A “poison pill” is a clause added to a contract with the express intent of providing a disincentive for anyone affected by that contract to contest it. It is typically employed when one anticipates animosity or disagreement among the parties (such as a Will where a beneficiary might be dissatisfied with their inheritance). In other words, it’s a legal stick (as opposed to carrot) used to keep otherwise discordant individuals in line. Unsurprisingly the most contentious legal artifact in recent memory, Obamacare, contains just such a legal provision. Naturally political prudence demanded that the punitive measure remain carefully camouflaged. Otherwise the Feds ran the risk of their private beliefs becoming public knowledge, namely that Federal paternalism gives them the right to punish impudent states.

A poison pill provision in Obamacare was recently unearthed in the wake of a ruling early last week by a D.C. Circuit Court (Halbig v. Burwell) which stated that contrary to an IRS rule and the Obama administration’s contention, the plain language of the Obamacare statute says that subsidies for health insurance were limited to STATE-run health exchanges (and therefore subsidies are not possible in exchanges created and run by the Federal government). There was of course an immediate howl of objection by the administration and those on the left. They said that this was silly, clearly that is not what Congress meant – even if they used very simple and unambiguous language to the contrary – of course they meant to include federal exchanges as well, silly rabbit, only some backwards troglodyte would think otherwise. Funny thing how selective memory works; anything that might contradict your current position is conveniently forgotten. So it was rather embarrassing indeed when it was found that in 2012 (long before this suit was initiated), a Jonathan Gruber (an MIT economics professor who played a key role in drafting Obamacare) was recorded (twice) unequivocally endorsing the very core of that ruling – that only state exchanges were eligible for subsidies. But it wasn’t that admission that was the most telling, but rather what followed.


“What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.” Jonathan Gruber, 1/18/2012


He clearly admits that this circumstance (no tax credits) is intended to influence state behavior in order to compel them (get their act together) to carry out the demands placed upon them by this legislation. This language was no mistake, no typo, no oversight; it was clearly intended to act as poison pill to keep the contentious “red” states in line. But then something unexpected happened. Overwhelming civil disobedience. A majority of states (34) chose to swallow that politically poisoned pill anyway. Uh-oh, now what to do we do? Establish federal exchanges and pretend that the poison pill language was a typo. Nothing to see here, move along, move along.

Even if one is inclined to believe it’s all just a big misunderstanding and perhaps only Gruber thought it had this purpose, then that still means the law as plainly written diverges from the intentions of Congress. So how do we fix bad law in this country? Apparently now we allow the executive branch (the President) to unilaterally change it to fit his own subjective interpretation. Extend this deadline, remove this penalty, change the rules, all at his whim.

It certainly is much easier to rule and get things done if you don’t have to deal with a pesky Congress that would never permit such a change without also compelling other, less ideologically palatable, changes. Who needs the slow and incremental rule of law when you can have the fast and instantaneous rule of man? As Mel Brooks said, “It’s good to be the King.”