Transcripts For CSPAN2 Today In Washington 20130801

Which in the context of thenly i terpre statute for the is a highly implausible interpretation. The when you look at the statute in the context of how it should be examined others confirm to is not at war atth the central purpose. So lets take a quick lookurpos. At the purpose when congresscest passed the Charles Willey fiercest critics concurred with the supporters to puhieve universal health carerp coverage which has michael panelist professor edwards wrote an article on addt theio subject and in additionm r the exchanges were a mechanism to achieve that it was n goal so not intel one 1 2, years after obama signed the aca into law is that and then to have the 180degree interpretation of the law mechanists some. Hael i but the text is in harmony. It did not intend there doesno not put the stake in the state hands of Health Reform forncere. Those that are very sincere i dont doubt that for a minute such as attorney general pruitt in the facted to stiffing the constituencytory that the act was to benefit. Eart that is not for the faint of all our i will try to summarize very clearly said gist of my a argumentum the the details to the written statement. Cus one. Mr. Chairman the opponents argument zeroes in on section 1401 which enacts a new section 36b of the Internal Revenue code and it targets a provision that is in their to define how to calculate the amount of premium assistance in that provision pegs the premium assistance amount to put monthly premiums for insurance policies which cover the taxpayer and which were enrolled in through an exchange established by the state under section 1311 of the aca. Its no wonder that it took a year and and a half to find this particular provision i must say. The theory of my colleagues here is that because this subsection calculates premiums for policies that are issued through an exchange established by the state under section 1311, therefore they say federally facilitated exchanges which are directed in another section of the act stand and where states fail to set up exchanges of their own cannot be considered their equivalent in their policyholders need premium assistance are left out in the cold. If this seems like an impossible interpretation it becomes much more so if one looks at the act as a whole, which i have done but im not going to go through all of the things that i have learned by doing that. Im going to focus on one provision which i feel particularly undermines these selfdefeating spin that my colleagues here with but on section 36b and section 1311. The section i would like to focus on the courses section 1321 and this is the section which says that if the state fails to establish an exchange then the secretary of health and Human Services shall establish and operate such exchange until take such actions are necessary to implement such other requirements. Now the key part of our position is simply that the use of the words such exchange and the use of exchange with a capital a map showing the defined term that the logical commonsense interpretation of that language is that the exchange under hhs stewardship shall remain as it would have been under state stewardship and shall be its functional equivalent and shall be subject to the same requirements and shall have the authority necessary to take such actions as are necessary to implement its functions. As the steward of such exchange our position is the secretary stands in stand in the shoes of our acts on behalf of of ed state government. This type of surrogacy were stewardship is commonplace and the law. And so that is what, that is what we feel 1321 and the statute as a whole contemplates. There is really no reason to impose this interpretation that professor adlers coauthor Michael Canon has said would ring obama cares Exchange Engines to a screeching hault. Mr. Lazarus i hate to interrupt you but how much time to let because we want to receive all of your statement. Have i overshot . I apologize. Apologize. Thats awry. Do you have a final statement . I certainly do. I just wanted to say that opponents recognize they need more than this textonly argument. They have gone through a purpose argument and they claim that the congress deliberately designed the exchange provisions so that they would essentially fail in the federal Exchange States and i would just like to suggest that is rather impossible to think that the aca sponsors and we are talking about people like harry reid, senator Chuck Schumer and max baucus would potentially turn it over to the aca opponents like attorney general pruitt the power to sabotage the law in their states but i think you have to think thats true in order to sustain the argument. Thank you mr. Lazarus. I apologize. Thank you mr. Chairman and members of the subcommittee. Thank you for the opportunity to testify today. The subcommittee has asked for my views on legal basis for the irs and Treasury Department rule purporting to extend tax credits and car sharing subsidies in the federal exchanges. I will be brief. There is none. The irs rule is directly contrary to plain language of the aec a and not authorized their love. The tax of section 14 through and that the entire akzo authorizes tax credits for the purchase of qualifying Health Coverage and by the state under this section 1311 of the act. Nowhere does the act authorized tax credits for the purchase of coverage and exchange established by the federal government. Attacks in the statute does not support the irish rule. Do not iris finalizes tax credit will it offered no substantive defense of his decision to extend tax credits through federal changes. A cursory statement verified no provision of tax credits are to identify any relevant legislative history to support its position. Hard to see how this rulemaking satisfied the apa requirements in recent decisionmaking. To this day neither the iris for supporters have been able to come up with the statement prayer to or contemporaneous to the packers passing of the act. There are many statements available in all 50 states as there are many statements at all 50 states would eagerly create and implement exchanges. There even statements that states be required to create exchanges. Something definitely federal government cannot compel. What there is not as a single statement saying the tax credit would be available in federal exchanges because no one assumed that the federal exchanges will be necessary which explains why they opted not provide any funding for the federal exchange months after the rule was issued after members of this committee that and others began to pass arguments in support of the iris rule. These arguments found spots of ambiguity that could be used to sustain the rule and ignore relevant statutory provisions. Some of these arguments are contradictory. None of these arguments can overcome the statues. My copanelist in his testimony misrepresents the timing and the substance of the argument i made by mr. Cannon and statutory provisions that undermine our argument is not based on a single provision but a careful reading of every provision in the statute. Indeed the only way to read the statute without generating surpluses, that is without generating language that must be rendered irrelevant is to recognize when the statute says established by the state it means established by the state. Some claim it would be observed to enact health care and state cooperation access to or in state coffers with federal policy. This is called sabotage. That is precisely what provisions of the active. The best example of this or the medicaid provisions. The medicaid provisions threaten to withhold not only the Medicaid Expansion but ill medicaid funding in a state if the state refused expansion. That would clearly have significant consequences on the most vulnerable populations. Even with the expansion the statute denies tax credits to the poorest of the working poor because there is a minimum income requirement. My copanilist may think this is a policy but its indisputable that this is in fact what the text of the statute does. Some say it would be absurd to oppose raising requirements without subsidizing health heale but that is also what multiple provisions of this act clearly and indisputably do such of his tax at provision. Some may think that the way the act was designed but that does not make it any less the law. The relevant statutory language was not an accident or an error. It was the choice of those in the senate to want state basic changes to play a key role in Health Care Reform. Others prefer the federal model. And has a had a built in enacted the model based on unconditional tax credits may tax credits may been the law of the land. After the of the filibuster proof majority in the senate apa opted to rely on the senate bill and its provisions clearly and expressly conditioning tax credits on cooperation. There was an air in believing that a majority of states with corporate and create their exchanges at their own expense. Such a miscalculation could not justify reweddings statute afterthefact that is what the irs has done. This rule is allowed to stand have fiscal and economic consequences. Whether not subsidy sound policy is not an issue. Whether the irs can unilaterally reread a lot entrusted to implement and enforce such tax credits are worthwhile and federal exchanges and congress may provide a statute. Thank you for your time and im willing to answer questions you might have. Thank you. As i mentioned before ms. Speier wind shear wessel has First Priority in an Opening Statement as well. Attorney general pruitt you mention the effect on the state of oklahoma as well as some businesses in oklahoma and individuals. Can you highlight that a little bit more . What is the effect of this . At this rule has is being proposed in the final rule if implemented what is the state effect on the state of oklahoma . With respect to the establishment of the state Health Health care exchanges to the law did not provide that choice under medicaid by 72 vote saying that the congress and the aca could not reduce the power of congress coerce and intimidate or threaten the state to expand medicaid at the risk of losing the entirety of medicaid so they are now to sovereign decision so states can make. One is whether to expand medicaid and webster. The state health care exchange. Mr. Chairman and arguments before the court in oklahoma we are arguing the decision that oklahomas has made the governor and legislature has balanced the convening interest of the penalties that would issue the state of oklahoma and the cost underrated trey burden of excess do they balance those factors i made a sovereign informed decision not to adopt the state health care exchange. The iris action effectively takes that decision away. Addition of the iris by rule in may of us says we will issue the subsidy and assess the employer mandate penalty. We think that is clearly takes away the decision to oklahomas me. As far as businesses and our state oklahoma is a large employer. Therefore we are subject to tax provisions. We are in the process of evaluating the cost of compliance and implementation and it made his decision as a state that we seek not to establish an exchange and avoid those costs and burdens and we make that argument as well. You make comments before between the state and the federal government. Can you elaborate on that . Under several Supreme Court precedence the Supreme Court is held at the federal government may not coerce the state to implement a federal program. Establish this principle and reaffirmed. What this means is the federal government wants the state to participate in or cooperate with a federal program and must offer inducement. One of the approaches we have seen as is for the federal government to threaten adverse economic treatment of private actors in the state if the state doesnt cooperate. Its what the text of the law does hereby withholding certain benefits to individuals and exchanges and Insurance Companies if they dont cooperate. You are saying this is not a compulsory think. This was a benefit put in front of them to say theres a consequence if you dont and a benefit if you do and the assumption of the government based on prior laws the consequence, the states will choose to do this on their own. That is something that is common and done in other portions of the statute. A the medicaid provisions for example operate in certain experts in Health Care Reform actually proposed this precise mechanism could be used as a way of cooperation and this would be an alternative to trying to find an additional pot of money to stay cooperative. Okay. Mr. Lazarus thank you for being here as well and your preparation. It seems in your Opening Statement you look at the laws of holland say congress is purpose or use the term that was the purpose or the intent of versus the actual textual reading of the statute that mr. Adler said as well. Can you identify you mentioned the statement that such Exchange Portion this section 1401 puts out the specific payment and specifically enumerates it has to be a state from 1311. Doesnt say from a state 1311 are federal from 1321. Is there a section of the text you look at them makes it plain that they should apply for federal apply for federal or taking it based on what you assume is the intent or the purpose of the laws the whole . Can you turn your microphone on as well please, sir . Im sorry. The text of the whole statute and i focus in particular on 1321 in the Exchange Language shows and should be interpreted to mean its a textual argument. Its not just some theoretical purpose point. That language should be interpreted to mean that a federally facilitated exchange stands in the shoes other than has all the same attributes and responsibilities as the state facilitated exchange. 1401 says statebased exchange like 1311. It should have also said statebased exchange like 1311 or 1321. Did need to say that because in 1321 where the federal exchange is explained and the rule is explained, it says the secretary shall establish and operate such an exchange. The words such is in reference to the exchange and 1311 and therefore its appropriate to interpret that to mean it becomes the same and furthermore mr. Chairman the fact that exchange in 1321 is capitalized is very important. That references back to the definition of what a Capital Exchange is which is made in 1311. Everywhere Capital Exchange for the capital a means it is referring to that defined concept. Thats the basic textual argument. Their other arguments such as the provision of the reconciliation supplement to the aca and after later in the year. That would have been later. We are running low on time. Can i make one comment on a little point . Im going to honor somebody remembers and we will come back. There will be other moments and with that i will recognize mr. Kosar. Thank you mr. Chairman. Can i get this light upon up on the screen, please . Mr. Adler in the background of 1401 section 36b the most important part of the statutory interpretation law the tax . Yes. Taxes the most them gordon part. Is it clear that tax credit should be linked to states that create their own exchanges and can you explain that . Its clear. In a relative provisions of this exchange and a Capital Exchange but then it goes on it goes on to say established by the state so even if one accepts that the Word Exchange in section 1401 references section 1321 is that it goes on to enumerate additional requirements. Air repeats the section number ,com,com ma section 1311 and on top of that is says established by the state in that state is capitalized and is also defined in the statute. And the interpretation offered by mike copanelists requires us to forget or ignore the fact that the statute and ignore the fact that the phrase established by estate is repeated authorizing the tax credits and i would go on to say in the reconciliation bill that amended the act congress recognized that it had to enumerate both section 1311 and section 1321 if that is what it meant so reporting requirements, the congress did not simply say exchange, did not simply say section 1311 exchange. The fact that section 1401 repeats the established by a state required means that even if we except the argument, we have this additional language we have to account for, and the only way his argument can work is if we ignore that language and ignore the expressly defined term in the statute which the testimony says we cannot do. I and my dentist, not an attorney. At the most people out in the real world want to hear it in plain terms. The administrations terminology was to drive individual exchanges so that you had all these 50 different marketplaces. Is that true . That was the intent of the senate bill. As we all know, there was a housesenate conference that may have been intending to make changes to that, but that bill was never brought out. Certainly the said bill that became law was designed test pass every state, create an exchange, and then to use this database exchanges as a means for providing subsidies. So summarized, the legislative history. Well, the history is entirely consistent with the intent to that to have states encourage states to create their own exchanges and to use state run exchanges as the mechanism for providing subsidies and tax credits, and that no provision was made for providing subsidies and taxpayers through federal exchanges, either in text or in the finding because we must remember that while the statute did authorize subsidies to states to help them set up exchanges initially, it provided for no funding for the creation of federal exchanges which further reaffirms no one thought the federal government would have to create exchanges. The secretary of health and Human Services repeatedly said that every state would do it and that is what people expected. What was the mistake here was not in the drafting of the law. It was not realizing the majority of states had no interest in creating their own exchange. Well was the consequence of scott browns election and massachusetts . That the senate bill be more specific. The senate bill adopted the state based exchange not model. It passed the senate. The plaintiff at the time was to have that bill go to a housesenate conference, commerce of the house bill which adopted a different approach. And there are certainly accounts suggesting that at least when it came to exchanges that the house approach was more likely to emerge from that conference. Scott browns election meant there were no wonder the votes in the senate to pass the conference bill. And so in effect the New York Times ran a story about Health Care Benefits for congressional staff. Members of congress this week pointed out that there are many provisions in the law that are the results of congress being stuck with the senate bill as the basis for Health Care Reform and the exchange provisions are one of them. The choice was made to take as senate bill that had many provisions that many people, or inadequate as the only alternative. And that was the choice because there were not the votes to do anything else. So the Senate Bill May have provisions that some may think dont work very well. But that was the choice that was made. Thank you. Thank you. And i would like to recognize an Opening Statement. You could move directly to question. Thank you, mr. Chairman. Witnesses for appearing. I apologize for not being present at your Opening Statements. As you know, the president of the United States came to speak to the Democratic Caucus which happens maybe once or twice a year. So it is obviously important for us to meet with him and be available to answer to ask questions as well. So i apologize for not being here. Hopefully in the future we can accommodate both sides of the aisle. Congress passed the Affordable Care act to make Affordable Health care available to all americans. It is the law of the land, and i am pleased to say it is already working. More than 3 million young adults who would otherwise have been uninsured are now able to stay on their Parents Health insurance. My son is one of them. More than 20 million children with preexisting conditions can no longer be denied Health Insurance. Seniors have saved more than 7 billion on their Prescription Drug costs. Those are just a few of the benefits that have already emily mcmahon. The full impact of the aca will not be felt until next year. Many states have embraced obamacare and implemented their own exchanges and have already announced lower premiums. In some cases dramatically lower than ever was expected. And that is despite offering better, enhanced benefits including free preventive care, no lifetime limits on coverage, and not being able to deny customers because they have a preexisting condition. In california average premiums ended the exchange are for 2 , to 29 percent lower than average premiums this year. In new york there will drop to as much as 50 lower. The law is working, and maybe that is what the opponents are afraid of. What happened when Congress Passes laws . Agencies implement them. That is what the Treasury Department issued regulations implementing provisions of their formal care act theyre relate to premium tax credits it authorizes to make Health Insurance affordable to lowincome earners. I know that when i voted for the law it never occurred to me that americans could be treated differently simply because of where they live. No one ever debated using the subsidies as a carrot or a stake to give states to implement their own exchange. I expected as Many Americans as possible to get affordable coverage and help if they needed why would we give a tax credit to the taxpayers seeking Health Insurance and one state and not a similarly situated taxpayers in another state. Since the fall of 2012 this committee has been scrutinizing treasurys implementation of the Affordable Care act tax provisions including the provision of tax credits for those who meet certain income criteria. Treasurys for these documents give us highlevel briefings and permit a Committee Staff to study sensitive documents without adoptions. What we found was the treasury follow the same transparent procedures in issuing this regulation that it is used in implementing other lost congress has enacted. We have found no evidence to the contrary. The chairman also consulted the cbo last year which confirmed that its core of the Affordable Care act at the time that it was passed in march 2010 assumed that tax credits in all states including states where exchange was established by the federal governments. I asked instead of this part, mr. Chairman, to enter the cbo response. Without objection. As we all know there are detractors to have never liked the Affordable Care act. As part of politics. They have marshalled their best arguments to vigorous we advocate to anyone. First they tried to stop the obamacare act. Then they took to the courts and pursue their case all the way to the United States Supreme Court. They lost their two. The continual effort to roll back time has become frustrating even some members of the majoritys own party. Senators coburn and mccain now categorize that effort stepped back aca as dishonest and tight. Cockburn stated, and , the worst thing is being dishonest with your base about what you can accomplish. Getting everybody up and in creating disappointment. It is a terribly dangerous and not successful strategy. Those attempting to sabotage obamacare are not giving up. All theyre left with now on their second best legal arguments. Todays hearing was called by the majority to put the best light on these arguments. Indeed, two witnesses called by the majority on todays first panel are litigants in pending lawsuits on this very topic. Well i appreciate that these witnesses have traveled to dig to give us their interpretation on the legality of certain aspects of health care law, i want to make this abundantly clear. This hearing is not the proper forum to litigate the merits of these cases. The subcommittee hearing room is not a court room. I hope that members intend to use this area are the documents obtained in the committees investigation to try and in plus litigation. That would be above and beyond the scope of our authority. As you know, i am a strong believer in the importance of congressional oversight, but i do not believe that we should insert the subcommittee in active litigation in the guise of oversight. I hope you will exercise your discretion and direct members to avoid asking questions which could jeopardize in any way a fair trial for all litigants. Otherwise i believe you may intentionally or not permit the Legal Process to be tainted by political and to ferrets. It simply does not serve any legitimate goal of this committee or congress. That said, these arguments present real world implications for millions of hardworking americans who will be seeking access to Affordable Health insurance over the next several months and into the future. This approved lawsuit were to prevail, all he would achieve is making health care on affordable so over 300,000 oklahomans who would no longer be able to receive premium tax credits to help them buy Health Insurance and up,. Contrary to any at the logical victory some may think could be won by this lawsuit, the reality of a legal victory is a terrible loss for lowerincome people of oklahoma that would pay the attorney general salary into sexes are even underwriting the very lawsuit that would deny the benefits. We are all public servants, and we should be better than that, looking to implement the law so that the reality attaches purpose and that it be done in an effective and efficient manner as possible. Unfortunately this congress will be voting this week for the 40th time to repeal or defund the Affordable Care act in whole or in part. So while i may disagree with the attorney generals pursuit of this letter litigation that is so contrary to the general welfare of the people of this state i have to concede that the current house of representatives in its desperate attempt to get this lot is not setting much of an example. I think the Witnesses Today for their appearance and that concludes my comments. And with that if it would be appropriate now for me to ask my opening set of questions. Absolutely. All right. Thank you. So i understand that your reading of the Affordable Care act is that it does not permit the irs to provide premium tax credits to individuals to participate in Health Insurance exchanges administered by the federal government. In back to you believe the irs has no authority to make such rules. Correct. The Congressional Research service has examined this issue and it did not come to the same conclusion. According to its report which i would like to enter into the record on page eight. Without objection. The report states that the irs rule appears to be an exercise of the authority delegated to the agency tass implement section 36 be which includes the authority to provide a refundable tax credits for taxpayers enrolled in Health Insurance exchanges. Have you seen this report . I have. I would note that earlier in the report crs makes clear that airplane reading of the statutory text would likely lead one to the conclusion that the irs does not have the authority. The languages like you just quoted is language that can be pointed to in case of a conclusion that the language is sufficiently ambiguous to allow the irs to make that interpretation, prior to that they strongly suggest the plain reading of the text which is where one must part with foreclose the irs rule. I am glad. Actually, mr. Adler, think in fact what the crs step does in many cases is provide both sides an issue and then comes up with conclusions. What i read just now was the conclusion. Thus if reviewing the best of if a reviewing Court Determines that there was ambiguity surrounding the issue of whether a premium credits are available in federal exchanges and reaches step to of the chevron analysis with respect to the regulations issued under 36 be their regulation will very likely consider a reasonable Agency Interpretation of the statute and a 48 difference by the court. What you just quoted, the word if. Crs, as i said earlier, they know that it is unlikely that a court would reach that conclusion, and i would add that it is important to remember in the context of chevron difference of the question of whether a statute is ambiguous is a question that coors zero no deference to agencies on. The explicit point time and time again is a question of law purely for the courts. And so the fact that the irs believes it has found ambiguity in the statute is not relevant in asking the question of whether or not the text is plain thank you, mr. Adler. I would like to ask you a question. Do you believe congress provided the irs authority to provide tax credits to individuals to participate in the federal exchange . Yes. You are obviously different. Would you like to explain why . Well, in my statement and i regret that i was not here to year. Basically i would make two points. First of all, the text of the statute, of the whole statute, not just the particular phrase that professor adler and his colleagues zero win on, the text about the whole statute supports strongly the sensible interpretation that tax credits and subsidies are to be available to all americans, whatever state they live in, whether they are in a federal exchange for the state with the state facilitated exchange. Secondly, professor adler has come up with an argument that congress it was not just a glitch the supports his interpretation, but that there was actually a deliberate design by the sponsors of the act. And he needs that because the tax text is now really support this point. And this is a completely baseless and really hard to say absurd because it is much more than absurd, the notion that as i said in my statements, senator schumer or senator reid or senator murray or senator baucus deliberately designed an Exchange Mechanism that would cause the statute to fail and deliberately put in the hands of their opponents such as attorney general pruitt, the power to sabotage the act entirely is so absurd that i cannot imagine how i any judge would spend three minutes. So those are the two basic reasons that i feel this interpretation, ingenious the back though it may be. I feel an obligation to represent all the people. I yield back. Mr. Mchenry. Thank you, mr. Chairman. I would say to the Ranking Members, looking at page eight of the Congressional Research service, let me quote, the plain language of 36 be suggests the premium tax credits are available only where taxpayers are enrolled in an exchange established by the state. As noted previously, strict textual analysis of the meeting of the provisions would likely lead to the conclusion that the irs authority to a issued a premium tax credits is limited to situations in which the taxpayers it and rolled. Therefore an irs interpretation that extended tax credits to those a role in federally facilitated exchanges would be contrary tech clear congressional intent. Receiving no chevron difference and likely be deemed invalid. I would say that that i appreciate the Ranking Member entering that into the record. At things to make the case very clearly on why were having this very important during. But make no mistake about it, obamacare is a ms. It is an absolute mess. And what we are trying to do on my side of the aisle and i think reasonable americans have come to this conclusion is it is broken. For us to force this on the American People when theyre having a hard time finding work is the wrong approach, absolutely the wrong approach. And so whether it is attorney general of oklahoma or other elected officials around the country, when they see this being committed on the people and when they look at the clear leader of a lot and you see the fellow government going in a very different direction, they have an obligation to step forward. I commend the attorney general of polk, for stepping forward today and for the work that he is done. Look, the administration has argued that the information reporting requirements added in 36 be that i reference your means that the subsidies are available both as federal and state exchanges, and that is not what the letter of the law says. Mr. Adler, does the administration have the authority is simply decline to implement a provision of law, of the law required . The executive branchs required ted safely administer the laws that passed by congress provided those laws are constitutional and that is true of this administration and prior administrations. If Congress Passes a law that in hindsight seems to be unwise or perhaps even absurd coming it is not the prerogative of the individual agencies to try and rewrite the law through regulation. Of the Congressional Research service put together a Ten Page Memo on this legal question. The irs put out irs or treasury put out one paragraph explanation of their legality. It is the evidence provided by the administration irs and the treasury, is that sufficient . No, it shouldnt. The locations imposed by the clear text and the statute, the irs, like all federal agencies is also on an obligation to engage in a reasonable Decision Making in the administrative procedure act which means when the irs is involved in issuing regulations it has to make clear the reasoning that it goes through that winter in coming up with that regulation. And courts have applied that test to statutory interpretation engage in by agencies. That is the reference. Right. And so the paragraph that the irs provided in finalizing the rules, even if it were impermissible interpretation of the ad, and i dont believe it was, i believe it still fails the reason decisionmaking requirement that all agencies are under in this requirement is a part of the administrative procedure act because it is important that when agencies issue regulations or interpret federal statute that they make clear to the American People the reasons why they are interpreting a statue in a particular way. So this administration, this is not something new for administrations. Well, i think it is fair to say that there are often times when administrations of both parties have failed to engage in Decision Making or fail to fully explain the reasons for the decisions. I think that more often than not when the agency fails to provide an adequate explanation first choice is because it realizes that there is no adequate explanation. I think that is what explains. My time is limited. Attorney general, i will have time to ask you, but i am deeply concerned about this case. Your pursuing folks that have strong moral convictions that own business is being forced to buy Health Care Policies counter to their moral principles and beliefs. And i encourage you to continue your good work on that. There are a lot of folks that have been harmed by this, including in my district. They are very closely watching your actions in the good work youre doing. Thank you, mr. Chairman. I yield back. Thank you, mr. Chairman. Want to thank the panel for being here today and your time, but i have to say, i will start my comments. I dont really have a question. I completely disagree since we have matters of opinion year on the dais. Matters of opinion there by the panel where we are peaking a phrase out of a report. And in the context that we wish, i think the Affordable Care act is in continues to work effectively. The businesses in my district finally have the support to protect the women and other employees to make sure that Insurance Companies dont discriminate against them and provide the bulk of their profits back into the direct delivery of care which they should have been doing all along. And so as you can see, i have my own opinions about the Affordable Care act and the benefits. And i have my own opinion about the statutory language and its legislative history support for the irs rule which allows everyone, regardless if theyre living in a state with a state administered or federally administered exchange to have access to the benefits of the Affordable Care act. And i am not going to ask questions about that because i agree with my colleagues in San Francisco that this is not inappropriate forum. The courts now will decide this issue. Instead of want to make these two points. First, this will mark the 40th time the republicans have attempted to appeal in whole or in part the Affordable Care act and is unprecedented for elected officials to devote as much time to impede the late and stop the implementation of federal law and the benefits that the law will provide to millions of americans. They are wasting precious time and Government Resources by impeding the effective and efficient implementation of federal law. I see this hearing as part of that effort. Second, the Affordable Care act is the law of the land. Our job is to oversee in this committee the Affordable Care act implementation and to make legislative recommendations and or changes which make that process more efficient and effective. Instead of holding a hearing on an issue that is subject ongoing litigation, lets clarify this work and work on legislation that would insure that everyone who lives in the state with the federally administered exchange can receive the same benefits as someone who lives in a state with a state administered exchange. I think we should be productive, not destructive, and that think we should remember the equal Protection Laws of this country which indicate unequivocally that we should be treating everyone the same. Thank you, mr. Chairman. Thank you. Thank you. Mr. Adler referred to the rest of u. S. Aca opponents. I dont know if you are. Some of these guys are in a lawsuit. I am certainly an opponent. Think it is a bad law. But regardless of whether youre for or against the law does not change your interpretation of how the law was written. Correct. I first wrote about these versions of the law many months before the oped. And that was a time when pointing out these provisions, the irs had yet to propose rule. And i was not aware of the potential consequences of restricting tax credits and subsidies in terms of the employer mandate. It was merely a question of such story interpretation and one that had been pointed up by a others as well. That is as basic as it gets. Remember firstyear law students , and you teach at that fine university in ohio. Frankly, kids in grades cool the legislative branch rice pilaf and the executive branch carries it out as written. We all learned in grade school. Certainly any firstyear law student would understand. Let me ask you this. Do you think that the employer mandate which is part of the law scheduled to take effect starting january of next year, do you think that the president has the ability to simply waved the employer mandate . I think that the justification for that has been provided by the administration is inadequate. Do not believe it is subject to legal challenge. I am not sure. I certainly have not seen an explanation that would justify that sort of blanket refusal to implement a clear statutory revision. Two examples of where the language says one thing but the legislative branch wrote one thing and the executive branch is doing something different. Yes. And i would i have been critical of republican administrations for doing similar things. The executive branch that is my point. Whether youre for or against the law does not matter. We have a way things work and his wonderful system in america. The legislative branch rice pilaf and opprobrious the dollars. The executive branch carries up alliance has the dollars. When the executive branch is not do with the legislative branch says every having an unconstitutional fashion. Theyre certainly not discharging their obligations. Let me go back. Again, you talked about this several times, but i would like to hammer this point home, interpreting statutes, the first thing you look at is the clear language. Tell me how these five words are taken out of context, exchange established by the state. I dont think that when that phrase is used repeatedly, not just once, in multiple places, that it can be meeting anything other than what it clearly says. And if the defining of terms is as important as mr. Lazarus says it is in the fact that state is a defined term in the statute should be just as important as his emphasis on the Word Exchange. The other side is accused republicans of sabotaging the law, working against the law. I am, but i would just like to ask a few questions. And trying to stop it because i think it is bad, but i want to ask if he would and frankly i would love to get my reaction. Democratic senator max baucus trying to sabotage the law when he says i just see a huge train wreck coming down the road . Would ask if he thinks that Union President jimmy hoffa is sabotaging the law when he says this will destroy the very health and wellbeing of our members along with millions of other hardworking americans. Frankly abbott as give howard dean is trying to sabotage the law when he says the independent them and Advisory Board is essentially health care rationing body. So the simple fact is this law is not working even though the site says that it is. It is not working and you have to take republicans word for it and democrats were. Completely. And as in my testimony there is clear design in this law that will put the government the federal government in the business of promoting illness and maintaining it as an entitlement. It is bad all the way around. It is distorting what is happening in health care already, causing their least efficient, most expensive, most dangerous sector of the Health Care Industry to be a winner. That is hospitals possible cartels. Ten seconds. I just want to get mr. Lazarus, and you can have time. If the chairman says so, but is max baucus de you agree with senator baucus when he says this is a train wreck coming . Do you agree when he says it will destroy the wellbeing of our members along with millions of other hardworking americans . Do you agree with howard dean of the independent payment Advisory Board is a problem . I need your microphone on. Sorry. I consider myself a lawyer of sorts, and i am not Health Policy expert. Remember, your Opening Statement, that long Opening Statement, you accuse the other three as a being opponents. I assume that means you are a proponent. You agree with the statements that i read or do you think senator baucus has lost it and does not know what he is talking about . I am a very strong supporter of the Affordable Care act. I dont really know what senator baucus was referring to. I just read it to you. I dont know what he had in mind. I am completely unfamiliar with the statements by mr. Hoffman and mr. Deane, so i have no ability to comment on them. Thank you. The chairman of the full committee. Thank you, mr. Chairman. I will start off with i guess i will start off with mr. Adler. See you live in Cleveland Heights . I used to. I grew up there. My brother is dead graduate. My sisterinlaw is with the university. So i guess i am a strong proponent of case western reserve. Glad to hear it. Having said that, i would really like to ask you a constitutional question. And one of them is not constitutional but more a balance of opinions. The congressional budget office, when scoring the Affordable Care act scored it assuming that all states were going to buy into this and participate. With a little checking we asked the cbo how many lawyers they have on it. They said they had basically oneandahalf lawyers fulltime equivalents. None of whom were constitutional lawyers and those lawyers did not issue a decision or an opinion as to why they were scoring that everyone was going to participate. From a standpoint of the law, is there any evidence when people talk about cbo scoring that cbo issued an opinion . Even if they did, is that opinion was not published a members of congress, where it really bear any credibility as to, for example, mr. Attorney general pruitt point of it is not in the four square of the law . I am not aware of any legal precedent for relying upon as ceos core in interpreting statutes. I would note that the cbo of discourse statutes in ways that it is directed to by congress, even if that involves adopting impossible assumptions. I would also note that the cbo in scoring the statute as i understand it did not account for any federal spending necessary to create federal changes. So if the cbo had considered the possibility that the federal government would be creating exchanges, i would think it would have had to account for all the spending that the federal government would have had to engage in to do that for. I think he had made my point very well. In preparation for this hearing we asked for documents. We found out through Public Disclosure that we received 500 documents just before coming here. I had the account and and we received 386. You will be pleased some of the 70 of those pages or your work already publicly posted publicly posted. So you have been presented as responsive to our inquiry as to the administrations decision. Clearly they did not read what they sent us. Lets get back to my democratic friends on the other side who are always saying that the law is a lot. Is there case law that you know of where a lot very specifically does or does not do something, and the executive branch creates a rule that is outside of the actual in the actual text that they can cite. And i am not trying to make the attorney generals case, but we lived through the entire 2400 pages or more that we had to pass before we can find out what was in it. We now know that there is nothing in there that says it. Have you found anything . I know your pieces on this. It goes to Great Lengths to say you did not find it, but if you looked again is there, in fact, anything in that that would allow somebody in good faith, maybe mr. Lazard who is a strong supporter and like to find a scintilla of justification, did you find that . There is nothing in the statute, and we also looked. And to be honest, we expected to find in the legislative history statements that went against art pieces. The expected to find members of congress saying, there will be subsidies and federal exchanges. And in that case the argument would have been, do we go by congressional statement or the plain text of the statute. We could not find even that. And those that have criticized our paper have not been able to find a single contemporaneous statement where any member of congress or supporter of the law said, there will be credits in federal exchanges. The closest that they can find is a statement saying that there will be tax credits in all 50 states, but those same sources usually say that every state will willingly create an exchange which would be a reason for tax credits of 50 states. It is striking how little there is an added the statute itself which is, of course, we should focus on, or the surrounding legislative history. Let me just close with a quick series of questions. The constitution explicitly gives the right of the appropriation of funds to this branch, is that correct . Correct. If we choose not to appropriate funds we make a statement notwithstanding previous law. Correct. So our absolute right not to appropriate funds for portions of the Affordable Care act that we believe do not need to what the president has out of thin air cause them to mean is exclusively our jurisdiction of the constitution. Yes, and i would add that congress has, for the past several decades, regularly opted to defund portions of authorized laws that congress did not want to see implemented and has been done under both republican and democratic majorities. I will leave the doctor added. The other two lawyers were correct. Exclusive jurisdiction of the congress and that congress has a right not to Fund Anything it does not want to fund, particularly if it is outside the existing legislation. Is that correct . Yes. Mr. Lazarists. I know you of the Affordable Care act, but isnt it our right not to fund that which we believe should not be funded and isnt it the right of every success of congress to start anew as to appropriations since George Washington was leading a ragtag army and ask for money a very long time ago. Well, i think it is quite clear that congress has the power the right and responsibility. Was asking i know i need to yield back, but the power is a different question. The right and responsibility under the constitution, wouldnt you say that is clearly within the four squares of our constitution . Particularly the word responsibility is putting a spin on it that i dont think is necessary. I would not necessarily want to add to that, but certainly there is a power. That is what congress is for, and that is what politics is all about. Mr. Chairman, i dont want to engage in politics. The term responsibility to me means a lot. I note to my democratic friends and you, mr. Chairman, right and responsibility of the constitution means a lot to us. I yield back. Mr. Cartwright. Thank you, mr. Chairman. This hearing is nothing but another partisan attack on the Affordable Care act. The gentlemans comments about not engaging in politics notwithstanding. Isnt it a coincidence that it corresponds with the 40th attempt to repeal the Affordable Care act this month jack and, you know, i understand my colleague from ohio has once again referred to the senator, max baucus statement about a train wreck. I think, once again, it is important to put that statement in the context. At the time senator baucus was objecting to the cutting by hhs to the pr budget for implementation of the Affordable Care act. And what he said was, a lot of people have no idea about all of this. People just dont know a lot about it. The kaiser pole pointed that out and the stand yet hired a contractor who was addressing kathleen sebelius. I am just sorry that that is going to be money down the drain because contractors like to make money. I just tell you, i see a huge train wreck coming down. What he was talking about was a people dont know about the Affordable Care act and sign up it is going to be a problem in that dont think anybody disputes that. Opponents of obamacare are trying to deny a low income people in certain states like my state, pennsylvania, the tax credits that they need and deserve under the law to make health care affordable. If they succeed in the courts kamal they will have achieved is creating a twotier society with profound effects in my home state and throughout the nation. What matters most is that it does nothing to address the real issues. The real issue is that four out of five in the u. S. Will live in poverty or long term unemployment at some point in their lives, and the majority have yet to pass a single jobs built in the 113th congress. The real issue is that in places like scranton and wilkesbarre and easton and pottsville, unemployment is over 9 . The real issue is that over 70,000 people in my district dont have Health Insurance. About 6500 of those people are children. In fact, just under nine and a half percent of families and one and have children in my district live below the poverty line. These are the exact people who need these tax credits. Instead we are sitting here wasting time and taxpayer dollars trying to find any possible reading of the law, a technicality to take away health care from the people he needed most. And many of my republican colleagues believe that the aca should be repealed or defunded and have voted nearly 40 times all ready to do so. The efforts have become frustrating, even to members of the republican party. Senators coburn and mccain have expressed their distaste for the continual few tell those to eliminate funding for the aca. And my question for you is, are you aware that despite the Supreme Court ruling upholding the aca the house this week is going to up vote for the 40th time. I am nowhere because you just told me. That aca was clearly designed to provide all americans with the past to Affordable Health care regardless of where they live. The aca represents a measurable progress and has already better the lives of millions of americans. Now, mr. Lazarus, if the opponents are successful what will happen to the millions of americans who are already benefiting from Health Reform . Well, in states like attorney general prove its, the federal government is going to be operating the strange, if the opponents such as c are successful then the large majority of people who were supposed to be benefiting from the law as opposed to be able to get access to Affordable Health insurance policies on the exchanges simply will not be able to do so. I mean, this is why you have to call this not only a poisonpill theory of how to interpret the statute, but it is really as self administered poisonpill theory. Thank you. I say, what assets they would be and if we regress to get into a time when children are denied coverage for preexisting conditions or hardworking people are forced to bankruptcy because of one Health Emergency and where the emergency room, again, in this country, serves as the primary care facility. With that i yield back, mr. Chairman. Thank you. Thank you, mr. Chairman. Today we have heard basically infomercials or commercials for obamacare from the other side of the aisle. The purpose of todays hearing is about the separation of powers and government, the checks and balances and the authorities bestowed upon the constitution to legislate and use those legislative and executive branches. What we had here was a very unpopular law that was pushed through in a hurry with the election of scott brown. They know the law was flawed when it was passed. The house had different ideas about how they should go forward. And the perception by the people at that time and i, like mr. Willey, was a practicing physician when this was passed. And so i look at it through that perspective. But the people in the country did not like this concept. It did not like it in the 90s. They did not like it for five years ago because it represented , in their mind, a federal or government takeover of health care. This in a new. Pacs, the implied in letters that i will introduce in just a minute that it would be better if they have a federal exchange or a National Single payer. But this was widely rejected by the American People and therefore it is my contention that it was their intent to avoid using the term, to avoid using the term federal exchange and focus on state exchanges because state sounded less like government takeover of health care. So this was my intent. I would like to enter into into the records a law review article from professor timothy joe. Without objection. Mr. Adler, can we put that up on the screen . Mr. Adler, have you seen this law review article . Is, i have. Okay. Page seven, professor wright said a way to get around the common during problem would be for congress to exercise his Constitutional Authority to spend money for Public Welfare either by offering tax subsidies for insurance only in states that comply with federal requirements war by offering its illicit payments to states that established exchanges for the federal requirements. Can you comment on whether or not what you found in your research would suggest that the senate bill did this . The said bill certainly is written to do precisely what the professor suggested that it could. And that had been done in prior context, as he notes as with Health Savings accounts. Who is timothy just nyse relevant . See is a law professor who is a very prominent expert on health law. As far as i am aware was very involved in Health Care Reform and helping me develop ideas that were part of Health Care Reform. Mr. Chairman, i would also like to enter into or ask unanimous consent to enter into the record a story from the npr that references Democratic House members from texas who wrote president obama urging that the house approach be preserved in the final bill. Without objection. And also i would like to introduce into the record a letter from u. S. Representative and six of his colleagues to my democratic colleagues. Without objection. Basically this letter is describing where in texas this of this problem and suggested that they urged the president of the house approach should be preserved. Leaders in their state oppose the bill and there will not bother to create an exchange leaving uninsured state residents with no way to benefit from the new law. So it was not an accident that federal exchanges were left out as was suggested. For him to suggest that you, mr. Adler, and the others on this panel are just engaging in selfdefeating span were looking to buy the glitch to bring this of kellogg down, would you disagree with that . As i mentioned before, i first heard about these provisions in the law before i was aware of the way that these provisions interacted with, for example, the employer mandate. Before it was clear that the majority of states would refuse to implement exchanges to me as a scholar of the minister of law and federalism. It was interesting to seek a different way in which Congress Says tried to induce the state collaboration thank you. Could you quickly give us an update on where the lawsuit that you are engaged in is going and what you expect to occur in the near future . Well, thank you, congressman. We have fully briefed the motion to dismiss the federal government. That was argued before the court back in june and we are awaiting the decision by the court at this time. If i could, mr. Chairman, i think it is important to remember that this congress and congress routinely use the spending power to accomplish something called cooperative federalism. And it is not unfamiliar to this committee or to congress and i would say, congressman car ride, with respect to the statement that has been a couple of times that of the all citizens across the country were intended to be treated equally. Routinely states engage in cooperative federalism with congress. Citizens were treated differently quite often. As you know, eligibility determinations are given to the states and there are incentives to the states to match the appropriations of this congress to cover more individuals. You might be surprised that in this state of obama we have a program called in cheryl, that has been around since 2003. It covers 30,000 individuals that could not otherwise afford Health Insurance. Cms has notified the state of obama despite the program being very successful and providing access to health care because the state of obama has not expanded medicaid and the viejo ca, cms is killed that program and told the state of a, to cease operations, under the 1115 medicaid waiver. So it is somewhat thinking right to say that a state when it makes a decision that has been reserved to the state by congress to decide whether a state health care rationing should issue in that state, we made that decision. We are pro end of the rule of law. It is not an opponent of the policy decisions that you have made in this congress. We are seeking to give life and meaning to what you have passed in this body. When an agency makes a decision that is inconsistent with that, when it makes a decision that is clearly against the plain reading of the statute, mr. Lazarus has set on more than one occasion that the context of the statue justifies his position, and only justifies the position if you dont read the plain language of the 1401, section 1401. You have to count that as surplusage to say that somehow these statutes are harmonious with one another as far as providing benefits under a federal exchange. So if this is something that on a couple of occasions this morning the motives perhaps of the state of obama and bring this lawsuit been brought to bear, i want you to know that the motives of my office, i did not the Attorney Generals Office did not make a decision about whether to expand medicaid it did not make a decision about whether to adopt the health care exchange. We are giving life and meeting to the plain reading of the statue honoring the decisions that have been made by our governor and our legislature and by this congress and i believe that every member of this committee should take seriously the language that has been passed by congress to make sure that agencies he that. Otherwise rule of law is the aggregate, and that is what we are part of death. Thank you. Thank you, mr. Chairman perrier. I would say it is tough to take the statute seriously. You have mr. Adler tell the tale again as it has been sadly sold so many times before about this law came into being, and it was not as serious work product on the day that it passed this house and went to the president s desk. Could have been a serious work problem. We could have sorted these out and solve a lot of these problems, but the politics trumka policy and we did not candidly. It embarrasses me that you have to sort this out in the courts and were not able to sort this out here on capitol hill. Ought to be an article one an article to decision, not nautical three decision, and we have failed the citizens of 00 booktv, and that respect. I to got the same word from the white house that if i had only been smarter would not have chosen al savings account. I would have chosen a plan that had more coverage and did not expose me to so much risk and require me to be as responsible. Thankfully the federal government has intervened, counsel make a man i am going to do better starting january 1st and then told will be much happier as a result. I appreciate what was said about not impugning anyones motives and you have no doubt that folks believe what they say when there were trying to do the best. That is not what i heard from my friends on the other side of the aisle this morning which is very frustrating because youre you are, trained in ways with the exception of the doctor behind me, the rest of us only wish we had the skills and insights. Yet folks say perhaps you are out to get your employees, your desire to help them to be well is inferior to the governments desire to treat them after they get sick, and it is incredibly frustrating to me that we secondguess again folks to have spend not just years but decades of their lives becoming experts in this field and we supplant the judgment of our positions with the judge half of our attorneys. Incredibly frustrating to me. Let me ask you because again i appreciate the honesty with which you are approaching this. Obviously we are on different sides of this issue. Let me ask you, i could probably stipulate that section 1401 makes a difference. I might not believe it, but i would stipulated for the purposes of this conversation. Why then do we need to included established by state . Why dont we just say exchange and be done with it . Seems that including that language almost by definition tells me we are trying to distinguish this from all of the other exchange conversations were talking about. Do you not find that troubling . I dont find it troubling. I understand how you could see it that way. I think that my point at the point of those who read this sketch is the way i do is simply that when in 1321 it says that the secretary shall establish such exchange, it is referring back to the definition of exchange which include includes established by the state. And that would be the interpretation which i think is a completely reasonable and not necessarily the only interpretation, but once you admit that it is a potential interpretation you have to look at the whole context and the purpose of the statute and you drive home the point about the dangers of sloppy legislating to be going back to the tale of here we are in the conference, trying to sort out two different congressional positions, trying to bring this language to perfection and then jettisoned the effort altogether. In fact was sitting in this very same chair earlier this year. I dont know if you are familiar with the navigator. My sister language, there is no system language in here whatsoever. This is not the first time we have had this conversation. If you feel the frustration of my colleagues it is because this is not the first time someone has read something into statute. We see it time and time again. If folks wonder what washington does not function, if the administration had come here on any of those occasions and said we made a mistake. Work with us to help us draft resolution, we would be in a different case today. Let me ask you i am looking at ten pages of analysis of the legality surrounding section 1401. I see one paragraph of a treasury analysis on that same topic. What is your assessment of the seriousness with which treasury analyzes this issue . Based on what the Treasury Department published, it does not appear that they engaged in their recent Decision Making that is required of agencies of the issue regulations and purport to provide a qualitative interpretation of the statute. There were derelict in their responsibilities in providing that meager justification. With the chairmans indulgence, let me ask you why. There are a lot of serious public servants. Implementing congressional mandates is not a new job. Why in the world is it that you believe such a cavalier work ethic was applied to this topic when folks are so serious about others . I dont know. There are many instances. We several an article where there were quite forthright about not being able to implement the law in particular ways because the text prevented them from doing so and went on at length discussing the relevant statutory divisions. The way this provision was treated is an anomaly. And i dont know why they did it this way, but as someone who has looked at statute and legislative history and someone, i think the explanation may be that the evidence to support their theory was not there and that thing that is further confirmed by the fact that months later when Treasury Department first began providing explanations for a rule it adopted mutually inconsistent explanations. Such exchange justification and the reliance on the reporting requirements that apply to both sections are mutually inconsistent. They cannot both be correct. Yet october 2012 Treasury Department offered them both simultaneously. I believe that was because there really is not anything there