CBO director: ObamaCare funds were assumed to be for all states

by Peter Sullivan - 05/19/15 4:42 PM ET

The man who led the Congressional Budget Office when ObamaCare was being constructed said Tuesday it was the “common understanding” at the time that subsidies would be available in all states — a crucial question in a looming Supreme Court case.

The challengers in the case of King v. Burwell argue subsidies are only available in states that established their own exchanges, as opposed to a federally-run exchange, citing language in the law referring to an exchange “established by the state.”

{mosads}The case, with a ruling expected in June, could cripple the law by invalidating subsidies on the roughly three dozen federally-run exchanges for about 7.5 million people.

Part of the challengers’ argument is that Congress could have intended to bar the subsidies from federally-run exchanges as an incentive for states to create their own.

Doug Elmendorf, the director of the nonpartisan CBO at the time of the law’s drafting and passage, says the idea that the subsidies would be limited to states creating their own exchange was never brought up while his office was estimating the cost of the law.

“It was a common understanding on the Hill, again on both sides of the Hill, on both sides of the aisle, in late 2009 and early 2010, that subsidies would be available through the federal exchange as well as through state exchanges,” Elmendorf said in an interview at the Peterson Foundation fiscal summit.

“And I’m confident in saying that because CBO’s analysis always worked under the view that subsidies would be available under the federal exchange.”

Despite all the scrutiny of his office’s cost projections, he said, the assumption of subsidies being available on both types of exchanges was never questioned, he said.

“Our analysis was subject to a lot of very intense scrutiny and a lot of questions, and my colleagues and I could remember no occasion on which anybody asked why we were expecting subsidies to be paid in all states regardless of whether they established their exchanges or not,” he said.

“And if people had not had this common understanding about what the law was going to do at that time, I’m sure we would have had a lot of questions about that aspect of our estimates.”

Elmendorf had made similar comments in a 2012 letter to Rep. Darrell Issa (R-Calif.), saying the idea of limiting the subsidies to some exchanges “did not arise” during wide-ranging discussions with congressional staff as the bill moved forward.

Many congressional aides involved in the process have also said it was not their intention to limit the subsidies.

However, congressional intent is not the entire consideration. The Supreme Court’s justices vary in how much they take intent into account.

The more conservative justices are more inclined to look at the plain text of the law itself, which the challengers argue clearly limits the subsidies to state exchanges.

Tags Doug Elmendorf Patient Protection and Affordable Care Act