Amicus Curiae Brief — King v. Burwell, 135 S. Ct. 475 (2014) (No. 14-114)

~ Supreme Court, U.S. ~

FILED

DEC 2 9 2014

(CE OF THE CLEHK

No. 14-114 COURT, U.S.

IN THE

SUPREME COURT OF THE UNITED STATES

DAVID KING, ET AL.,

Petitioners,

Vv.

SYLVIA BURWELL, SECRETARY OF HEALTH AND HUMAN

SERVICES, ET AL.,

Respondents.

On Writ of Certiorari to the United States Court of

Appeals for the Fourth Circuit

BRIEF OF MISSOURI LIBERTY PROJECT AND

MISSOURI FORWARD FOUNDATION AS AMICI

CURIAEIN SUPPORT OF PETITIONERS

JOSHUA D. HAWLEY D. JOHN SAUER

323 Hulston Hall Counsel of Record

Columbia, Missouri SARAH E. PITLYK

65211 MICHAEL MARTINICH SAUTER

CLARK & SAUER, LLC

ERIN MORROW HAWLEY 7733 Forsyth Boulevard

212 Hulston Hall Suite 625

Columbia, Missouri St. Louis, Missouri 63105

65211 (314) 332-2980

jsauer@clarksauer.com

Counsel for Amici Curiae

i

TABLE OF CONTENTS

pe OP ee iii

INTEREST OF AMICI CURIAE.............c00c:00eeee0000 1

SUMMARY OF THE ARGUMENT......................... 2

IE enartneichincianttacmndtbancedandyiteapashbnbidddeinanniibe 6

I. Congress Commonly Threatens to Withhold

Benefits from States’ Citizens to Encourage

State Participation in Federal Programe. .......... 6

Il. The ACA Reflects Congress’s Judgment that

State Participation Would Be Critical to the

Public Acceptance of the Act. ...................000eee0000+ 9g

III. Many States Have Rejected State Exchanges

After Careful and Informed Political

EE ROL TEA ELE EAI NSE Re ee me eT 13

IV. Enforcing the ACA as Written Best Accords

with the Institutional Roles of this Court,

Congress, and the States in our System of

S'NSEEAEDE VE 2 BABIN Ms EAE CP LIE NE KG 21

A. Enforcing the plain terms of the ACA

accords with this Court's limited

RR RIAL A ltt Rd ATA OS WA OT 21

B. Enforcing the ACA as written accords

with Congress’s supremacy in legislative

matters and respects the compromises of

the legislative process. .................s:scssseeeeeees 23

li

C. Enforcing the ACA as written accords

due respect to the States and preserves

the results of state political processes........ 26

1. As written, the ACA preserves a

more robust role for States to

exercise their traditional authority

over health care policy. ..................-....+. 26

2. As written, the ACA promotes

democratic accountability by

conferring authority over health-

care reform on democratically

responsive state officials....................... 28

3. As written, the ACA fosters

democratic participation by

ordinary citizens in state political

I ncecennccitnicnnniacerammrsicinenteecsssnctn 30

4. Enforcing the ACA as written will

preserve the democratic choices

resulting from informed state

consideration of the exchanges............. 31

IE occetectinscrssecsensccctccossocestontsizensbinsesoubins 34

TABLE OF AUTHORITIES

Cases: Page

Alaska Dep’t of Envtl. Conservation v.

E.P.A., 540 U.S. 461 (2004) ....0..0.. eee 4, 26, 32

Barnhart v. Sigmon Coal Co.,

ee ts I ae diiss cabcicacleemssasanonacien 22, 25

Bd. of Govs. of Fed. Res. Sys. v.

Dimension Fin. Corp., 474 U.S. 361 (1986) .. 25, 26

Bond v. United States, 131 S. Ct. 2355 (2011)........ 27

Davis v. Monroe Cnty. Bd. of Educ.,

i ecnadile 29

Exxon Mobil Corp. v. Allapattah Servs.,

I Bit Se I gic aiiaiasnsaencconntsocieinkesnssancestedts 24

FERC v. Mississippi, 456 U.S. 742 (1982) .............. 30

Gregory v. Ashcroft, 501 U.S. 452 (1991).......000...... 27

Halbigv. Burwell, 758 F.3d 390

RR RNG ae De FS aT SA a passim

Indiana v. Internal Revenue Serv.,

Case No. 1:13-cv-01612 (S.D. Ind.) ..............0....... 18

Kingv. Smith, 392 U.S. 309 (1968) ...........c0ccc0c00ee 7

Lamie v. United States Tr.,

a 24

Massachusetts v. Mellon, 262 U.S. 447 (1923) ......... 5

Nat? Fed’n of Indep. Bus. v. Sebelius,

Oe NU eicccctterssetcerctecsovacencoven passim

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co.,

RNR 9 510 Pe aceroreniee 27

New Yorkv. United States, 505 U.S. 144

RR aR Ce NESE a Ra ali A SE eS Hea 21, 28, 29, 32

Pegram v. Herdrich, 530 U.S. 211 (2000) ............... 27

Printz v. United States, 521 U.S. 898 (1997).......... 27

1V

Cases Continued: Page

Pruitt v. Sebelius, Case No. 6:11-cv-00030 (E.D.

(NBR eth A stl Neeser ea vienna nah sede herald 19

Pub. Citizen v. Dep't of Justice, 491 U.S. 440 (1989)

nA SE ROSSER ne NR RARE AR ROA RS: BE Peo RD ty NEY SI 8.90 23

Ragsdale v. Wolverine World Wide, 535 U.S. 81

RR Ree eS SRS a CPanel ere P04 25

Revesv. Ernst & Young, 494 U.S. 56 (1990)........... 24

Schafferv. Weast, 546 U.S. 49 (2005) ...........:.0c0000+. #

Schuette v. Coalition to Defend Affirmative Action,

134 S. Ct. 1623 (2014) ...........ccccsseseccccsseeee 20, 21, 31

United States v. Locke, 471 U.S. 84 (1985)............. 24

United States v. Lopez, 514 U.S. 549 (1995)..... 12, 28

W. Va. Univ. Hosps. v. Casey, 499 U.S. 83 (1991) .. 22

Statutes:

ei ie Ne rsa ticesedde and acandaprahieniomeages ss

I ae I cosines scisissno'tcpadclipsndesiennionnasbanannactannitaasins 8

ER | RRA Rar RAT TRE Ns deh REA Svea I

SE EEE OP Mr sasicdsonsacapesiosevcpoenanaliabéessesdemacbannasenionant 6

Fee ch bentnticsscdsnecvscreinsinivicssnnserishumencsnenis 8

eUsce Bi |... x

Be I ceccriitteceddecisistscheasticaiieeonnieveatenmniinioapinetns 7

Be ee Oe i icstierectnenctecssnnsciidanialenddndinpcancdenspcuntainte 7

Mo. Rev. Stat. § 376.1186. ........ccccccceceseceseeceseseeeeees 14

eee: ere 2 fons ek oe 15

Other Authorities:

155 CONG. REC. $13853 (ec. 23, 2009) .............000+ 12

155 Cons. REC. $13862 (Dec. 23, 2009) ............ 11,12

v

Other Authorites Continued: Page

Abbe R. Gluck, Jntrastatutory Federalism and

Statutory Interpretation: State Implementation of

Federal Law in Health Reform and Beyond, 121

YALE LJ. 534 (2011) 0.0... eceeceeeceeceeseeees 9, 10, 11, 24

Ambiguity in Affordable Care Act could impact

Missourians, MIZZOU WEEKLY (Nov. 15, 2012)

available at

http://mizzouweekly.missouri.edu/archive/201 2/34-

13/health-care-/index.php................cccccccccseeeeceeeeee 15

Christie Herrera, Op-Ed, Kudos to Missouri Senate

for Blocking Health Exchange, SOUTHEAST

MISSOURIAN (March 18, 2012), available at

http://www.semissourian.com/

SOOT UGBOO TS. GE occccessccccesccccccccccceseseccocecesescesoes 15

Eric Eyre, W. Va. and Feds to Share Health

Insurance Exchange, CHARLESTON GAZETTE (Dec.

10, 2012), available at http://www.wvgazette.com/

News/201212100096. ....0.........ccccccccceccsseeceseeecceeeeee 20

Health Insurance Exchange Working Group

Findings, October 30, 2012, available at

http://www.doi.idaho.gov/HealthExchange/Final_r

SII csnsiciinipasbbiibinndaaiuminisaadennssenconuaasumousanidiacaae 19

John F. Manning, 7he Absurdity Doctrine, 116 HARV.

Bi rs I es 23

JOURNAL OF THE MISSOURI HOUSE OF

REPRESENTATIVES, April 14, 2011, at 127, available

at

http://www.house.mo.gov/billtracking/bills111/jrnp

REM Ti eh earnest Se SAL ALES, oY 13

vi

Other Authorities Continued: Page

Kate Zernike, Christie Vetoes Health Insurance

Exchange, N.Y. TIMES (May 10, 2012), available at

http://www.nytimes.com/2012/05/11/nyregion/chris

tie-vetoes-health-insurance-exchange-for-new-

a a 16, 17

Maine Issues Letter to Federal Health Officials

Opting Out of Health Insurance Exchanges (Nov.

16, 2012) available at

http://content.govdelivery.com/bulletins/gd/MEGO

ce RMESENS 2S Sane Rene oh oe Ie a eS Se 17

Missouri's Effort to Create Health Insurance

Exchange Falls Short in First Attempt, HEALTH

CARE FOUNDATION OF GREATER KANSAS CITY, June

8, 2011, available at

http://hcfgkc.org/news/missouris-effort-create-

health-insurance-exchange-falls-short-first-

New Hampshire Health Insurance Exchange Ban

Headed to Gov. Lynch June 16, 2012) available at

http://news.heartland.org/newspaper-

article/2012/06/16/new-hampshire-health-

insurance-exchange-ban-headed-gov-lynch......... 16

Nov. 15, 2012 Letter from Mike Pence to Mitch

Daniels, available at

http://www.in.gov/aca/files/November_15_Pence_L

i itiatcsavennsdcsccenictitasireinicntiinstisttnnividediitciaincbiceni 18

Nov. 6, 2012 General Election Results, Missouri

Secretary of State, available at

http://enrerchives.sos.mo.gov/enrnet/default.aspx?

REET A Na ERE Ne cE MANNS te OER RP 14

vil

Other Authorities - Continued: Page

Outspoken Critic of Obamacare Helped to Turn

LePage against State Exchange, PORTLAND PRESS

HERALD (Nov. 23, 2014), available at

http://www.pressherald.com/2014/11/23/outspoken-

critic-of-obamacare-helped-to-turn-lepage-against-

RE RRO EERE AEELE El ne eae Nena 17

THE FEDERALIST NO. 45 (J. Madison) ...................... 27

THE FEDERALIST No. 79 (A. Hamilton).................... 23

Legislation:

Personal Responsibility and Work Opportunity

Reconciliation Act of 1996, Pub. L. No. 104-193,

Ee ls SIE pevickocestassccncssacoumdscesidacceshcamnsdenBncuebaass 7

]

INTEREST OF AMICI CURIAE

Founded by constitutional lawyers and law

professors Joshua D. Hawley and Erin Morrow

Hawley, Missouri Liberty Project and Missouri

Forward Foundation are nonprofit organizations

dedicated to promoting constitutional liberty and

limited government. As part of their mission, the

Project and Foundation seek to give ordinary

Missourians a meaningful voice in government.

Following adoption of the Patient Protection and

Affordable Care Act (“ACA” or “Act”), Missouri

citizens elected by statewide ballot to prohibit the

establishment of a state-based exchange under the

Act. The IRS rule at issue here, however, effectively

nullifies this decision by Missouri voters. As a voice

for Missourians, the Project and Foundation have an

important interest in seeing that a federal regulation

that exceeds the Executive Branch’s statutory

authority does not override the deliberative choices

of Missouri citizens.'

1 Pursuant to Supreme Court Rule 37.6, counsel for amici

curiae represent that, in consultation with amc, they authored

this brief in its entirety and that none of the parties or their

counsel, nor any person or entity other than amuci or their

counsel, made a monetary contribution intended to fund the

preparation or submission of this brief. Counsel for amici also

represent that all parties have consented to the filing of this

brief.

2

SUMMARY OF THE ARGUMENT

The ACA is a cooperative-federalism statute that

insists on state participation for the operation of

some of its provisions. It reflects Congress's

judgment that the engagement of state voters and

political actors would be essential to the public

acceptance of the Act. The Act therefore gives the

States powerful incentives to set up state exchanges.

After careful consideration, however, many state

voters have deliberately rejected state exchanges

with their attendant benefits. The voters of

Missouri, for example, voted by referendum not to

establish a state healthcare exchange. This Court

should respect the outcome of these state political

judgments and enforce the ACA as written.

By its plain terms, the ACA gives the States the

choice of establishing state-based healthcare

exchanges. The Act incentivizes state participation

by providing tax benefits for citizens living in States

that choose to set up exchanges. Contrary to the

Government, this assortment of choices and

incentives is hardly “inconceivable,” “unfathomable,”

or in any way unprecedented. It is, in fact, entirely

familiar. Congress routinely attempts to incentivize

state participation in federal social-welfare programs

by promising benefits or withholding incentives.

There is particular reason to think that this was

Congress’s purpose here. The ACA passed Congress

by the narrowest of margins, in the face of concerted

political opposition. Under these circumstances, it is

not surprising that Congress viewed the active

involvement of the States in implementing the ACA

3

as essential to securing public acceptance of the Act.

State political actors have distinct advantages over

federal agencies in promoting public acceptance of

new social-welfare programs. Among other things,

they are closer to the voters and better able to

respond to public concerns. Congress is keenly

aware of these advantages, and it has come to view

the States as indispensable partners in the

administration of social-welfare legislation. The

plain terms of the ACA reflect its framers’ decision to

give state voters and political actors compelling

incentives to participate in the ACA’s

implementation. The plain terms of the ACA also

allow state citizens to choose not to participate.

After the ACA’s enactment, state voters and

political actors engaged in careful, thoughtful, and

well-informed consideration of whether to establish

state exchanges. For example, an overwhelming

majority of Missouri voters rejected a state exchange

by enacting through referendum a statute that

forbids the Governor to establish a state exchange.

In Missouri and elsewhere, such debates have been

marked by public awareness that tax subsidies may

not be available on the federal exchanges.

Notwithstanding this eventuality, numerous States

consciously refused to establish state exchanges, for

various reasons. Those reasons include concerns

about the unknown future costs of operating the

exchanges, opposition to federal encroachment on

traditional state regulation of health care, the desire

of state employers to avoid the employer mandate,

and for some state actors, the desire to pressure the

political branches to revisit the ACA.

4

This Court should interpret the ACA to give full

effect to the results of the state deliberation that the

statute’s plain terms invite. This interpretation best

accords with the constitutionally appointed roles of

this Court, Congress, and the States—not to mention

the statute’s plain text. Giving effect to the statute

as written will best preserve this Court’s role as the

faithful interpreter of Congress’s enactments, and

adhere to this Court’s traditional refusal to second-

guess Congress’s political judgments. This

interpretation will also accord with Congress’s

supremacy in enacting legislation: It will give effect

to the vigorously negotiated compromise that

emerged from the legislative process. Congress, not

this Court, has both the authority and the

responsibility to “correct” any perceived

shortcomings of the ACA as written.

Further, enforcing the ACA as written will best

safeguard the traditional role of the States in our

system of federalism. The Government’s atextual

reading “conflicts with the express language of the

[ACA] ... and with principles that preserve the

integrity of States in our federal system.” A/aska

Dep't of Envtl. Conservation v. E.P.A., 540 U.S. 461,

502 (2004) (Kennedy, J., dissenting). Enforcing the

statute as written will preserve the States’ historic

role as primary regulators of health care. It will

promote political accountability by ensuring that key

decisions about health care are made by political

actors who are more responsive to the citizens than

are federal bureaucrats. It will enhance the

opportunity of citizens for democratic deliberation.

Above all, it will protect individual liberty.

+)

Considering the ACA, a plurality of this Court

once remarked: “In the typical case [of federal

spending legislation] we look to the States to defend

their prerogatives by adopting ‘the simple expedient

of not yielding’ to federal blandishments when they

do not want to embrace the federal policies as their

own. The States are separate and independent

sovereigns. Sometimes they have to act like it.”

Nat'l Fed’n of Indep. Bus. v. Sebelius (““NFIB”), 132

S. Ct. 2566, 2603 (2012) (opinion of Roberts, C.J.)

(internal citation omitted) (quoting Massachusetts v.

Mellon, 262 U.S. 447, 482 (1923)). By largely

rejecting the state exchanges, the States have

“actled] like it.” Jd. They have “adoptled] the simple

expedient of not yielding to federal blandishments

when they [did] not want to embrace the federal

policies as their own.” Jd. (quotation omitted). On

the Government’s view, their decisions were

meaningless. This Court should correct that

misimpression.

6

ARGUMENT

The ACA is a cooperative-federalism statute

whose plain language reflects Congress’s political

judgment that the participation of state actors would

be critical to the statute’s public acceptance.

Congress routinely incentivizes States to participate

in federal social-welfare programs, and there is good

reason to believe that Congress did the same here.

The ACA passed Congress by the narrowest of

margins and in the face of concerted political

opposition. Under these circumstances, it is not

surprising that Congress viewed State cooperation in

the Act’s programs as critical to the Act’s future.

Accordingly, the ACA invites the States to set up the

exchanges on which health insurance is to be Sought

and sold. While the Act does not requi™ state

cooperation, it generously incentivizes state

involvement. Many States, however, declined the

offer, including the voters of Missouri. This Court

should respect the political decisions of state voters

and their elected representatives and enforce the

ACA as written.

I. Congress Commonly Threatens to Withhold

Benefits from States’ Citizens to Encourage

State Participation in Federal Programs.

The plain terms of the ACA threaten to withhold

an important federal benefit—namely, ' tax

subsidies—from the citizens of States that do not

establish a state exchange. See 26 U.S.C.

§ 36B(b)(2)(A), (c)(2)(AG). The Government argues

that it is inconceivable that Congress intended this

threat to withhold federal benefits as an incentive to

7

the States to establish exchanges. Gov't Br. in Opp.

to Pet. For Certiorari, at 27 (“No sound approach to

statutory interpretation would attribute to Congress

the intent to create such a_ self-annihilating

scheme.”); see also Halbig v. Burwell, 758 F.3d 390,

413 (D.C. Cir. 2014) (Edwards, J., dissenting). On

the contrary, federal legislation routinely threatens

to withhold federal benefits from citizens of States

that do not cooperate in the administration of the

legislation—even when withholding such benefits

would significantly impede the achievement of the

law’s central purposes.

Instances of this tactic abound. For example, the

Federal Temporary Assistance for Needy Families

(“TANF”) program provides block grants to States to

establish subsistence-welfare programs, but only if

the States comply with numerous requirements in

structuring those programs. See 42 U.S.C. § 602;

King v. Smith, 392 U.S. 309, 316-17 (1968)

(describing the similar structure of TANF's

predecessor, AFDC). If States opt not to comply with

those requirements, the federal government denies

all TANF funding to the State, even though that

denial would undermine TANF’s aims of supporting

families and ending welfare dependency. See 42

U.S.C. § 601; see generally Persona] Responsibility

and Work Opportunity Reconciliation Act of 1996,

Pub. L. No. 104-193, 110 Stat. 2105.

Similarly, the Individuals with Disabilities

Education Act (“IDEA”) provides funding for local

schools to educate children with disabilities, but it

withholds funding from States that do not comply

with an extensive list of federal statutory

8

requirements. See 20 U.S.C. § 1412(a); Schaffer v.

Weast, 546 U.S. 49, 52 (2005). Likewise, the Federal

Unemployment Tax Act, 26 U.S.C. §§ 3301-3311,

grants federal tax credits for taxpayer contributions

to State unemployment funds, but it denies those

benefits to taxpayers whose States’ unemployment-

compensation laws do not comply with a number of

federal requirements. See 26 U.S.C. §§ 3302(a)(1),

3304. In the same vein, the No Child Left Behind

Act of 2001, Pub. L. No. 107-110, 115 Stat. 1425

(“NCLB”), conditions federal education grants on

States’ compliance with numerous statutory

requirements. See, e.g., 20 U.S.C. § 6311{a), (b).

Denying NCLB funds to non-compliant States would

plainly defeat NCLB’s goals of providing children in

those States “a fair, equal, and significant

opportunity to obtain a high-quality education.” 20

U.S.C. § 6301.

In short, like nearly every other regime of

cooperative federalism, the ACA conditions the

receipt of an important federal benefit by a State’s

citizens on the State’s agreement to cooperate in the

administration of the ACA’s federal-benefit program.

There is nothing “fanciful” about it. Halbig, 758 F.3d

at 413, 414, 420, 425 (Edwards, J., dissenting).

Rather, such incentives reflect a common, even

preferred, tactic of the framers of federal social-

welfare legislation.

9

Il. The ACA Reflects Congress’s Judgment that

State Participation Would Be Critical to the

Public Acceptance of the Act.

Congress determined that state involvement

would be important to public acceptance of the ACA

and accordingly offered the States significant

incentives to participate. These incentives are

commonplace. The federal government has long

since come to see the States as indispensable

partners in the administration of federal social-

welfare legislation. Indeed, given the vocal and

highly organized political opposition to the ACA’s

passage, Congress very rationally could have

concluded—and evidently did conclude—that the

voluntary engagement of state voters, officials, and

agencies would be essential to the successful

implementation of the Act. Accordingly, the ACA

provides the States compelling incentives to

cooperate in the administration of the exchanges.

There is no doubt that Congress is keenly aware

of the advantages of employing state political actors

to implement federal welfare legislation and thereby

promote its acceptance. Implementation of federal

legislation by state actors “offers a means for deeper

entrenchment of federal statutory norms through a

broader web of state and local implementers than

does federal implementation alone.” Abbe R. Gluck,

Intrastatutory Federalism and Statutory

Interpretation: State Implementation of Federal Law

in Health Reform and Beyond, 121 YALE L.J. 534,

565 (2011). “[Djecentralizing implementation

typically presses into service not only state agencies

but also state legislators and executives (governors,

10

commissioners, attorneys general, and so on), and

does so in a way that is far more direct than the

initial role played by Congress and the President in

federal statutory implementation.” Jd. at 570.

Congress deliberately employs state implementation

as a “strategic tool, . . . a nationalizing mechanism

utilized by Congress to facilitate its takeover of a

new field.” Jd. at 543. Federal policymakers are

aware that the use of the States tends to promote

public acceptance of new federal programs, since

“there are potentially important, and sometimes

public, moments of deliberation about the new

federal statute—moments that ... certainly are

closer to ‘the people’ simply because they happen at

a local level.” Jd. at 571-72.

Congress had maximal reason to be concerned

about the public acceptance of the ACA, given the

high-profile political and public opposition to its

passage. The ACA is an ambitious public-welfare

program designed to reshape the Nation’s health-

care system. The ACA faced significant barriers to

passage, including vigorous political opposition in

Congress and organized public resistance. Facing

these politica] realities, it is not surprising that

“Congress chose ... to preserve a central role for

private insurers and state governments,” NFTB, 132

S. Ct. at 2609 (Ginsburg, J., concurring in part and

dissenting in part), in an attempt to achieve broad

public acceptance for the ACA.

In fact, “we have evidence from the ACA’s

legislative history that the choice between state and

federal implementation was critical to the statute’s

passage.” Gluck, 121 YALE L.J. at 578. “[T)he

11

question of state/federal implementation was the key

question that divided the House and Senate versions

of the legislation.” Jd. Because the election of

Senator Scott Brown to replace Senator Edward

Kennedy deprived the ACA’s supporters of the 60th

vote for passage in the Senate, the bill had to be

passed through the reconciliation process, which

meant that only the previously-passed Senate

version could be enacted. See id. at 578 n.118. For

that reason, “[gliving the states the leadership role

lin implementation] was the concession ultimately

required to close the deal.” Jd. at 578.

The congressional debate over the States’ role

focused specifically on the establishment and

implementation of the state exchanges: “[T]he major

point of contention between the House and Senate

versions of the bill was whether the states or the

federal government would run the new insurance

exchanges.” /d. at 575. Supporters of state-run

exchanges argued that such exchanges would

directly promote public acceptance of the Act: “[Al]s a

matter of how individual Americans encounter the

health insurance system—as an expressive and

informal matter—a nationally operated system of

insurance purchasing would convey something very

different about the allocation of state and federal

power in this area.” /d.

Multiple Members of Congress’ expressly

recognized that engaging the States would be critical

to effective implementation of the ACA. For

example, Senator Maria Cantwell stated that

“[mjany States in our country have been the most

cost-effective tools for delivering new and efficient

12

health care models, while we at the federal level still

struggle to try to drive these policies.” 155 CONG.

REc. S13862 (Dec. 23, 2009) (statement of Sen.

Cantwell). She publicly urged the Senate to “[llet

States do what they have done best for the last

several decades; that is, innovate ....” Id.

Similarly, Senator Ron Wyden pointed to health-

reform proposals in Oregon and Vermont as he

praised ACA provisions that would permit States “to

tailor health reform to best meet the needs of their

citizens.” 155 CONG. REC. S13853 (Dec. 23, 2009)

(statement of Sen. Wyden).

The States long have played a central role in

experimenting with innovative public-policy

solutions. See United States v. Lopez, 514 U.S. 549,

581 (1995) (Kennedy, J., concurring). The ACA

reflects a congressional judgment that engaging the

States offered the best opportunity for successful

implementation and public acceptance. In order to

ensure this essential state engagement, the ACA

employed the strongest incentive that Congress

could muster.

The history of the ACA’s passage, therefore,

directly contradicts the assertion that “[iJt is

inconceivable that Congress intended to give States

the power to cause the ACA to ‘crumble.” Ha/Jbig,

758 F.3d at 413 (Edwards, J., dissenting); see also id.

at 420 (“It is unfathomable that Congress intended

to allow States to effectively nullify the individual

mandate ....”). To the contrary, the plain terms of

the ACA indicate that Congress viewed state

cooperation as so essential to the public acceptance

of the ACA that Congress consciously chose to offer

13

powerful incentives for compliance, and equally

powerful disincentives for non-compliance.

Ill. Many States Have Rejected State Exchanges

After Careful and =MInformed Political

Deliberation.

As the plain text of the Act envisions, the

ACA’s passage prompted thorough public debate by

state voters and political actors on the issue whether

to establish state exchanges. Ultimately, after much

deliberation, more than thirty States declined to

establish state exchanges, notwithstanding the

powerful incentives to do so. Many of these States

rejected exchanges with the understanding that

doing so might deprive their citizens of tax subsidies;

indeed, some States did so for the express purpose of

avoiding the tax subsidies and their statutory

effects.

For example, in Missouri, the Missouri General

Assembly was initially poised to create a state

exchange in 2011. The Republican-dominated House

of Representatives passed a bill to create a state

exchange by a vote of 157-0. See JOURNAL OF THE

MISSOURI HOUSE OF REPRESENTATIVES, April 14,

2011, at 127, available at

http://www.house.mo.gov/billtracking/bills 11 1/jrnpdf/

jrm055.pdf.2 In the Senate, however, the bill stalled

due to opposition by Senators wh» believed that the

bill gave the federal government too much control

over the exchange. See Missouri's Effort to Create

Health Insurance Exchange Falls Short in First

2 All internet sources were last visited December 23, 2014.

14

Attempt, HEALTH CARE FOUNDATION OF GREATER

KANSAS CITY, June 8, 2011, available at

http://hcfgkc.org/news/missouris-effort-create-health-

insurance-exchange-falls-short-first-attempt.

Opponents indicated that they could support the

creation of a state-based exchange, but only with

greater privacy protections and strengthening of

Missouri's control over the exchange. /d.

Subsequently, in 2012, the Missouri General

Assembly presented the issue of the creation of

Missouri's exchange to the voters of Missouri.

Specifically, the General Assembly submitted for

voter referendum the question whether Missouri law

should be amended to provide that “[nlo state-based

health benefit exchange may be established, created,

or operated within this state in order to implement

Section 1311 of the federal health care act, 42 U.S.C.

Section 18031,” unless authorized by the referendum

or by the General Assembly: and that “{iJn no case

shall the authority for establishing, administering,

or operating a state-based health benefit exchange in

Missouri be based upon an executive order issued by

the governor of Missouri.” Mo. Rev. Stat.

§ 376.1186.1, 2. In November 2012, this referendum

was approved by 61.7 percent of Missouri voters, or

1.573 million votes out of 2.549 million cast. Nov. 6,

2012 General Election Results, Missouri Secretary of

State, available at

http://enrarchives.sos.mo.gov/enrnet/default.aspx?eid

=750002497. This referendum effectively halted any

effort to set up an exchange in Missouri and barred

Missouri’s Governor from creating an exchange by

executive order.

15

Missouri's referendum occurred amid public

awareness that failure to establish a state exchange

could result in the unavailability of tax subsidies for

purchasing insurance in the state. See, e.g., Christie

Herrera, Op-Ed, Kudos to Missouri: Senate for

Blocking Health Exchange, SOUTHEAST MISSOURIAN

(March 18, 2012), available at

http://www.semissourian.com/story/1826974.html

(op-ed approving the blocking of the state exchange

while noting that the ACA does not “offer subsidies

to people buying insurance in the federal exchange”);

Ambiguity in Affordable Care Act could impact

Missourians, MIZZOU WEEKLY (Nov. 15, 2012),

available at

http://mizzouweekly.missouri.edu/archive/201 2/34

13/health-care-/index.php (asserting that the

outcome of Missouri’s referendum “put $2.2 billion in

federal health insurance subsidies for low-income

Missourians at risk”).

Other States have similarly elected not to create

state exchanges following democratic deliberation.

And like Missouri, many of these states did so with

the understanding that failing to create an exchange

could mean the loss of federal incentives. For

example, in 2012, the New Hampshire legislature

enacted a _ statute providing that “[nlo New

Hampshire state agency, department, or political

subdivision shall plan, create, participate in or

enable a state-based exchange for health insurance

under the [ACA], or contract with any private entity

to do so.” N.H. Stat. § 420-N:7(D (June 18, 2012).

The same statute provides that “[sltate agencies or

departments may interact with the federal

government with respect to the creation of a

16

federally-facilitated exchange for New Hampshire.”

N.H. Stat. § 420-N:7(1D. Proponents of the New

Hampshire bill expressly acknowledged that

declining to establish a state exchange meant

foregoing federa) subsidies. Proponents recognized

that the ACA “lacks authorization for the federal

government to offer subsidies through the [federal]

exchanges, making state-level creation of the

exchanges all the more essential for [the ACA] to

work.” New Hampshire Health Insurance Exchange

Ban Headed to Gov. Lynch @WJune 16, 2012), at

http://news.heartland.org/newspaper-

article/2012/06/16/new-hampshire-health-insurance-

exchange-ban-headed-gov-lynch. But they

contended that, in the long run, “the state would

have little say in how the [state] exchange is run,

but New Hampshire taxpayers would be forced to

pick up the tab.” Jd.

In 2012, New Jersey Governor Chris Christie

vetoed a bill that would have established a state

exchange in that state. Kate Zernike, Christie

Vetoes Health Insurance Exchange, N.Y. TIMES (May

10, 2012), available at

http://www.nytimes.com/2012/05/11/nyregion/christie

-vetoes-health-insurance-exchange-for-new-

jersey.html?_r=1&. Proponents of the New Jersey

exchange pointed out that the state exchange would

have “allowed people to apply for tax credits or other

subsidies toward the cost of insurance.” J/d. The

bill’s proponents also argued that “the governor's

veto would leave the state scrambling to comply with

the federal law and could jeopardize future grant

money.” Jd. Notwithstanding these concerns,

Governor Christie vetoed the bill because “he was

17

concerned about the potential costs of the exchange.”

Id.

Similarly, in Maine, Governor Paul R. LePage

vetoed a bill to create a state exchange in 2014.

Summary of LD 1345, State of Maine Legislature,

available at

http:/Negislature.maine.gov/LawMakerWeb/summar

y.asp?paper=HP0962&SessionID=10. In a previous

letter to HHS, he had advised that Maine would not

set up a state exchange, for reasons typical of the

opponents of such exchanges: “[E]ven a state-based

health insurance exchange is actually controlled by

the federal government. In the end, a state

exchange puts the burden onto the states and the

expense onto our taxpayers without giving the state

the authority and flexibility we must have to best

meet the needs of the people of Maine.” Maine

Issues Letter to Federal Health Officials Opting Out

of Health Insurance Exchanges, MAINE.GOV (Nov.

16, 2012), available at

http://content.govdelivery.com/bulletins/gd/MEGOV-

5cfe96. Recent reports indicate that Governor

LePage’s opposition was additionally motivated by

the desire to deprive Maine’s citizens of the tax

subsidies in order to force Congress to revisit the

ACA. See Steve Mistler, Outspoken Critic of

Obamacare Helped to Turn LePage against State

Exchange, PORTLAND PRESS HERALD (Nov. 23, 2014),

available at

http://www.pressherald.com/201 4/11/23/outspoken-

critic-of-obamacare-helped-to-turn-lepage-against-

state-exchange/.

18

For some States, the major point of declining to

establish a state exchange was to prevent the

availability of federal subsidies in the state. Indiana

is one example. Political officials there declined to

create a state-based exchange precisely to prevent

the availability of tax subsidies. In November 2012,

Governor-Elect Mike Pence wrote to Governor Mitch

Daniels that Pence opposed creating a state-based

exchange in part because “there are legal

uncertainties [about the ACA] such as whether the

employer tax penalty even applies to businesses in

the absence of a state-based exchange.” Nov. 15,

2012 Letter from Mike Pence to Mitch Daniels,

available at

http://www.in.gov/aca/files/November_15_Pence_Lett

er.pdf. As an employer, the State of Indiana did not

want to be subject to the employer mandate. In a

lawsuit that it filed in October 2013 challenging the

IRS rule permitting subsidies in the federal

exchanges, the State of Indiana explained that

Pence’s views caused Gov. Daniels not to create a

state-based exchange. See Complaint for

Declaratory and Injunctive Relief and Judicial

Estoppel, Jndiana v. Interna] Revenue Serv., Case

No. 1:13-ev-01612 (S.D. Ind.), Doc. No. 1, § 87. In its

lawsuit, Indiana expressly seeks a declaration that

the IRS rule is invalid because Indiana does not wish

to be subject to the ACA’s employer mandate. /d. at

48.

Similarly, Oklahoma opted not to establish a

state-based exchange in order to prevent the

availability of tax subsidies and, in turn, avoid the

application of the employer mandate. As the State

explained in litigation parallel to this case,

19

“Oklahoma has exercised its right not to establish an

Exchange .... At present and for the foreseeable

future, the State of Oklahoma has decided that the

better alternative under the [ACA] for the people of

the State of Oklahoma is to preserve a competitive

advantage in the area of job growth over States

where [employer-mandate] liabilities can be

triggered against employers.” Amended Complaint

for Declaratory and Injunctive Relief, Pruitt v.

Sebelius, Case No. 6:11-cv-00030 (E.D. Okla.), Doc.

No. 35, at % 34. Like Indiana, Oklahoma has

declined to establish a state-based exchange and

seeks a declaration that the IRS rule is invalid. /d.

at 21-22.

Many of the States that did establish state-based

exchanges also weighed the availability of tax

subsidies. For example, Idaho established a state

exchange after the State’s Health Insurance

Exchange Working Group—appointed by the

Governor and chaired by the State Insurance

Director—expressed concern that a failure to do so

would deprive Idaho citizens of the ACA’s tax

subsidies. See Health Insurance Exchange Working

Group Findings, October 30, 2012, available at

http://www.doi.idaho.gov/HealthExchange/Final_ rep

ort.pdf, at 12 (“Some feel that . .. the APTC

(subsidy) money from the federal government may

not be available with [a federally created

exchange]”); jd. at 48 (“There has been much talk

about that idea that federal subsidies would not be

available in a federal exchange. There may have to

be a lawsuit to make decide [sid this issue.”).

20

State deliberation over the exchanges included

debate on other issues as well, not least the question

of federalism. Opponents of state exchanges

repeatedly expressed concerns about loss of state

control, federal encroachment on traditional state

regulation of health care, and the prospect of

substantial future costs in running the state

exchanges. Raising a typical concern, West Virginia

officials cited “exorbitant information technology

costs” and “the fiscal burden on consumers, industry

and the state” in refusing to establish a state

exchange. Eric Eyre, W.Va. and Feds to share

health insurance exchange, CHARLESTON GAZETTE

(Dec. 10, 2012), available at

http://www.wvgazette.com/News/201212100096.

In sum, the state political processes in over

thirty States—including the State of Missouri—

reflect the conscious decision to reject state-based

exchanges. These decisions were made with

knowledge—a i, in some cases, the intention—that

the failure to establish a state exchange could

deprive the State’s citizens of tax subsidies. The

assertion that “[nJo State even suggested that a lack

of subsidies factored into its decision whether to

create its own Exchange,” Ha/big, 758 F.3d at 425

(Edwards, J., dissenting), is simply not true.

This Court should favor the interpretation of the

ACA that respects the results of these democratic

processes. “Democracy does not presume that some

subjects are either too divisive or too profound for

public debate.” Schuette v. Coalition to Defend

Affirmative Action, 134 S. Ct. 1623, 1638 (2014)

(plurality opinion). On the contrary, “[ilt is

21

demeaning to the democratic process to presume

that the voters are not capable of deciding an issue

of this sensitivity on decent and rational grounds.”

Id. at 1637.

IV. Enforcing the ACA as Written Best Accords with

the Institutional Roles of this Court, Congress,

and the States in our System of Federalism.

Enforcing the ACA according to its plain terms

best preserves the institutional roles of this Court,

Congress, and the States. The Government's

atextual interpretation, by contrast, would

effectively nullify the considered political judgment

of numerous state actors. In this Court's

jurisprudence, that result is highly disfavored. For

as this Court has said time and again, “federalism

secures to citizens the liberties that derive from the

diffusion of sovereign power.” NFTB, 132 S. Ct. at

2578 (Roberts, C.J.) (quoting New York v. United

States, 505 U. S. 144, 181 (1992) (Roberts, C.J.).

A. Enforcing the plain terms of the ACA

accords with this Court’s limited

constitutional role.

First, enforcing the ACA as written accords with

this Court’s limited role in the interpretation and

enforcement of federal statutes. The Government, in

effect, asks this Court to “correct” the judgment of

the statute’s framers about how to address the

political resistance to Act’s implementation. “This

argument profoundly mistakes [this Court’s] role.”

W. Va. Univ. Hosps. v. Casey, 499 U.S. 83, 100

(1991). “Members of this Court are vested with the

22

authority to interpret the law: [they] possess neither

the expertise nor the prerogative to make policy

judgments.” NFTB, 132 S. Ct. at 2579. Rather than

correct Congress’s errors, this Court “will not alter

the text in order to satisfy the policy preferences of

the [Government]. These are battles that should be

fought among the political branches ....” Barnhart

v. Sigmon Coal Co., 534 U.S. 438, 462 (2002).

It is particularly important for this Court to

adhere to its “limited role” in the context of the ACA.

NFIB, 132 S. Ct. at 2577. The ACA reflects an

extremely complex system of interlocking provisions,

rendered more complex by concentrated politica!

opposition and the necessity of political compromise

to secure passage. “It is not [this Court’s] job to

protect the people from the consequences of their

political choices.” Jd. at 2579. “Whatever one thinks

of the policy decision Congress made [in the ACAI, it

was Congress’ prerogative to make it.” /d. at 2615

(Ginsburg, J., concurring in part, concurring in the

judgment in part, and dissenting in part).

This Court’s reluctance to rewrite the plain

terms of a statute arises, in part, from its recognition

that no court has the institutional capacity to

determine which elements of a complex statute were

necessary to secure its passage. “(Dlisregardling]

the plain language of the statute” in an effort to

implement Congress’s perceived purposes “creates

too great a risk that the Court is exercising its own

‘WILL instead of JUDGMENT, with the

consequence of ‘substituti[ng] [its own] pleasure to

that of the legislative body.” Pub. Citizen v. Dep't of

Justice, 491 U.S. 440, 471 (1989) (Kennedy, J.,

23

concurring in the judgment) (brackets in original)

(quoting THE FEDERALIST No. 79 (Alexander

Hamilton)). Accordingly, “because a statute's

apparently odd contours may reflect unknowable

compromises or legislators’ behind-the-scenes

strategic maneuvers, judges can rarely, if ever, tell if

a law’s specific wording ... was ... crafted to

navigate the complex legislative process.” John F.

Manning, The Absurdity Doctrine, 116 HARV. L. REV.

2387, 2395 (2003).

B. Enforcing the ACA as written accords

with Congress's supremacy in

legislative matters and respects the

compromises of the legislative process.

Enforcing the statute’s plain terms, moreover,

best accords with Congresss constitutional

supremacy in legislative matters. To enforce the

objective terms of the statute affords due respect to

the hard-fought and often unknowable compromises

of the legislative process.

This Court has long recognized that deference to

Congress's legislative supremacy calls for the

enforcement of the objective terms of federal

statutes. “Our unwillingness to soften the import of

Congress’ chosen words even if we believe the words

lead to a harsh outcome is longstanding. It results

from ‘deference to the supremacy of the Legislature,

as well as recognition that Congressmen typically

vote on the language of a bill.” Lamie v. United

States Tr., 540 U.S. 526, 538 (2004) (Kennedy, J.)

(quoting United States v. Locke, 471 U.S. 84, 95

(1985)).

24

The doctrine of legislative supremacy, moreover,

prevents this Court from purporting to correct

Congress’s perceived “errors” and “oversights” in

legislative drafting. “If Congress erred, however, it

is for that body, and not this Court, to correct its

mistake.” Heves v. Ernst & Young, 494 U.S. 56, 63

n.2 (1990). Thus, even if the putative omission of tax

subsidies on federal exchanges had been the result of

an “unintentional drafting gap’—which it almost

certainly was not—nevertheless “it is up to Congress

rather than the courts to fix it.” Exxon Mobil Corp.

v. Allapattah Servs., 545 U.S. 546, 565 (2005).

Indeed, enforcing the text as written is

particularly appropriate for the ACA, in which the

availability of tax subsidies on only the state

established exchanges is hardly a drafting lacuna,

but rather a deliberate design to address vigorous

political opposition to the statute. As explained

above, the ACA required a series of well-documented

compromises to secure passage. State-controlled

exchanges lay at the very heart of these

compromises—they were “the concession ultimately

required to close the deal.” Gluck, 121 YALE L.J. at

578. This Court properly defers to the legislative

process when it enforces a provision that is “the

result of compromise between groups with marked

but divergent interests in the contested provision.”

Ragsdale v. Wolverine World Wide, 535 U.S. 81, 93-

94 (2002). “Courts and agencies must respect and

give effect to these sorts of compromises.” /d. at 94.

It is indisputable that the ACA’s “delicate

crafting reflected a compromise amidst highly

25

interested parties attempting to pull the provisions

in different directions.” Barnhart, 534 U.S. at 461.

“As such, a change” to the provisions governing state

exchanges “could have unraveled the whole .... The

deals brokered during a Committee markup, on the

floor of the two Houses, during a joint House and

Senate Conference, or in negotiations with the

President are not for [this Court] to judge or second-

guess.” Jd.

For these reasons, the Government’s contention

that subsidies must be made available on the federal

exchanges to achieve the “purposes” of the ACA

misses the mark. “Application of ‘broad purposes’ of

legislation at the expense of specific provisions

ignores the complexity of the problems Congress is

called upon to address and the dynamics of

legislative action.” Bd. of Govs. of Fed. Res. Sys. v.

Dimension Fin. Corp., 474 U.S. 361, 373-74 (1986).

In the case of statutes like the ACA, “Congress may

be unanimous in its intent to stamp out some vague

social or economic evil; however, because its

Members may differ sharply on the means for

effectuating that intent, the final language of the

legislation may reflect hard-fought compromises.”

Id. at 374. The true “intent” of Congress is

expressed in the objective terms of the ACA.

“Invocation of the ‘plain purpose’ of legislation at the

expense of the terms of the statute itself takes no

account of the processes of compromise and, in the

end, prevents the effectuation of congressional

intent.” Jd.

26

C. Enforcing the ACA as written accords

due respect to the States and preserves

the results of state political processes.

Perhaps most fundamentally, Petitioners’

interpretation of the ACA best accords with the

constitutional role of the States and state political

processes. It does so in at least four ways: (1) It

tends to preserve the historic role of the States as

principal regulators of health care and health

insurance; (2) it promotes political accountability by

ensuring that key decisions are made by political

actors more proximate to the people: (3) it enhances

the opportunity for citizens, such as the voters of

Missouri, to deliberate on the great issues of our day,

including health-care reform; and (4) it promotes

democratic values by preserving the actual

democratic choices of the States. In contrast, the

Government’s atextual reading “conflicts with the

express language of the [ACA] ... and with

principles that preserve the integrity of States in our

federal system.” Alaska Dep't of Envtl. Conservation,

540 U.S. at 502 (Kennedy, J., dissenting).

1. As written, the ACA preserves a

more robust role for States to

exercise their traditional

authority over health care policy.

First, this Court has frequently observed that

“the field of health care[] lis} a subject of traditional

state regulation.” Pegram v. Herdrich, 530 U.S. 211,

237 (2000); see also New York State Conference of

Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,

514 U.S. 645, 655 (1995) (noting that health care is

27

among the “fields of traditional state regulation”).

As this Court has long recognized, protecting

traditional enclaves of state authority from federal

encroachment protects individual liberty. “By

denying any one government complete jurisdiction

over all the concerns of public life, federalism

protects the liberty of the individual from arbitrary

power.” NFTB, 132 S. Ct. at 2578 (quoting Bond v.

United States, 131 S. Ct. 2355, 2364 (2011)).

In this way, “[t[he Framers thus ensured that

powers which ‘in the ordinary course of affairs,

concern the lives, liberties, and properties of the

people’ were held by governments more local and

more accountable than a_e distant federal

bureaucracy.” NFIB, 132 S. Ct. at 2578 (quoting

THE FEDERALIST No. 45 (James Madison)). Thus the

interpretation of the ACA that better promotes “a

healthy balance of power between the States and the

Federal Government will reduce the risk of tyranny

from either front.” Gregory v. Ashcroft, 501 U.S.

452, 458 (1991). After all, “[plreservation of the

States as independent and autonomous political

entities” is an affirmative value in our system of

federalism, and it is better served by “requiring [the

States] to make policy in certain fields than ... by

reducing them to puppets of a _ ventriloquist

Congress.” Printz v. United States, 521 U.S. 898,

928 (1997) (quotation and brackets omitted).

As written, the ACA provides a robust role for

the States in keeping with their traditional influence

over health-care policy. The Government’s

revisionist interpretation, by contrast, denies the

States any real say in the Act’s implementation. The

28

Government effectively asks this Court to take “a

great step backward in Congress’ design to grant

States a significant stake in developing and

enforcing national [health policy] objectives.” Alaska

Dep't of Envtl. Conservation, 540 U.S. at 516

(Kennedy, J., dissenting). This Court should prefer

the plain terms of the statute. Interpretation which

hews to these terms “protects us from [the ACA’s]

best intentions” by “resistling] the temptation to

concentrate power in one location as an expedient

solution to the crisis of the day.” New York, 505 U.S.

at 187.

Over the long run, such an interpretation will

best preserve and protect individual liberty—a core

concern of the Missouri Liberty Project. “Were the

Federal Government to take over the regulation of

entire areas of traditional state concern,” such as

health care regulation, “the boundaries between the

spheres of federal and state authority would blur

and political responsibility would become illusory.”

Lopez, 514 U.S. at 577 (Kennedy, J., concurring).

“The resultant inability to hold either branch of the

government answerable to the citizens is more

dangerous even than devolving too much authority

to the remote central power.” Jd.

2. As written, the ACA promotes

democratic accountability by

conferring authority over health-

care reform on democratically

responsive state officials.

Second, the preservation of significant authority

at the state level promotes democratic accountability

29

by ensuring that critical decisions are made by

political actors more proximate and more responsive

to the citizens. In the States, “the facets of

governing that touch on citizens’ daily lives are

normally administered by smaller governments

closer to the governed.” NFIB, 132 S. Ct. at 2578.

As this Court has noted, “[wlhere Congress

encourages state regulation rather than compelling

it, state governments remain responsive to the loca!

electorate’s preferences; state officials remain

accountable to the people.” New York, 505 U.S. at

168. Such “accountability ... is diminished” when

“elected state officials cannot regulate in accordance

with the views of the local electorate.” Jd. at 168,

169. “Preserving our federal system .. . ensures that

the essential choices can be made by a government

more proximate to the people than the vast

apparatus of federal power.” Davis v. Monroe Cnty.

Bd. of Educ., 526 U.S. 629, 684-85 (1999) (Kennedy,

J., dissenting).

The history of the ACA’s implementation vividly

illustrates this dynamic. The “vast apparatus of

federal power,” 7d. at 685, such as HHS and IRS, has

been largely unresponsive to the persistent public

opposition to the ACA. By contrast, state officials

and state democratic processes, who are “more

proximate to the people,” id. at 684, have been

sensitive to public opinion, resulting in a variety of

state responses to the establishment of state

exchanges. Petitioners’ interpretation of the ACA

not only maintains fidelity to the text of the statute,

but also promotes democratic accountability at the

state level.

30

3. As written, the ACA fosters

democratic participation by

ordinary citizens in state political

processes.

Third, Petitioners’ interpretation of the ACA

recognizes Congress’s decision to involve the States

in the Act’s implementation. This design permits

the voices of ordinary citizens to influence the

implementation of federal policy, which encourages

political participation and instructs citizens on the

political process—core values of Our Federalism: “In

addition to promoting experimentation, federalism

enhances the opportunity of all citizens to

participate in representative government.” FERC v.

Mississippi, 456 U.S. 742, 790 (1982) (O’Connor, J.,

concurring in part and dissenting in part). “If we

want to preserve the ability of citizens to learn

democratic processes through participation in local

government, citizens must retain the power to

govern, not merely administer, their local problems.”

Id.

The plain terms of the ACA allow the citizens to

“retain the power to govern, not merely administer,

their local problems” relating to health-insurance

regulation. Td. The statute thus advances

federalism’s interests in promoting “participatfion]

in representative government” and permitting

“citizens to learn democratic processes.” /d.

Perhaps the most striking example of the ACA’s

promotion of democratic participation is Missouri's

voter referendum on whether to permit its Governor

to create a state exchange. This Court frequently

31

has acknowledged the value and effectiveness of

such democratic deliberation in resolving difficult

issues. See Schuette, 134 S. Ct. at 1636-38. Direct

democracy includes “the right to speak and debate

and learn and then, as a matter of political will, to

act through a lawful electoral process.” Jd. at 1637.

In this case, the Government “insist{[s] that a

difficult question of public policy,” i.e., whether to

create a subsidized exchange, “must be taken from

the reach of the voters” of Missouri, “and thus

removed from the realm of public discussion,

dialogue, and debate in an election campaign,” to be

conferred on the federal bureaucracy instead. Jd. at

1637. This Court should not “rule that the question

addressed by [Missouri] voters is too sensitive or

complex to be within the grasp of the electorate; or

that the policies at issue remain too delicate to be

resolved save by [federal bureaucracies], acting at

some remove from immediate public scrutiny and

contro] ....” Jd.

4. Enforcing the ACA as written

will preserve the democratic

choices resulting from informed

state consideration of the

exchanges.

Fourth, Petitioners’ interpretation has the merit

of preserving actual democratic choices achieved

through the States’ political processes, which the

Government’s revisionist view would effectively

nullify. This Court has frequently emphasized that

federal spending programs function properly only

“when a State has a legitimate choice whether to

accept the federal conditions in exchange for federal

32

funds.” NFYIB, 132 S. Ct. at 2602-03; see also id. at

2608 (“Congress may offer the States grants and

require the States to comply with the accompanying

conditions, but the States must have a genuine

choice whether to accept the offer.”). “[Bly any...

permissible method of encouraging a State to

conform to federal policy choices, the residents of the

State retain the ultimate decision as to whether or

not the State will comply.” New York, 505 U.S. at

168. “If a State’s citizens view federal policy as

sufficiently contrary to local interests, they may elect

to decline a federal grant.” Jd.

In this case, the ACA presented each State with

a stark choice: set up an exchange, or face the loss of

tax subsidies by its citizens. Many States confronted

this choice and knowingly elected to forego the state

exchange with its attendant benefits. This Court

should respect these democratic choices, not nullify

them. “The Federal Government is free, within its

vast legislative authority, to impose federal

standards [in cooperative-federalism programs]. For

States to have a role, however, their own governing

processes must be respected.” Alaska Dep’t of Envtl.

Conservation, 540 U.S. at 513 (Kennedy, J.,

dissenting).

The last time this Court considered the ACA, a

plurality of the Court remarked: “In the typical case

lof federal spending legislation] we look to the States

to defend their prerogatives by adopting ‘the simple

expedient of not yielding’ to federal blandishments

when they do not want to embrace the federal

policies as their own. The States are separate and

independent sovereigns. Sometimes they have to act

33

like it.” MNFIB, 132 S. Ct. at 2603 (opinion of

Roberts, C.J.) (internal citation omitted) (quoting

Mellon, 262 U.S. at 482). Here, the States have

“actled] like it.” Jd. They have “adoptled] the simple

expedient of not yielding to federal blandishments

when they do not want to embrace the federal

policies as their own.” Jd. (quotation omitted). On

the Government’s view, these decisions were

illusory. This Court should decline to adopt such a

startlingly reductionist view.

tke

There is nothing “inconceivable” or

“unfathomable” about the fact that the ACA deploys

tax subsidies as an incentive for States to set up

state-based exchanges. Threatening to deny benefits

to state citizens in order to ensure States’

participation in federal programs is an entirely

familiar tactic of federal social-welfare legislation.

In the ACA, Congress offered the States a choice: set

up a healthcare exchange and receive major

subsidies, or do not establish one and forego the

money. The States took Congress at its word. They

deliberated and crafted a variety of different political

responses. This Court should interpret the Act

according to its plain terms to give full effect to these

state political outcomes. Enforcing the plain terms

of the statute will best preserve this Court’s role as

faithful interpreter of federal legislation, Congress’s

supremacy in legislative matters, and the States’

authority as independent sovereigns in our system of

federalism.

34

CONCLUSION

For the foregoing reasons, amici curiae

respectfully request that this Court reverse the

judgment of the court below.

Respectfully submitted,

JOSHUA D. HAWLEY D. JOHN SAUER

323 Hulston Hall Counsel of Record

Columbia, Missouri SARAH E. PITLYK

65211 MICHAEL MARTINICH-SAUTER

CLARK & SAUER, LLC

ERIN MORROW HAWLEY 7733 Forsyth Boulevard

212 Hulston Hall Suite 625

Columbia, Missouri St. Louis, Missouri 63105

65211 (314) 332-2980

jsauer@clarksauer.com

Counsel for Amici Curiae

December 29, 2014