A federal court has struck down a rule from the Internal Revenue Service making Americans in federally-run health insurance marketplaces eligible for subsidies, a decision that could seriously imperil implementation of the Affordable Care Act. [...] The ruling was a 2-1 decision by a three judge panel. Judge Harry Edwards, the lone Democratic-appointed judge on the panel, dissented.
Fortunately, courts do not read statutes by cherry-picking single phrases to defeat the entire purpose of laws.... If one views the totality of the ACA -- its purpose and its other provisions -- it's clear that tax credits are available in the federal exchange. The Affordable Care Act was meant to "provide affordable ... coverage choices for all Americans." A key section says, "Each state shall ... establish an ... Exchange," but another section provides that if a state "elects" not to establish the "required Exchange," the secretary of health and human services must "establish and operate such Exchange." These sections both require states to establish exchanges and allow them not to do so. Congress gave the IRS the responsibility to resolve such contradictions, and the IRS adopted the only reasonable approach. If a state does not create the "required Exchange," HHS steps into its shoes and sets up "such Exchange." The law, in other words, requires the federal government to create the "Exchange established by the state," with the same authorities and responsibilities as state exchanges, including offering premium tax credits. This may be a convoluted way of writing a statute, but it is the only way of reading the statute that makes sense of the entire statute and carries out its purpose. It is how the states that decided not to establish exchanges understood the law. It is how the only two federal courts to rule on this issue so far have read it. It is how Judge Harry T. Edwards of the D.C. Circuit panel read the statute when he called the plaintiff's argument "preposterous."