Obamacare’s fate is still largely a mystery — but the Supreme Court provided a lot of new clues Wednesday.
Neither side came away with a clear victory in nearly 90 minutes of oral arguments over the health care law’s insurance subsidies. But the justices’ questions shed new light on how they’re thinking about the case, and which arguments they’re most likely to rely on as they determine the law’s future.
Here are the five most important things the justices said Wednesday:
1) Anthony Kennedy: “It seems to me that “¦ there’s a serious constitutional problem if we adopt your argument.”
Justice Anthony Kennedy indicated that he’s at least open to one of the government’s key arguments: that withholding Obamacare’s subsidies as a way to punish states for not creating their own exchanges would not have been a fair deal.
“Let me say that from the standpoint of the dynamics of federalism, it does seem to me that there is something very powerful to the point that, if your argument is accepted, the states are being told: Either create your own exchange, or we’ll send your insurance market into a death spiral,” Kennedy said to Michael Carvin, the attorney arguing for the challengers.
Congress can attach strings to federal money, or require states to meet certain standards if they want to participate in a particular program. But it can’t “coerce” the states into doing what it wants by setting the stakes of a program so high that states don’t really have a choice.
That was the Court’s basis, in 2012, for ruling that states had to be able to opt out of Obamacare’s Medicaid expansion, and the challengers’ view of the law’s subsidies might be just as unreasonable, Kennedy suggested. And the court tries to avoid reading ambiguous statutes in ways that would make them unconstitutional.
“It does seem to me that if petitioners’ argument is correct, this is just not a rational choice for the states to make, and that they’re being coerced,” Kennedy said.
2) John Roberts: “If you’re right ”¦ that would indicate that a subsequent administration could change that interpretation?”
Roberts didn’t say much during Wednesday’s argument, but the one substantive point he did address seemed to cast doubt on one of the Justice Department’s strategies to win the case. Under a well-established doctrine known as Chevron deference, when a statute is ambiguous, the court often defers to the interpretation of the agency tasked with implementing it.
Solicitor General Donald Verrilli said he doesn’t think the Affordable Care Act is vague about who gets subsidies. But if the Court disagrees, he said, Chevron would mean that the government still wins.
The argument has been a consistent safety net for the government; it won the previous round of this case on Chevron grounds. But it didn’t get much traction Wednesday. As Roberts noted, a win based on Chevron would mean that a Republican administration could change the IRS’s interpretation and still claim the same deference from the courts as it began to withhold subsidies.
Kennedy wasn’t into it, either.
“If it’s ambiguous, then we think about Chevron,” Kennedy said. “But it seems to me a drastic step for us to say that the department of Internal Revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here?”
3) Samuel Alito: “So going forward, there would be no harm.”
Even the conservative justices were conscious of the real-world implications if they were to strike down the HealthCare.gov subsidies, and Justice Samuel Alito floated the possibility that the Court would try to make it possible to avoid those consequences. He asked if the Court could stay its ruling until the end of the current tax year, giving states time to set up exchanges and keep the subsidies flowing.
“Here, it’s not too late for a state to establish an exchange if we were to adopt petitioners’ interpretation of the statute,” he said during a line of questioning with Verrilli about whether states knew what would happen if they didn’t set up an exchange. “So going forward, there would be no harm.”
The solicitor general pointed out that the tax credits would be cut off immediately, which is when Alito proposed his solution.
“Would it not be possible, if we were to adopt petitioners’ interpretation of the statute, to stay the mandate until the end of this tax year, as we have done in other cases where we have adopted an interpretation of “¦ a statute that would have very disruptive consequences?” Alito said.
In response, Verrilli noted that under current federal rules, states must have their exchanges approved by the Obama administration by May. A ruling isn’t expected until June.
4) Elena Kagan: “There’s really nothing clear about this. I mean, this took a year and a half for anybody to even notice this language.”
The liberal justices spent much of their time badgering Carvin about how Congress could have possibly intended to limit the tax credits to state-based exchanges. At one point, Justice Elena Kagan emphasized that it had taken the law’s opponents quite a while to realize that they could have a case. She also questioned, perhaps playing to Kennedy’s concerns about states’ rights, whether states were aware of what would happen if they didn’t set up their own exchange.
“There’s at least a presumption, as we interpret statutes, that Congress does not mean to impose heavy burdens and draconian choices on states unless it says so awfully clearly,” she said. “There’s really nothing clear about this. I mean, this took a year and a half for anybody to even notice this language.”
She pressed further by arguing that the language in question was in an unusual place in the statute if it had such importance — not the first place that the affected states would look.
“It’s put in not in the place that you would expect it to be put in, which is where it says to the states, ‘Here is the choice you have,’ ” Kagan said. “Rather, it comes in this technical formula that’s directed to the Department of the Treasury, saying how much the amount of the subsidy should be.
“And that seems to be — it both makes no sense from Congress’s point of view, and in terms of our own point of view, in terms of interpreting statutes — that’s not the clarity with which we require the government to speak when it’s upsetting federal-state relations like this,” she said.
5) Antonin Scalia: “How can the federal government establish a state exchange? That is gobbledygook.”
This case was made for Justice Antonin Scalia. A strict textual approach that would weaken Obamacare? Check and check. Scalia and Alito held the textualist line Wednesday, pressing Verrilli repeatedly to explain how “established by the State” could serve any purpose other than restricting subsidies to state-based exchanges.
“If Congress did not want the phrase ‘established by the State’ to mean what that would normally be taken to mean, why did they use that language? Why didn’t they use other formulations that appear elsewhere in the Act? Why didn’t they say, ‘established under the Act’? Why didn’t they say, ‘established within the State’? Why didn’t they include a provision saying that an exchange established by [the Department of Health and Human Services] is a state exchange?” Alito asked Verrilli.
The further the Court is willing to get from the “established by the State” language, the better the government’s odds of winning. Scalia and Alito sought to keep the focus squarely on this potential discrepancy — because if that part is a clear win for the challengers, there’s no need for Roberts or Kennedy to venture into other arguments they might find persuasive.