Millions of Americans rest assured that the Patient Protection and Affordable Care Act1 ("ACA") provides tax credits for health insurance to individuals earning 100-400% of the federal poverty line.2 The tax credits will be accessible through state insurance exchanges, also known as Marketplaces,3 which are government-regulated organizations designed to create more competition in the health insurance industry.4 But a gap in the unwieldy, two-thousand-plus-page statute-either a scrivener's error or an overlooked loophole-is raising questions about whether citizens in certain states are eligible for the tax credits. This "quirk" could be a serious blow to an already contentious healthcare-reform effort.5
The ACA, deemed constitutional by a divided Supreme Court in June 2012,6 requires all residents of the United States to retain minimum essential health coverage and imposes a tax penalty for failure to do so.7 The individual mandate, as this requirement is known, is softened by tax credits, or subsidies, made available to eligible individuals purchasing insurance through one-stop-shop exchanges.8 Either the state or federal government will establish an American Health Benefit Exchange in each state; however, the ACA, read literally, does not make tax credits available through federally established exchanges.9 Was the omission of tax credits through federal exchanges intentional? Or is this a would-be amendment that slipped through the cracks of the massive bill-a manifestation of House Speaker Nancy Pelosi's infamous comment that "we have to pass this bill to find out what is in it"?10
The Internal Revenue Service ("IRS"), the agency charged with administering the tax credits, is looking beyond the seemingly plain text of the statute: in a final rule, the agency interpreted the statute as making tax credits available through both state and federal exchanges.11 There are two important questions to ask regarding this interpretation: (1) Does the IRS have the authority to interpret the text in this way? (2) Who would have standing to challenge such a reading?
This Note explores these two questions and explains, from an advocacy standpoint, why traditional tools of statutory interpretation suggest that the IRS acted within its prescribed bounds in construing the statute broadly. Significantly, subsequent legislation shows that the agency is implementing the statutory scheme Congress envisioned. Part II outlines the state of health insurance prior to the changes instituted by the ACA, explains the role of the exchanges in healthcare reform, and details why Congress amended the statute to include the option of federal exchanges. Part III argues that large employers might have standing to challenge the IRS's rule because they would be injured by the statutory provision that grants tax credits to those who use federal exchanges. Part IV analyzes the gap in the statute by considering the plain text, the other provisions of the Act, the legislative history, and the postenactment legislation. Finally, Part V suggests the appropriate framework for judicial review of the current IRS rule; it walks through the two-step test found in Chevron v. Natural Resources Defense Council, the controlling case requiring deference to an agency's statutory interpretation,12 by asking whether the statute is ambiguous and whether the IRS interpretation is reasonable. Answering both these questions in the affirmative, this Note concludes that a court will likely defer to the IRS interpretation of the statute.
II. BACKGROUND ON THE AFFORDABLE CARE ACT AND EXCHANGES
The ACA, amended by the Health Care and Education Reconciliation Act of 2010 ("HCERA"), seeks to improve the navigability of the health insurance marketplace.13 Pursuant to this legislation, an exchange in each state will facilitate the purchase of qualified health plans, acting as a central portal for consumers to find and compare health insurance options. …