Why Obamacare Will Lose

A lower court’s ruling could help the Supreme Court weaken Obamacare’s subsidies.

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 win.

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 lose.

The cent­ral is­sue in King is the for­mula for cal­cu­lat­ing Obama­care’s premi­um sub­sidies. The law says the pay­ments are tied to cov­er­age through an Ex­change “es­tab­lished by the State.” The chal­lengers say that line means that sub­sidies are only avail­able in states that set up their own mar­ket­places—not in the 34 states that punted the task to the fed­er­al gov­ern­ment.

“The fear is go­ing to be that the Court is go­ing to read these four words in isol­a­tion,” said Abbe Gluck, a law pro­fess­or at Yale Uni­versity who sides with the Obama ad­min­is­tra­tion in the case.

The ques­tion that keeps nag­ging at the Justice De­part­ment is this: If Con­gress didn’t in­tend to lim­it sub­sidies to state-based ex­changes, what are the words “es­tab­lished by the State” do­ing there? It’s one the gov­ern­ment will have to an­swer dur­ing or­al ar­gu­ments, giv­en the strong tex­tu­al­ist lean­ings of the Court’s con­ser­vat­ive ma­jor­ity.

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

The most hon­est an­swer is prob­ably some ver­sion of, who knows? It’s a messy stat­ute; this part was writ­ten in a hurry—maybe it’s just a mis­take.

But the Justice De­part­ment can’t really make that ar­gu­ment be­fore the Court, leg­al ex­perts said, be­cause courts try to avoid read­ing parts of any le­gis­la­tion as ex­traneous. If Con­gress said something, the courts tend to as­sume that it did so for a reas­on.

“It’s a simple ar­gu­ment for the pe­ti­tion­ers,” said Chris Walk­er, a law pro­fess­or at Ohio State Uni­versity and a former clerk to Justice An­thony Kennedy.

So, the gov­ern­ment’s best bet is to ar­gue that “es­tab­lished by the State” be­longs there, but doesn’t mean what it sounds like. The Justice De­part­ment says “es­tab­lished by the State” refers to any ex­change, no mat­ter who es­tab­lished it.

The stat­ute treats state- and fed­er­ally run ex­changes as equi­val­ent in oth­er ways and, the gov­ern­ment ar­gues, the stat­ute as a whole in­dic­ates that Con­gress in­ten­ded for the fed­er­ally run ex­changes to “stand in the shoes” of the states.

(RE­LATED: Why the Obama­care Case Drives Wash­ing­ton Crazy)

“That phrase is a term of art that in­cludes both an Ex­change a State es­tab­lishes for it­self and an Ex­change HHS es­tab­lishes for the State,” the Justice De­part­ment said in a brief to the high court.

Still, every­one who sup­ports Obama­care and wants to see this case fail would be hap­pi­er if the words “es­tab­lished by the State” wer­en’t there. And that makes them a prob­lem. The ques­tion is, how big a prob­lem?

Un­der the Justice De­part­ment’s in­ter­pret­a­tion, crit­ics ar­gue, “es­tab­lished by the State” is a “term of art” that doesn’t mean any­thing—the sen­tence would mean the same thing with those words as it would without them. So, again, why are they there?

“Why would Con­gress add un­ne­ces­sary words that, on any read­ing, say pre­cisely the op­pos­ite of what it sup­posedly meant?” the chal­lengers’ brief asks.

Leg­al ex­perts said Dav­id Rivkin, who is ar­guing the case for the chal­lengers, will likely do his best to bring the justices—par­tic­u­larly Kennedy and Chief Justice John Roberts—back to that ques­tion.

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

The Justice De­part­ment has a thor­ough ar­gu­ment about the most nat­ur­al way to read oth­er parts of the stat­ute, but when the ques­tion­ing is con­fined to “es­tab­lished by the State,” it will likely stay pretty cir­cu­lar. The fur­ther the justices are will­ing to branch out, the great­er chance the gov­ern­ment has of win­ning.

Real­ist­ic­ally, the Justice De­part­ment has more ways to win than the chal­lengers. But the sil­ver lin­ing for the law’s crit­ics is that their strongest ar­gu­ment is the start­ing point for the court’s ana­lys­is.

“The four words are def­in­itely on their side, and then they just have to be able to really ham­mer home that you can read the rest of the stat­ute con­sist­ently with that,” Walk­er said.

That’s not easy, but it can be done.

The chal­lengers have worked hard to build a case that Con­gress fully and ex­pli­citly in­ten­ded to lim­it Obama­care’s sub­sidies to state-run ex­changes. It’s not an es­pe­cially strong ar­gu­ment; no lower-court judges have bought it. It’s more of a per­mis­sion struc­ture—a loose col­lec­tion of facts and the­or­ies that might help a con­ser­vat­ive justice cast doubt on the gov­ern­ment’s view of con­gres­sion­al in­tent, even without a fully formed al­tern­at­ive.

That was enough for a three-judge pan­el from the D.C. Cir­cuit Court of Ap­peals, which ruled 2-1 last year that sub­sidies should only be avail­able in state-based ex­changes. Al­though the ma­jor­ity in that de­cision didn’t buy the chal­lengers’ ar­gu­ment that Con­gress clearly in­ten­ded to lim­it the scope of sub­sidies, as an in­cent­ive for states to set up their own ex­changes, it said the gov­ern­ment’s the­ory of in­tent wasn’t a sure thing, either—and that the text should be the tie-break­er.

(RE­LATED: 5 Things to Watch in SCOTUS’ Obama­care Ar­gu­ments)

“The fact is that the le­gis­lat­ive re­cord provides little in­dic­a­tion one way or the oth­er of con­gres­sion­al in­tent, but the stat­utory text does. Sec­tion 36B plainly makes sub­sidies avail­able only on Ex­changes es­tab­lished by states. And in the ab­sence of any con­trary in­dic­a­tions, that text is con­clus­ive evid­ence of Con­gress’s in­tent,” that court wrote.

The D.C. Cir­cuit’s ma­jor­ity could provide a sort of road map if the Su­preme Court’s con­ser­vat­ive bloc wants to in­val­id­ate the sub­sidies. It largely ac­cep­ted the gov­ern­ment’s ar­gu­ment that fed­er­ally run ex­changes were meant to stand in for state-based mar­ket­places—but, again, said that doesn’t change the mean­ing of “es­tab­lished by the State.”

“The prob­lem con­front­ing the [gov­ern­ment] is that sub­sidies also turn on a third at­trib­ute of Ex­changes: who es­tab­lished them,” the D.C. Cir­cuit wrote.

Such a rul­ing might ap­peal to Roberts’s in­ner tex­tu­al­ist, of­fer­ing him a way to rule against a law he pre­sum­ably doesn’t care for, while fram­ing that rul­ing as the only way to re­solve an un­clear stat­ute.

The Justice De­part­ment needs to em­phas­ize the sub­sidies’ con­nec­tions to oth­er parts of the stat­ute to steer the Su­preme Court away from a sim­il­ar de­cision, Gluck said.

“This is a very com­plic­ated stat­ute, and the fear is that the Court won’t un­der­stand it enough to be able to see through the chal­lenger’s ar­gu­ments. That’s what I’m most wor­ried about. That’s what happened in the D.C. Cir­cuit.”

Now read why the Obama ad­min­is­tra­tion will win.

— This story has been up­dated.

What We're Following See More »
POLIQUIN STILL CHALLENGING RANKED-CHOICE VOTING
Poliquin Loses in Maine's 2nd District
9 hours ago
THE LATEST

"Democrat Jared Golden has defeated Maine Rep. Bruce Poliquin in the nation’s first use of ranked-choice voting for a congressional race, according to state election officials. The Democrat won just over 50 percent of the vote in round one of ranked-choice voting, meaning he’ll be the next congressman from the 2nd District unless Poliquin’s legal challenges to the voting system prevail. A Golden win in the 2nd District, which President Donald Trump carried in 2016, mean Democrats have picked up 35 seats in the House."

Source:
IF SHE AGREES TO RULES REFORMS
Republicans Could Back Pelosi in Speaker Vote
9 hours ago
THE LATEST

"Rep. Tom Reed (R-N.Y.) said he and some other Republicans are committed to backing Nancy Pelosi (D-Calif.) for Speaker if she agrees to enact a package of rule reforms. Reed, co-chair of the bipartisan Problem Solvers Caucus, said the growing frustration with gridlock, polarization and a top-heavy leadership approach in Congress are the reasons why several members in his party are willing to supply Pelosi with some Speaker votes in exchange for extracting an overhaul of the House rules." The caucus wants to fast-track any legislation with support of two-thirds of members, and require a supermajority to pass any legislation brought up under a closed rule.

Source:
FOLLOWS THE KINGDOM'S INDICTMENT OF 11 SUSPECTS
Administration Sanctions 17 Saudis Over Khashoggi Case
11 hours ago
THE LATEST
FOUR TWEETS OVER THREE HOURS
Trump Lashes Out at Mueller Investigation
11 hours ago
THE LATEST
RESTRICTS FLAVORED CIGARETTES, E-CIGS
FDA Cracks Down on Smoking Products
11 hours ago
THE DETAILS

"The Food and Drug Administration announced two major attacks on the tobacco industry Thursday, saying it will start the process to ban menthol in cigarettes and strictly limit sales of flavored e-cigarettes to youths." FDA Commissioner Scott Gottlieb said the move is motivated by a 78 percent increase in e-cigarette use by high school students in the span of one year.

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login