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.
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.
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.
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.”
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.