchange involves a provision in which the statute is serving to induce

a cooperation or coordinated federal action. established by the state is not used anywhere else in the statute except in the provisions that are serving that purpose. in terms of, and this is the question why would congress ever think to do something like this? the condition falls on state cooperation that they did that on medicaid. now they offered a lot of inducement on medicaid but because congress can't come here everyone knew that congress could make a really good offer that but it had to be an offer. the state refused to accept the medicaid expansion is the statute was written was leave the ports are most vulnerable people in that state without any help under the medicaid program. that's the way the statute was written, conditioning a whole lot of the goals on states willingness to go along. they would do that with medicaid so why would they do it here?

after all congress has done this before. congress has routinely said tax credits or other benefits are conditioned the same including state cooperation including state enactment of measures or regulations that apply federal requirement. the origin of the aca in 2002 with a health care tax credit that was authored and put in place in that year. statutes identified in the chairman's mark of the aca and the statutory precursor language that would be modified and built on enacting the statute. the structure of using coverage as a basis for eligibility was in fact found in that prior statutory language again drafted by the same committee. experts propose doing it here people that knew a lot about health care. one example professor tim jones

won the most prominent health law professors in the country was invited to the white house and the statute was signed. he authored a paper in 2009 saying hey that we are going to do a state exchange model, a lot of people in want in the senate felt we had to. we could encourage states to cooperate and one of the things we can do is weaken offer insurance on that states that comply with the federal requirements. you and congress have done this before and you can do it here and the other thing we can do with offer to establish exchanges which statutes also did providing funding for states to help them set up exchanges for their own incidentally providing bureau funding for the federal government in the constitution.

bills were part of the debate over this condition credits and subsidies benefits on state cooperation. one of the other proposals in the senate condition on state cooperation on states taking regulatory action that the senate desired which was part of the debate not only among commentators it was a mechanism a tool that was discussed and proposed in the senate in of bills as well. it was a way to avoid federal takeover. one of the reasons the senate unlike the house wanted to go with a state model was because there were some members of the senate, some democrats in the senate that were very afraid of going home and having to defend a pill that could be characterized as a federal law so a bill that said states are going to great changes and make

sure states will do it was the way to fund that charge and for example the senate democratic policy that came in late 2009 said there's no government takeover because all the health insurance stages are run by states. they claim that cannot be made based on the command because i know such a command is not constitutional. a claim that can only be made if we believe the statute provided incentives for the state that would induce state cooperation. as we know from all sorts of cooperative federal programs that be don't give states incentives they don't cooperate. under the clean air act they cooperate. why? because the federal government takes away -- and the states refused to cooperate with the clean air act like they have here -- because the epa can do by. other under environmental acts where there are no real

incentives to states in the program. congress is well aware that though they want states to poverty can't just say you have to change. it has to provide it. and they assume states will cooperate not only by sent by summit democrats but by all kinds of books. the present by 2014 each staple set up a health insurance calling exchange. secretary sebelius actually said that states would be eager to create exchanges and before the 2010 elections that might have been a false argument but as we know the united states in 2010 a lot of state legislators opposed cooperating with the statute were elected throughout the country. the assumption was it was the universal assumption, and assumption reflected in all sorts of claims about the bill

and also to way the bill was drafted. jim mentioned a portion of other aspects of the tax credit the fact shows up at the bill there was an assumption that states will cooperate. the idea that states would just say no, was that a mistake? was it the sort of mistake that could be fixed? of course not. related to this is there is a dog that didn't bark. because what you cannot find and i agree with jim but what you cannot find any point in the debate and michael cannon and i were writing this article. i think he had a research assistant spend days going through every reference to the word exchange. going through every reference to

the word exchange in the congressional record. we were curious what we would find them there was not a single place where anyone said that the senate bill would provide for tax credit in federal exchanges. their statements that tax credits would be available in all 50 states but that's entirely consistent with the assumption voice repeatedly that was reflected in the statute that everyone would cooperate. but not once did anyone say contrary to statute tax credit will be available. no one said that. there are commentators who sai said -- i wasn't really paying attention to the provisions. maybe that's why wasn't aware of this. no one said something so simple and in fact i was quite surprised.

no one has come up with the congressional statement saying something contrary to the statute. the last reason -- how am i doing on time? the last thing to remember was this was a negotiating draft. the plan was that we would have a senate bill, we would have a house bill and adopted very different approaches. a senate bill said state exchanges will have a federal fallback. house bill federal exchange. news reports that the white house approved a house bill and that was where the final bill was going to go in there would be a house-senate conference that we usually happen that would be the law that would be enacted. a senate bill was the negotiating position. the state exchange oriented rather than federal exchange negotiating draft. the problem is then there was

this. scott brown is elected in massachusetts. there were no longer 60 votes in the senate and no longer enough votes for a house-senate conference bill. the choice of that point became a bill that a lot of people didn't like. the president said there were lots of things he didn't like and 51 health policy experts saying there were a lot of things in this though we don't like. the choice is clear passed the senate bill and reconciliation. other limitations of a senate bill can be addressed through other means. what they meant was not -- what they meant was this will cause democratic gains in congress in 2010 and then we will be set legislatively. oops but everyone understood the bill was not what anyone really wanted. it was a bill that could get past. we drafted and got 60 votes in the senate.

there were no longer 60 votes in the senate. it was this or nothing and it got enacted and that's what we have today. the law perhaps no one wanted but it is the law that was passed in congress. it is the love for land land and the irs cannot rewrite that and i will stop there. thank you. >> yeah i wellpoint i believe that was -- i congratulate you for reading the double whole way through. i believe there's a justice of the supreme court to describe it as being torture if he had to do it. go ahead, dave. >> thank you. i would like to start by thinking cato. it's great to be here to talk about the statute in the cases which the founding fathers of the litigation. i would love coming to d.c.. one of the main benefits is unlike her home state of washington in seattle i'm less likely to be told to slow down and not talk so fast so i will try to move through quickly to keep things going on time.

most them are writing on these cases in the statute has been critical of liberal arguments in favor of the government's positions. think that's 90% of my writing but given the makeup of this panel there would be a bit of a lack of balance up where two people talking about the challenger site and i came up en masse the government side. much of my writing is saying liberals way or not we making the best arguments in support of the government's position here? i'm going to spend some time trying to talk about what i think would be the best argument for the governance position. i want to start by talking generally about theories of statutory interpretation. my friends on the right are physically on the right it may be politically on the right have been interpreting the statute as advancing in cases that they call plain text or plain language meeting of the provision issue. i think that meant the statutory interpretation as they advance it was much too cramped and one

that takes into account the intent in the context. the government wins this case and a wins it outright so one on two chevron to which doesn't show there was was was ambiguity and it does on a technicality. it wins because the government's interpretation is the best interpretation that is the only reasonable interpretation under the statute. another reason why i think this broader theory of statutory limitation is the proper one is that it's been endorsed very recently by the supreme court. the supreme court said last term when you're interpreting a statute you need to look at the context of the provision and the broader scat statutory scheme need to have a reasonable reading of that provision based both on the specific provision at issue the language in a specific provision but also the statute as a whole more generally been to look at the overall design and object of the statute, the structure of the statute, the substandard effects of a proper interpretation to

see if those substandard effects are compatible with the statute as a whole and to see which interpretation is more consistent with the design and object of the statutory structure. as i said it was a supreme court case. those of you listening in the audience who are not familiar with supreme court cases might want to recheck that reasoning. might've been our friend justice breyer with a 5-4 majority but that was justice scalia talking about his version of type shall-ism interpretation of the statute last term. that should not be surprising. the terms that i use if you go back on the tape and rewind and talk about the theory of statutory interpretation is not a psychoanalysis or the general appeal or purpose that you have heard some liberals make. certainly not the liberal argument that was sort of a foiled by my colleagues on the right. rather when justice scalia talked about intent, purpose

object, designed not talking about what he read it in their it in your times are not talking about general appeal some purpose. rather he's talking about the text of the statute intent based on tax structure based on text design based on tax. i was interpretation of the statute and that the government's best argument to win in this case. the theory of interpretation used by her previous speakers and the challengers in the litigation is not textualism. i don't know what has been named and i don't know if it's a well-recognized statutory interpretation but i think it is a statutory isolationism and what i mean by isolationism is that outlook set of provision wholly in isolation and comes up with a plain meaning what it asserts is a plain meaning and then it gives that narrow plain meaning a huge amount of weight,

strong default static friction and inertia that then goes out to the rest of the statute and does battle with other provisions that possibly conflict. when it does battle with these provisions are it looks at the one by one and another version says is there anyway we can interpret this other provision in a way that makes sense? for example there is a provision in the affordable care actresses we have federal exchanges and we have state exchanges. those exchanges have certain reporting requirements and among those requirements involve reporting on subsidies paid under those exchanges. now if you look at a plain meaning of just that provision of the statute you will say well it looks like subsidies are available under the federal exchange and it tells the federal change to report the subsidies so say you have her ports are all the time but when faced with that story an and argument that the complementary statutory -- the challengers

don't view that as an opportunity to harmonize the statute. they see that other textual provision of some sort of hapless enemy that they say we can envision a world in which this other provision makes sense and we don't have to adjust our national default. let's just assume the government was looking to save space. they didn't want it to separate provisions for reporting one for states and one for federal exchanges so some of these reporting requirements are redundant and they are useless but we will make some of them useless and we can still keep our default provisions. that is not a textual interpretation. the textual interpretation of the statue looks at the statute as a whole and attempts to harmonize each individual provision of the statute. in some ways jonathan has told me i am terrible at analogies. their method of statutory interpretation is a very bad action movie with the narrow provision at issue playing the role of our hero. you have hundreds of other

provisions all of them viewed as hapless enemies and instead of looking at them one by one and they are all terribly weak. statutory interpretation under a proper textual framework under the framework advanced by justice scalia it's an ensemble cast like the adventures and the other provisions they are not enemies to be dispatched with by an initial narrow isolated provision. they're meant to be harmonize to work together to come to a complete understanding and interpretation of the statute. you see this isolation and all sorts of the challengers breezed through deceit in the plaintiffs breeze. you see it in the opinion and just the opinion and just a structure the opinion answers to structure the opinion starts with a strong default and each individual challenge one by one by saying it wouldn't be absurd in our reading. it wouldn't be ridiculous. we can twisted in some way that makes it work.

so under this more contextual textbased argument i think that's the best argument the method of statutory interpretation for two reasons. what i think the government wins under that argument and second i think it's the best argument. if you are goal is not to preach to the converted. i think they're going to be judges and liberals who want to see everyone get insured and they are going to -- in any case but if the government that wants to win this case are folks in the press that support the government and want to convince people they think is important to focus not on psychoanalysis or broader appeal to purpose that everyone should be ensured that focused on the text of the statue. here's a brief outline of what i think that textual contextual and i will even say scalia's endorsed method of statutory interpretation would work here. the key provision says subsidies

are available only on exchanges established by the state under section 1311. our our goal as textual as this to say i'll does that mean? we don't just just stop there and isolate that one phrase and think i know without looking at the rest of the statute. we need statute. then he took to the rest of the statute. the first place to look when you are trying to figure out what a phrase means is the definition section. the statute defines exchange and it defines exchange as a e exchanges in exchange so that's helpful but as an exchange established under section 1311. any time in the statute you see the term exchange with a capital e when the statute has defined the term to mean his exchange established under section 1311. what does that mean? we don't resort to cycle and analysis. we look to section 1311. 1311 says as we have heard from

previous speakers have state shall establish an exchange. all 1311 have to do, all 1311 relates to the state exchanges. what states have to do this though this exchanges how states compare with other states in establishing exchanges. the only purpose the only type of exchange referenced in section 1311 our state established exchanges. not only that the only way a state can establish an exchange discount by complying with the terms of 1311. so we have this parallelism between 30 and 11 in state exchanges. looking at those two provisions you think that's it. there are only going to be state exchanges though we know that's not true. they're provisions such as 1321 which provides for the creation of a federally operated exchange and what the heck does that mean given what we have seen?

1321 is the provision that creates federal exchanges uses very specific language. it says that the state fails and i'm paraphrasing, fails to establish an exchange than the federal government secretary shall establish such exchange. well what does that mean? is it talking about a different kind of exchange? >> exchange in 1321 somehow different? when it were uses the word exchange imagine the sly behind me. that's the same capital e exchange that used throughout the rest of the statute and exchange established under 1311. when the federal government under 1321 to establish such exchange its establishing a 1311 exchange. the statute doesn't say it shall establish an exchange we doesn't say it shall establish 1311. it says it shall establish such 1311 exchange.

why does the statute use the words such instead of a hand or a? how the opinion concedes this you have to conceive what words mean and such means referring to the previously mentioned exchange. it's the exchange the state was supposed to establish under 1311. if the statute it just said an exchange then maybe it would just be a normal run-of-the-mill 1311 exchange but says such an exchange which refers back. the help it majority got halfway there. we are going to admit that it refers to 1311 exchange. but that's a nonstarter and a nonsequitur. every exchanges of 1311 exchan exchange. you don't need it to create interpretation that's a 1311 exchange. just based on the provisions that is the best reading of the

statute. the federal statute, the federal exchange is such an exchange meaning it's established by the state under 1311 going back to 1401 it complies with the statute provision of 1401. again i'm not an isolationist on my next step is to look at the context of the statute as a whole and let me take a step back and look at the statue design. its structure. despite everything i just said if i look back at the statute as a whole and saw system or oh oh my goodness there are all these terms relating to federal exchanges that describe federal exchanges for 1321 exchanges on the one hand and the statute is careful to limit our separate or distinguish 1311 exchange is operated by the state. that's not what i find. i find hardly any mention of section 1321 or operated exchanges with the exception of one provision which specifically provides for the recording of tax subsidies on federal exchanges. we don't have this two-tier

system. perhaps there's a pattern in the statute. i will look at the statute as a whole that says maybe they're using the term exchange even though it's defined as a 1311 exchange. exchange can mean any exchange. when the statute wants to limit state exchanges assisted exchange. that is not the system at all that the status setup. we know that 1311 only relates to states and that state focus is states right in the definition of exchange so there's that distinction the challenger trying to raise defined out of the definition of exchange. secondly when the bill is referring to exchanges mr. ever talked about how exchanges established by state it refers to the state -- exchanges and number ways.

change exchanges established under the title, exchanges entitled under 1311. exchanges established under 1311 by the state and also in various places exchange generally. looking at the design and structure of the statute as a whole it is not the sort of thing that talks about differentiating between state and federal exchanges. i say i have about 15 seconds i will hurry up. i need to step back and theorizes there any problem with how that definition fits into the design and structure into the designer structures a hole in the one main problem is a problem that professor adler talk about in his presentation to potential conflict with the carrot and stick system that reportedly the federal government set up. i want to say a couple of things about the carrot and stick and then i'll sit down. first of all that is not a textual argument. the discussions about legislative history and other bills and build giraffes they

don't find their way into the actual statute itself unless you agree with the strict isolationist interpretation of the provision issue. it's more of the second-order argument as to why they might do this. the problem for them is that this carrot and stick argument faces a huge textual hurdle and that is the statute itself includes the provision of federal exchanges. federal exchanges exist not in real life in the text of the statute. why the two exchanges? if the subsidies were supposed to be a threat and if congress thought a threat would be uniformly successful than there should be no need for a second fallback for federal exchange. the answer cannot be commandeering principles because if you don't want to commandeer there's always another option, don't provide anything. in the medicaid example if the states did not cooperate with medicaid and fallback is not

let's create a federal system that comes in and tries to do something for poor people that doesn't work? no the fallback is nothing. a federal exchange must do something in this case under the challengers. the federal exchange is a one-legged stool that only offers expensive insurance, fails under the mandate and the individual and employer mandate. if it is useless under their theory then it is almost entirely -- the fact that the federal exchanges exist and they must serve some purpose based on the text and that specifically contradicts the argument based on a textbased argument i think government wins. [applause] i went over.

>> well, you talk fast. you do that. >> i want to thank cato for hosting this and invited me to participate in this morning's panel. i will start by saying i agree with a lot of what david just said about interpretation and a textual issues of the state in particular his point about the proper way to engage statutory phrases in isolation but to to look up attacks as a whole and i think when you do that in this case it's clear that tax credits should be available on all exchanges federally facilitated statement. davis spoke of the textual interpretations. i'm going to focus elsewhere and by remarks and starting with legislative history congressional intent in particular the argument made as fred discussed the argument made that these were included in the statute as a tool to set up their own exchanges. the basic idea that congress

wanted their own exchanges. we intentionally made these exchanges available only to the states who had no choice but to set up their own exchanges about the argument. the problem is that the tax, the history and the purpose of the statute all say otherwise. that was the point that was made in the amicus brief filed before the king panel by leading members of congress. the folks who asked to participate in the discussion the celebrations and negotiations in the advancement of a affordable care act. it was an off-the-cuff remark made after the law was passed and jonathan gruber himself has missed out but what is most important is not what someone said in front of the q&a to conference but the folks who were actually there had to say. those folks an amicus brief

filed before the court that was never the purpose of this provision. it was never their intent and never their understanding that tax credits and subsidies would only be available in state exchanges and their understanding is confirmed by the text and history of its action. let's start with the text. we talked about it a lot already but you would think if the provision was to encourage changes congress wouldn't want to make it clear and safe you don't set up your own exchanger citizens are not going to get this money when they purchase insurance on exchange but that is not what in fact the statute does. professor adler shifted from the provision providing for the subsidies. when you look at the section to hold the first thing it says is there shall be no credit allowed for qualifying where applicable taxpayers. they define it based on income level is professor blumstein mentioned.

there citizens won't get subsidies and subsidies won't be available on federal exchanges. instead the language that professor adler pointed out is a technical subsection setting up the formula for calculating tax credit. that's a pretty strange place to put the condition if it's dealing with what the opponents say. this would have been a big elephant to hide in a pretty small town hall. the point is confirmed by the history of the debates in congress about the affordable care act. professor adler talk about medicaid and the fact that the medicaid expansion was condition on states compliance but the issue here no one doubts that

congress can engage in these kinds of carrot and stick incentives. the question was they did it here with respect to the exchanges and attack subsidies and no evidence in the legislative record that it did. he also mentioned a study by an academic which i should say mention this is one way and he also mentioned congress would set up a federal fallback which is what we all know they did it importantly there is no evidence that the paper will discuss debates in congress and nothing in any database of congress have suggested that this is what congress was intending. there were a lot of debates about the tax credits in the credits for eyes discussed in terms of making clear that income not reference with the qualifying criteria. there was widespread evidence the state might set up their exchanges.

it was not implied that there would be opposition in some states and this was generally understood. despite this everyone is in the credits would have failed be available to all purchases on exchanges both state and federal. there is lots of evidence in the record the amicus brief discusses this in one example there was a march 2010 fact sheet issued by the health committees that explains how the exchange would operate. it would be both federal and state exchanges and it drew no distinction between them. members of congress wanted subsidies to be available on exchanges for the reason that the subsidies were essential to the effective operation of exchanges. eliminating assistance would undermine parts of a lot including the individual mandate and insurance reforms dealing with pre-existing conditions.

they were essential to making sure that other specific parts of the statutory scheme could work properly. the basic point is congress didn't intend for the subsidies to be part of a carrot and stick incentives system to set up an exchange and there was no reason for congress to do that. professor adler suggested that this is the only way you can get the states to apply. one thing it often does it set up a federal fallback. it's a case that states will often want to set up their own program rather than rely on the federal fallback so they can maintain control of the program. you can see in the record of whether to set set up an exchange state officials including republicans saying they want to set up our exchange because we don't want to lose control of the program to the

federal government. that's the congress citing on the stateside the states never understood the tax incentives operate this way. it failed because the states didn't get the message. there are lots of examples and evidence of this in the deliberations on the states part about whether to set up an exchange. a couple of quick examples ohio listed five pros, for cons setting up the state exchange the availability of tax credits was nowhere mentioned. the prospect that a state citizen sets of pics on exchange was not -- and this isn't just him matter of data. there's a report a study done by georgetown university health policy institute looking at the state decisions and one of the causes of the study said the states are motivated by a mix of

policy considerations such as flexibility over the programming control and calculations by aca opponents but the availability was not a factor that played into the state provisions about whether to set up an exchange rate again this is not a carrot and stick incentives scheme. congress and state legislators legislators believe tac studies would be available on all exchanges including those run by the federal government. based on that history in based on the tax that david discussed i think it's clear the statute not only allows but requires tax credits and subsidies be available on federally filled silicate exchanges but it's still worth remembering that the statute doesn't need to be clear on that point for the government to win. as we have discussed this a key supreme court key supreme court case that says when a statute is ambiguous court should defer to the reasonable expectations of agencies charged with recommending that statute. in this case that's the iris and hhs establishment of a tax

credit should be available on all exchanges. i think it's worth highlighting quickly comments made by the panel majority. they said at the end of their opinion that they were reluctance to reach the decision they did that make up their hands were tied. they had to implement the statute that congress enacted. they were exercising judicial restraint. the real restraint is to do what judges are supposed to do which is when the statute is ambiguous if you think it's ambiguous you defer to the reasonable interpretation given by the agencies implement in the statute. that is what to the judges did. on the judges decide the statute was unambiguous but required tax credit and subsidies on federally facilitate exchanges. what does that mean we have to do? we have to do -- to the rule promulgated by there

is and allow the statute to be available on federally facilitate exchanges. that is a lot very quickly on the merits and i will spend the rest of my time talking briefly about worrier in the litigation was going to happen next in a particular what might happen in the court tomorrow when the justices meet to decide whether to take king. as most folks know it takes four votes in the bottom line is that the court follows usual practices and procedures it will not -- a supreme court practitioners know the most important factor the court considers in deciding whether or not to grant cert is whether there's a division of authority among the courts. in federal court there's a circuit split. this principle is expressly reflected in the supreme court's rules. rule 10 identifies the fact that the court decides whether to grant stir -- search.

an important part of the job of the court is to make sure the laws implemented uniformly. that is why the confirmation hearings of the job is to ensure the uniformity and consistency of federal law. this is something the justices themselves said all the time. justice scalia told the senate judiciary committee that when he and his colleagues were deciding on a case they have case they ask themselves is there a conflict plex is there a significant issue on which the lower courts are divided. he said we don't get involved. justices ginsburg said the same thing in discussing why the court denied same-sex marriage cases. when there's no disagreement we don't step in. the major java court is to keep the law of the united states more or less uniform.

that is why professor adler said he wasn't surprised by the denial given the lack of a split. here too there is no split in the disagreement. as we all know there was a disagreement. the circuit issued a decision but the d.c. circuit has subsequently granted -- and the full court will hear the case and vacated the panel's judgment that eliminated any division among the circuits. i'm not going to spend a lot of time talking about it the decision is but there has been continuing conversation whether that was proper and i will just say that clearly was. you can see that an apollo rules themselves. it expressly defines importance to include when there is a circuit split. the loss challengers continue to argue that there is a circuit split.

the review vacated panel's judgment about opinion. that's true but it's a distinction without a difference. there is no division in the way the laws being applied to parts of the country and so no need for the supreme court to intervene now. justice scalia again, you talk so what is -- a lot of latin. he said earlier this month an argument that the courts over the opinions. he reviews judgments and results. there are a lot of other factors that clearly don't apply here. the other one that could arguably be in place when the state court for court of appeals has decided on federal law that has not been but should be settled by the square.

the petitions raise questions back in the rights of millions of americans in contrast with the questioning king is a narrow straightforward statutory interpretation. the marriage case involves dozens of state laws being satisfied on federal grounds, question would want the supreme court to weigh in and assess whether that is a valid determination of federal law. in contrast there is no judgment from a court of appeals setting aside of federal regulation at issue in these cases. whatever you think about the marriage cases, i suppose there's lots of agreement -- to surmount this room it makes far less sense to use king. i should say waiting would give the court the benefit of hearing what the d.c. court has to say. it gives it a chance at a lower courts in the d.c. circuit and

potentially the town circuit which is expediting its review of pruitt. excellent, we will hear from a corporate i think it will be in denial. >> i was sort of ineffectual they are but i think you got a very good view of both sides of this question and i think it's clear which way justice scalia is going to vote if the court takes this case. let me very quickly ask this side of the table to quickly say whether or not you think the court takes this case or holds on. >> uis predict that it won't but i think the factors that might cause the court to take the case here are the fact that we are dealing with implementation of a large statutory scheme like this and what one piece has to be in place before the next piece can actually operate.

there is an argument to resolve this sooner rather than later for the whole system to work. there's a question about how much time states would have to reconsider their decision. whether or not to create an exchange with the irs rule in place. they are questions of timing in terms of can i get subsidies from hhs to create exchanges? do you they wait to consider the waiver provisions to operate and this is why every federal appellate court that is heard one of these cases has expedited proceedings. every court until the d.c. circuit which also did it on an expedited basis every appellate court in these cases has recognized this is not a question that can sit out there for a long period of time. the supreme court does have a habit especially with constitutional cases of letting things percolate. one reason for that is because of the decision cost.

the supreme court makes an erroneous judgment and only if the supreme court can fi fix it where's the statutory cases congress can fi fix it so the ct often less cases percolate a long time even after certain split and brianne had a piece complaining about the court not taking constitutional cases where there were circuit splits but clearly because it's waiting for the right vehicle. in this context there's an argument that the statute because it involves what the congress is in the states to their needs to be clarity and every appellate court has recognized that. >> jim any disagreement with back? >> let me add one comment about this. i think the more recent behavior of the courts is not the dialogue and same-sex marriage cases i think it's the granting of stays in the various voting cases. i think what we see there is when the court believes that

lower courts are gaming the system they're not particularly tolerant of that. here the d.c. circuit and the whole blowing up of the filibuster rule and so forth is very much politicize this issue. i really feel for the judges who were just put on and i think this is highly political. the distinction between a split and opinions. this is too fancy and doesn't pass the smell test. i think it's always risky to protect the court is going to take a case because the odds are that it's not so certainly she is right about that what i do think that this has an odor of bad institutional behavior and especially when you add the oklahoma case into the mix. i would not be surprised to see the court agreed to hear this case. >> quick rebuttal bad institutional behavior?

>> when you look at the federal rules this expressly provides from block review. the politicalization is happening is about like that and that's the reason why the supreme court may be hesitant to take it because google knows comments and the fact that is percolating in the lower courts it would be -- i'm a courts part to step in now. >> would the questions for you. please state your name and any organization you are with if you would like to. this person was extremely quick. >> maureen with the indianapolis star. indiana's challenge in addition to challenging the subsidies as greg zoeller talked about this morning challenging the sovereignty issue and whether or not to tax states as employers. can anyone address what you think of that part of indiana's challenge? >> i think that's a tougher case to make.

he mentioned he's concerned about garcia and is certainly true that the garcia decision the rationale that is articulated the idea that states have enough political weight on congress to protect their own interests has been thoroughly repudiated by the court that the holding of garcia that basically says when states act not as states but as employers or service providers or market participants can be treated like any other under congress power something the court has reaffirmed quite regularly in the context of reaching a federalism decision. i think that is going to be challenge. i feel like the district court is going to go against that and i don't see many signs that the supreme court revisiting that part of its doctrine. >> let me say a word about that. in the nfib case the states challenge the aca.

the states did t. up and overruling of the garcia case. the supreme court denied search on that issue so that was in the cert petition the court didn't take it out. so i think garcia is not going to be overturned easily. on the other hand there are some distinctions from what the indiana case is bringing up in the garcia case. garcia basically says the federal government can impose working conditions minimum wage maximum hours laws on the states. this is actually a position of attacks on the state not just requiring compliance with penalizing it in a certain way and that is a nontrivial distinction. i think jonathan is right that it will probably not result in overturning garcia but i think this is a nuance that arguably can put this into a commandeering category rather then you must live by the rules as every employer must. >> anyone else?

>> my name is todd and i write a blog and also contribute to watchdog wired.com in the state of pennsylvania. i'm sorry i don't have my source to cite my source by what i've seen is the shoe came off -- up of what happens in how it stands in the pressure comes on the states to set up exchanges. from from what i've found there are 621 million dollars of level 1 awards to states that rejected the exchanges. the seven states% of those awards that the 629 is the states that did not. the other problem is january 1, 2015 the application deadline to apply for level to exchange awards. if the republicans control the

congress they certainly the proponents would certainly not getting the help they are. what about point obama choose to use his pen by executive order to extend those deadlines? >> it's possible that litigation in court as part of its relief and extending deadlines but the fact that these deadlines exist as an argument for resolving this sooner rather than later. the next panel is going to talk about some of the practical issues but there other things in law that affect how this goes forward. the waiver provisions in the beginning of 27 ninteen could arguably use by states did pay tax credits without creating a full exchange. there are a lot of pieces to this law which when we look at

it in its entirety and i don't think it's sure that those on this side reinforce the idea that states have different options of ways of interacting. aware system works is that if congress makes an offer and states refuse and the voters don't like it let me faux people out and this is how this is supposed to work. my state of ohio people don't get tax credits. if people don't like that they can pressure state representatives to change that. because litigation has dragged on ohio can get help that would be too bad. it would be a sad consequence if ththe mechanisms and a lot that were designed to help states that want to make this election disarmed or disconnected will cause the federal government to decide. >> i think the idea because those laws that complicated

regulatory scheme that warrants a free court review. the supreme court can't get involved in looking at the legal issues about the job of the lower courts. expediting decisions will get this to the court and there will be ways to deal with the decision in either direction when the time comes. >> hi. i had a quick question on the timing. when can we expect to hear from the supreme court on this petition and number two do you think the midterms could have any punting on the decision made in a couple of weeks? >> that's an interesting issue. in due course the list from today, i'm sorry from friday will be disclosed monday if there is no decision.

nondecision is a possibility it would be pushed off into the future to be rescheduled for a subsequent conference. we will know monday whether there has been the decision and if there's a decision what it is. we will also know if there has been a nondecision or deferral of that decision. i think that will be monday's news. >> actually we might not know monday because even if the court decides to take this case from the fourth circuit they sometimes delay announcing that until they have done another quick round to see if very our structural problems. >> not likely in this case because they will want to expedite this to be heard in this term. they may delay the week. >> they have plenty of time for that. >> i think if there's a quick denial we will see that on monday but if we don't see anything on monday could mean different things.

they are still deciding and if someone disagrees or fits in denial that will result in delay or if they decide to hold it and wait to see what the d.c. circuit does. >> basically the court can take the case in january and hear it in the current term. who else? anyone else? a question over here. >> my name is rich weinstein weinstein. professor after three weeks weeks ago you were debating professor bagley and michigan any mention at the end that there was further research taking place and i think you are talking about the cpi contract. could you expand on that a little bit? >> that's something i think folks are looking at. there's there has been a lot of research trying to figure out what the irs and agency side of the statute. there is a house oversight

committee report which shows the irs as it typically does when it was drafting its rule followed language of the statute. it wasn't until somebody else at hhs on his record about problems this could cause and potential legal issues that someone decided they would depart from the texas statute. as a question with regard to the contracts were not similarly when the contracts for the computer operations up exchanges were being developed whether or not federal exchange is required with the same capability of calculating exchanges at the legislative level. there are some argued looking for more closely at these statues than i have been dozens upon dozens of pages of procurement contracts, there is an argument made that the functionality that the federal exchanges were initially required to have required to

have federal exchanges did not require the actual ability to calculate and provide a tax credit. i would be an indication that folks that do this sort of thing on a routine basis when reading the statute read it the way that i read it in my presentation before this was a political issue. established by the state one establishes used throughout the statute on the state is defined in the statute definition that dave didn't mention to include d.c. and not the federal government. when people outside of the political context use the statue what was there on politicized reason to use the statute. federal agencies haven't been forthcoming with everything but there are certainly efforts to try and look at what did folks when they read the statute think

it meant because obviously now everyone has a sound of what the possible obligations are. sierra stood in early read where they said if you go by the plaintext a strong argument that this is limited. acknowledge that you could argue also find it ambiguous. the irs initially said this is exchanges established by the state and they were later told to change that and when they promulgated their rule they gave no rationale. all they are convinced that we have heard about such exchanges were arguments that were brought up after the irs made a decision after people were scrambling to find an argument for why the statute could be read. since we -- as we was quoting from the opinion is dustier it's important to read the whole position decision. i agree 100% about the whole statue. that's why over the whole statute. that's why a look at every

phrase established by the state. in some cases of david is right there provisions in the statute allow federal government to pull all medicaid funding of federal exchanges don't fulfill certain observations. that is just crazy. it makes sense that states can lose medicaid money but to say the state loses money -- that can be right. the other thing scalia's said talking about the clean air act the power necessarily includes authority and responsibility to resolve some questions by congress that arise during the laws of administration but it does not include a power to revise clear statutory terms that turn out not to work in practice. we reaffirm the court ministry of law principle that an agency may not be right clear statutory terms to suit its own sense of how the statue should operate. the state is clear.

it's defined in the statute established by the state. it will not be here today. if there's any reason why congress wouldn't use third in 1401. >> david. >> a few things. the structure of this back-and-forth of it is sort of telling. on one side we have an inquiry into what to do in the irs function put in a request for work to computer programmers. there is that possible way and i don't know what those documents would say. on the other hand we have the judge giving a cold reading of the statute saying i want to look at the texas at the taxes you what that means. they think the statutory text to control. we should read the statute without considering its implications. it's a fair reading of the

statute. you don't interpret it in a vacuum. you don't read "the new york times" that you do need to say how does this reading of the statute effect to the rest of the statute and lastly with regard to harry reid's midnight editing session again i don't think any of that matters for my textual interpretation of the statute. the statute as written with the state, no it's defined but it's included in 1311 so it works by reference. the reason why some staffer and harry reid's office late at night perhaps after a deer looked at the statute in said oh my gosh in this provision we say established by the state should be consistent. i don't know for an interview with would matter. that is not what was passed. if you look at the statute unlocked for it the way that professor adler did and the way i did and you say what is the

best reading of the text, that's what's most important. >> i'm afraid that's all of our time. i said it wasn't going to be all about justice scalia that i might be all about chief justice roberts but i than school. two announcements. there is water on the first floor outside. we are going to take now a ten-minute break, not a 15 minute break and restaurants -- restrooms are located on the lower level. so please thank our panel. [applause] [inaudible conversations]

>> back to the form posted by the cato institute on federal subsidies and state health care exchanges. up next oklahoma attorney general scott pruitt up scott pruitt up outlines a glamis lawsuit challenging tax credits and subsidies and federally run health care exchange it.

this is about 30 minutes. [inaudible conversations] >> good afternoon. thank you for staying here. we are going to have our last keynote address and then we will break for lunch which will be held upstairs in the second floor. our final speaker of the day is the attorney general from oklahoma scott pruitt. he holds the merit, he holds the distinction of seeing the merit in this litigation before any other attorney general. he was the first to challenge the irs disputed tax spending way back in september of 2012 and last month fairly slowly it seems seems a federal district court in oklahoma ruled for general pruitt's and against federal government, the obama administration the obama

administration not surprise the obama administration not suppressing his appeal that ruling to the tenth circuit which we will hear oral arguments in january. scott pruett was elected attorney general of oklahoma in 2010. his official biography says as attorney general he is dedicated to fighting corruption which i assume would include illegal taxis mandates and subsidies imposed by the federal government. pruitt established oklahoma's first federalism unit in the office of solicitor general to combat unwarranted regulation and overreach by the federal government and has led efforts to bring attorneys general together to advance policies and legal strategies to protect interests of their states from an overly intrusive federal government including a multistate lawsuit challenging the constitutionality of the dodd-frank financial regulation law which is also a great concern at cato. most importantly for seven years he was the managing general partner of the aaa baseball team in oklahoma city, some honest

work. welcome to the podium. >> thank you. [applause] >> impact was on his work work. i enjoyed my time at as an owner of triple a baseball payday was disappointed disappointed of less nice outcome, day seven of the world series. we were rooting for the kansas city royals that it was a great time for baseball. sometimes a mistake is made in david is from kentucky so you understand this but sometimes the mistake is made when i'm introduced that i played basketball and i back played baseball at the university of kentucky. i will step out behind the podium. i am am all of 5 feet 9 inches and they say you didn't play basketball there and that is absolutely true. they recruit taller people than i but i want to say thanks to david for the invitation and to michael as well. it is a joy to be here and my good friend general seller presented this morning. he and i have had the opportunity to chat but it's

good to see you and good to have partners and teammates in the room. i do want to offer if i might i know you have had many discussion points on policy illegal components. if i could offer something to you generally before you get into the specifics of oklahoma's case a couple of policy statements that i think are relevant. one i think we need to remind our friends on the left that health insurance does not equate to health care. sometimes policymakers at the federal and state level level believe they can expand eligibility and coverage and somehow that magically fits all of our health come outcomes in this country. ..