Politicized Court System Bodes Badly for Obamacare

Despite clear signs of health care reform’s success, the Affordable Care Act faces a long road of legal hurdles ahead.

WASHINGTON, DC - JUNE 28: Obamacare supporters and protesters gather in front of the U.S. Supreme Court to find out the ruling on the Affordable Health Act June 28, 2012 in front of the U.S. Supreme Court in Washington, DC. The Supreme Court has upheld the whole healthcare law of the Obama Administration. (Photo by Alex Wong/Getty Images)
National Journal
Norm Ornstein
July 16, 2014, 5:51 p.m.

The news these days about the Af­ford­able Care Act — aka Obama­care — has been very pos­it­ive.

On most fronts, it is work­ing quite well. The ranks of un­in­sured Amer­ic­ans have de­clined dra­mat­ic­ally. People re­ceiv­ing in­sur­ance un­der the act — with num­bers that at least match the rosy ex­pect­a­tions and pro­jec­tions raised when it was en­acted — are quite sat­is­fied. The Com­mon­wealth Fund’s ex­tens­ive sur­vey found 78 per­cent of those newly in­sured are sat­is­fied, in­clud­ing 74 per­cent of Re­pub­lic­ans. A ma­jor­ity said their plans in­cluded the doc­tors they wanted; only 5 per­cent said they had none of their former doc­tors in their plans.

At the same time, more in­sur­ance com­pan­ies have in­dic­ated they will par­ti­cip­ate in ex­changes in 2015, of­fer­ing af­ford­able plans; that sug­gests they will do just fine in this mar­ket­place. This is in con­trast to the con­fid­ent and dire pre­dic­tions of op­pon­ents of both huge hikes in premi­ums in the second year and a drop in in­surers that would dev­ast­ate the mar­ket ele­ment of the ex­changes.

Fol­low­ing Obama­care’s dis­astrous first weeks of rol­lout, at­tacks on the law be­came the cent­ral fo­cus of elec­tion­eer­ing ads run by Amer­ic­ans for Prosper­ity and oth­er con­ser­vat­ive groups last year and earli­er this year. Many of these ads show­cased “vic­tims” of the law who turned out, un­der me­dia scru­tiny, to be any­thing but vic­tims, or people who had not un­der­stood their op­tions or the net cost of plans un­der the ex­changes. Re­pub­lic­an can­did­ates who planned to run on a “re­peal Obama­care” plat­form, or even a “re­peal and re­place” plank, have in most cases tried to shift the fo­cus. This is in part be­cause many, like Michigan’s Terri Lynn Land, have had no good an­swer to the ques­tion of wheth­er they sup­port the ex­pan­sion of Medi­caid in their states, and they have had no an­swer about what they would do to re­place the ACA.

Plenty of glitches and bumps in the road re­main, in­clud­ing the con­tro­versy over wheth­er and when to roll out the em­ploy­er man­date and the fate of the un­in­sured (not to men­tion com­munity hos­pit­als and oth­er pro­viders) in states that have re­fused to ex­tend Medi­caid cov­er­age. But pro­ponents of re­form have many reas­ons to be re­lieved and even sat­is­fied now. When the Medi­care pre­scrip­tion-drug law was en­acted, it faced a com­par­ably rocky rol­lout, for­cing Pres­id­ent George W. Bush to go way bey­ond the let­ter of the law to post­pone some por­tions and to re­quire pro­viders to step in where the law did not re­quire it. It was as un­pop­u­lar as Obama­care when it star­ted — but eight years later, it is widely pop­u­lar and en­trenched. Five years from now, the same might well be true of the Af­ford­able Care Act.

But, of course, the ACA is dif­fer­ent in key re­spects from Medi­care Part D. While par­tis­an in its en­act­ment, Part D was bi­par­tis­an in its im­ple­ment­a­tion. As Hil­lary Clin­ton said when its im­ple­ment­a­tion was at its rocky low, “I voted against it, but once it passed, I cer­tainly de­term­ined that I would try to do everything I could to make sure that New York­ers un­der­stood it, could ac­cess it, and make the best of it.” Demo­crats in Con­gress didn’t vote once, much less 50 times, to re­peal it or gut it, and neither they nor their lib­er­al aco­lytes filed law­suits to over­turn or upend it.

It is the lat­ter set of moves that should make both pro­ponents of the law and those now in­sured un­der it wary right now. Two suits — NFIB v. Si­beli­us, and Bur­well v. Hobby Lobby — res­ul­ted in flesh wounds to the law, the first mak­ing the ex­pan­sion of Medi­caid vol­un­tary for the states, the second cre­at­ing ex­cep­tions for closely held for-profit cor­por­a­tions when the own­ers have re­li­gious ob­jec­tions. But there is an­oth­er set of cases that could do much more dam­age.

I am not talk­ing so much about the now-fam­ous and hyped law­suit that Speak­er John Boehner is launch­ing against the pres­id­ent for fail­ing to faith­fully im­ple­ment the em­ploy­er man­date ele­ment of the ACA. I find it so ab­surd that I doubt it has any ser­i­ous chance of reach­ing the Su­preme Court. Ima­gine giv­ing stand­ing to a group of law­makers who say they want the law im­ple­men­ted but who voted against the law, voted dozens of times to re­peal it, and them­selves called for delay in its im­ple­ment­a­tion!

Rather, the threat comes from an as-yet little no­ticed and more ob­scure set of four law­suits filed by ideo­lo­gic­ally con­ser­vat­ive act­iv­ists and their law­yers, two of which have reached fed­er­al Ap­pel­late Courts, the D.C. Cir­cuit and the 4th Cir­cuit both of which could rule any time now on their cases, Hal­big v. Bur­well and King v. Bur­well.

The key to this lit­ig­a­tion is an awk­ward word­ing in the stat­ute about the sub­sidies avail­able to the less af­flu­ent, which says the sub­sidies come “through an Ex­change es­tab­lished by the State un­der Sec­tion 1311.” If we re­lied only on a lit­er­al read­ing of these words in isol­a­tion, there would be no sub­sidies al­lowed by ex­changes not es­tab­lished by in­di­vidu­al states — mean­ing that mil­lions of people who are in­sured in the fed­er­al ex­changes in the 36 states that re­fused to es­tab­lish their own state-run mar­ket­places would be stripped of eli­gib­il­ity for sub­sidies. This would be dev­ast­at­ing for most of them; the in­sur­ance they are re­ceiv­ing is af­ford­able be­cause of the fin­an­cial as­sist­ance. But the dam­age would go bey­ond these in­di­vidu­als. As they dropped their in­sur­ance be­cause of its un­af­ford­ab­il­ity — ex­cept for the really sick or en­dangered among them, who would still be­ne­fit by keep­ing their plans even at a high­er cost — it would rad­ic­ally al­ter all in­di­vidu­al in­sur­ance mar­kets, chan­ging the risk pool in ways that would destabil­ize them.

Two in­di­vidu­al judges who have heard the case based on these par­tic­u­lar words have dis­missed it pretty much out of hand. First, as leg­al schol­ar Timothy Jost has poin­ted out, if one reads oth­er sec­tions of the law along­side Sec­tion 1311 — Sec­tions 1312, 1321, and 1453 — it is abund­antly clear that Con­gress cre­ated a fall­back of fed­er­ally run ex­changes for states that failed to es­tab­lish their own, defined all ex­changes in­clud­ing the fed­er­al ones as be­ing “Ex­changes es­tab­lished by the State,” and made clear that all Amer­ic­ans are res­id­ents of states that es­tab­lished ex­changes.

Second, it is quite clear what Con­gress’s in­tent was — and it was not to ex­clude mil­lions of Amer­ic­ans from the be­ne­fits of the law be­cause their states ca­pri­ciously de­cided not to es­tab­lish their own ex­changes. The plaintiffs in these cases claim oth­er­wise: that Con­gress wanted to co­erce states to set up their own ex­changes by deny­ing the res­id­ents of the re­cal­cit­rant states any sub­sidies. It is pretty easy to de­term­ine con­gres­sion­al in­tent in this case — by ask­ing the drafters of the law what their in­tent was. Five prin­cip­al drafters — Max Baucus, Tom Har­kin, Henry Wax­man, Sander Lev­in, and George Miller — wrote a friend of the court brief mak­ing it crys­tal clear that their in­tent was to provide be­ne­fits and sub­sidies to all who are eli­gible.

So why worry? A three-judge pan­el of the D.C. Cir­cuit that heard the case — the pan­el whose rul­ing is im­min­ent — in­cluded one Re­pub­lic­an-ap­poin­ted judge with an ex­cep­tion­ally con­ser­vat­ive repu­ta­tion, A. Ray­mond Ran­dolph, who made it abund­antly clear that he would rule for the plaintiffs, and an­oth­er Re­pub­lic­an-ap­poin­ted judge, Thomas B. Grif­fith, who could well join him. To be sure, if this oc­curs, it will likely have no leg­al ef­fect for many months. This is be­cause the de­cision will be put on hold as soon as the Justice De­part­ment ex­er­cises its op­tion to seek im­me­di­ate re­view of the pan­el’s de­cision by the full com­ple­ment of judges on the D.C. Cir­cuit. With four Obama ap­pointees re­cently con­firmed as a res­ult of the Sen­ate’s 2013 ab­ol­i­tion of fili­busters for Ap­peals Court ju­di­cial nom­in­ees, the Cir­cuit’s fi­nal de­cision will likely af­firm the Dis­trict Court’s dis­missal of the chal­lenges. The 4th Cir­cuit pan­el hand­ling its case in­dic­ated, dur­ing its or­al ar­gu­ment in mid-May, that it, too, will prob­ably af­firm the tri­al judge’s dis­missal of the case.

Two oth­er sim­il­ar cases, in fed­er­al Dis­trict Courts in Ok­lahoma and In­di­ana, are wend­ing their way up through their re­spect­ive cir­cuits. There are no tea leaves yet to pre­dict res­ults in those two cases; ul­ti­mately, they could yield a di­vided out­come, en­sur­ing Su­preme Court re­view. And there is no as­sur­ance that the Roberts Court, which came with­in an eye­lash of de­clar­ing the en­tire ACA un­con­sti­tu­tion­al in the NFIB case, would dis­miss this chal­lenge. Justice Ant­on­in Scalia, in par­tic­u­lar, has been dis­missive of con­gres­sion­al in­tent, even if this past June, he re­af­firmed re­cog­ni­tion of an in­ter­pret­a­tion­al ap­proach friendly to the Obama ad­min­is­tra­tion’s case — “the fun­da­ment­al can­on of stat­utory con­struc­tion that the words of a stat­ute must be read in their con­text and with a view to their place in the over­all stat­utory scheme.” But Scalia has fre­quently ruled based on nar­row, lit­er­al read­ing of words taken out of con­text in stat­utes to sat­is­fy his ideo­lo­gic­al and polit­ic­al pre­dilec­tions. Were he to do so in this as­sault on the Obama­care ex­changes, he would very likely have his two ami­gos, Samuel Alito and Clar­ence Thomas, with him. He might well also have Justice An­thony Kennedy, who joined a dis­sent fiercely hos­tile to the ACA two years ago, when the in­di­vidu­al man­date was up­held by one vote — that of Chief Justice John Roberts. Would Roberts go against them again, cog­niz­ant of the heavy polit­ic­al con­sequence of strip­ping mil­lions of Amer­ic­ans of health in­sur­ance pur­chased with the help of ACA tax cred­its and sub­sidies? Who knows?

Court chal­lenges that in the past would have been dis­missed out of hand are not any­more, in an era in which the fed­er­al ju­di­ciary, es­pe­cially the Su­preme Court, is po­lar­ized and tri­bal­ized along the same lines as Con­gress. Reas­on enough to be con­cerned about the fu­ture of health re­form.

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