Why Obamacare Will Win

The White House has more ways to win at the Supreme Court than its challengers.

The exterior of the U.S. Supreme Court on March 26, 2012.
National Journal
Feb. 18, 2015, 3:40 p.m.

Na­tion­al Journ­al looks at the up­com­ing Su­preme Court case on Obama­care and ex­plains why each side will win. Click here for our story on how the Obama ad­min­is­tra­tion will lose.

The Su­preme Court will hear or­al ar­gu­ments next month in King v. Bur­well, the con­ser­vat­ive-led law­suit that will de­term­ine the fu­ture of the Af­ford­able Care Act

Here’s why the Obama ad­min­is­tra­tion will win.

The chal­lengers in King likely will have a hard time con­vin­cing five justices that the real-world ef­fects they are ad­voc­at­ing are what Con­gress ac­tu­ally had in mind when it wrote Obama­care. And if they can’t per­suade the Court that their read­ing is clearly, un­am­bigu­ously cor­rect, the ad­min­is­tra­tion’s in­ter­pret­a­tion could win by de­fault.

(RE­LATED: Will John Roberts or An­thony Kennedy Save Obama­care?)

The chal­lengers are try­ing to con­vince the Court that Con­gress au­thor­ized Obama­care’s sub­sidies, which help en­rollees pay their premi­ums, only for people who live in states that set up their own in­sur­ance ex­changes — not in the 34 states that punted that task to the fed­er­al gov­ern­ment.

And they need to get justices to be­lieve that the law is clear — that its text, read in the con­text of the whole law, lim­its sub­sidies to state-es­tab­lished ex­changes.

When stat­utes are am­bigu­ous, the courts of­ten de­fer to the in­ter­pret­a­tion of the agen­cies im­ple­ment­ing them. As long as the agen­cies’ in­ter­pret­a­tions are reas­on­ably in line with the stat­ute and ad­vance its goals, they gen­er­ally have some flex­ib­il­ity in de­term­in­ing ex­actly how spe­cif­ic pro­vi­sions ought to be im­ple­men­ted.

“If there’s any am­bi­gu­ity in the stat­ute, the gov­ern­ment is go­ing to win here,” said Chris Walk­er, a law pro­fess­or at Ohio State Uni­versity who clerked for Justice An­thony Kennedy.

Be­cause King is not a chal­lenge to the law it­self, but rather to reg­u­la­tions is­sued by the IRS and the Health and Hu­man Ser­vices De­part­ment, the Court could de­fer to those agen­cies even if it’s not en­tirely sold on the Justice De­part­ment’s po­s­i­tion — as long as it’s also not sold on the chal­lengers’.

The chal­lengers point to a sec­tion of the Af­ford­able Care Act that refers to sub­sidies flow­ing through “an Ex­change es­tab­lished by the State.” And if you stop there, the case might look like an easy one. But they have had a much harder time con­vin­cing lower courts that Con­gress truly in­ten­ded to lim­it sub­sidies to cer­tain states.

(RE­LATED: The One Word That Could Save Obama­care)

Sub­sidies are part of the law’s in­cred­ibly com­plex, in­ter­con­nec­ted sys­tem. Obama­care guar­an­tees cov­er­age to sick people, and it off­set the cost of do­ing so by in­clud­ing the in­di­vidu­al man­date (a stick) and the sub­sidies (a car­rot) to get health­i­er people in­to the sys­tem.

Con­gress would not have gone to such great lengths, set­ting up such a del­ic­ate bal­ance, only to set it up to fail in cer­tain states, the Justice De­part­ment ar­gues.

To an­swer that point, the chal­lengers say that Con­gress in­ten­tion­ally, ex­pli­citly lim­ited sub­sidies to state-run ex­changes be­cause it wanted the states to set up their own mar­ket­places: The threat of res­id­ents los­ing sub­sidies, and in­sur­ance mar­kets spiral­ing in­to chaos, was its own dra­mat­ic stick to get states to act, they ar­gue.

No lower court has bought the chal­lengers’ view of con­gres­sion­al in­tent, and one fed­er­al Ap­peals Court judge was es­pe­cially un­friendly to the chal­lengers’ in­ter­pret­a­tion.

“This ar­gu­ment is disin­genu­ous, and it is wrong,” D.C Cir­cuit Court of Ap­peals Judge Harry Ed­wards wrote in a dis­sent­ing opin­ion in a sim­il­ar case. “The simple truth is that Ap­pel­lants’ in­cent­ive story is a fic­tion, a post hoc nar­rat­ive con­cocted to provide a col­or­able ex­plan­a­tion for the oth­er­wise ris­ible no­tion that Con­gress would have wanted in­sur­ance mar­kets to col­lapse in States that elec­ted not to cre­ate their own Ex­changes.”

The Justice De­part­ment has gone to great lengths not to frame the case as a battle between the law’s text and its pur­pose — a con­struc­tion that would only make it easi­er for con­ser­vat­ives, par­tic­u­larly Chief Justice John Roberts, to in­val­id­ate the sub­sidies.

(RE­LATED: Re­pub­lic­ans See Lever­age From Su­preme Court for Obama­care Over­haul)

Rather, the gov­ern­ment ar­gues, in­tent is part of what’s clear when you read the text of the law as a whole.

Sim­il­arly, the chal­lengers will have to ex­plain why, if Con­gress did in­tend for the sub­sidies to func­tion as an in­cent­ive for the states, the states didn’t know it.

“It would be the most dra­coni­an car­rot-and-stick fed­er­al­ism stat­ute in the U.S. Code, and it would look noth­ing like the co­oper­at­ive fed­er­al­ism scheme the ACA is ac­tu­ally modeled on,” said Abbe Gluck, a law pro­fess­or at Yale Uni­versity who sides with the Obama ad­min­is­tra­tion in the case.

Jonath­an Adler, a law pro­fess­or at Case West­ern Re­serve Uni­versity who helped de­vise the leg­al chal­lenge, said this ar­gu­ment — about the bal­ance of state and fed­er­al power — might be the oth­er side’s best bet.

“I take some of the fed­er­al­ism ar­gu­ments ser­i­ously,” Adler said. “I’m sym­path­et­ic to some of those ar­gu­ments as a mat­ter of over­all con­sti­tu­tion­al struc­ture. I just think they de­part from and ex­pand upon ex­ist­ing pre­ced­ent.”

(RE­LATED: Why the Obama­care Case Drives Wash­ing­ton Crazy)

A hand­ful of states said in a brief to the high court, sid­ing with the gov­ern­ment, that they al­ways be­lieved their res­id­ents would be eli­gible for sub­sidies wheth­er the state es­tab­lished an ex­change or not. To change that deal now would be to pull the rug out from un­der the states, they ar­gued, and in­sert­ing such a massive con­di­tion in one of the law’s defin­i­tions — rather than stat­ing it plainly — would have been un­fair to be­gin with.

“It makes little sense to con­clude that Con­gress would have com­mu­nic­ated these con­sequences in so ob­lique a man­ner if — as pe­ti­tion­ers in­sist — its pur­pose was to en­sure that every State got the mes­sage that it needed to es­tab­lish its own Ex­change to avoid harms to its cit­izens and its in­sur­ance mar­ket,” the Justice De­part­ment said in its brief.

The clar­ity of the law re­mains key.

The U.S. Court of Ap­peals for the 4th Cir­cuit, which ruled in King last sum­mer, said that, while it thought the chal­lengers had a good stat­utory ar­gu­ment, neither side had proven Con­gress’s in­tent — mean­ing that the IRS got to de­cide.

“Widely avail­able tax cred­its are es­sen­tial to ful­filling the Act’s primary goals and that Con­gress was aware of their im­port­ance when draft­ing the bill,” the court wrote. “The IRS Rule ad­vances this un­der­stand­ing by en­sur­ing that this es­sen­tial com­pon­ent ex­ists on a suf­fi­ciently large scale.”

Walk­er put it suc­cinctly: “For the pe­ti­tion­ers to win, they have to show that there’s only one way to in­ter­pret the stat­ute.”

Now read why the Obama ad­min­is­tra­tion will lose.

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