The 5 Most Important Quotes From SCOTUS’ Obamacare Arguments

What the justices asked, and what it means for the future of health care in America.

U.S. Supreme Court Chief Justice John Roberts (L) and Associate Justice Anthony Kennedy listen to President Barack Obama deliver the State of the Union address to a joint session of Congress in the House Chamber at the U.S. Capitol on January 28, 2014 in Washington, DC. In his fifth State of the Union address, Obama is expected to emphasize on healthcare, economic fairness and new initiatives designed to stimulate the U.S. economy with bipartisan cooperation. (Photo by Chip Somodevilla/Getty Images)
National Journal
March 4, 2015, 11:17 a.m.

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 Health­ 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.

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