Obamacare’s Road Back to the Supreme Court

With one big loss and one big win on the same day, Obamacare may be headed back to the high court.

Supreme Court Chief Justice John Roberts stands with fellow Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan prior to President Obama's State of the Union speech on Capitol Hill on January 28, 2014 in Washington, DC.
National Journal
Sam Baker
July 22, 2014, 12:10 p.m.

The Af­ford­able Care Act landed in a new level of leg­al per­il Tues­day, cour­tesy of a duo of con­flict­ing court rul­ings that threaten to send the law back to the Su­preme Court — and once again put the law’s found­a­tion at the mercy of the justices.

Two fed­er­al Ap­peals Courts is­sued con­flict­ing rul­ings Tues­day in law­suits that chal­lenge the sub­sidies that Obama­care provides to help people cov­er the cost of their premi­ums. One Ap­peals Court said the sub­sidies should be avail­able only in states that set up their own in­sur­ance ex­changes and ruled that the IRS broke the law by provid­ing them na­tion­wide.

Hours later, an­oth­er Ap­pel­late Court said the IRS did noth­ing wrong and the sub­sidies are leg­al every­where.

But the con­flict­ing rul­ings don’t auto­mat­ic­ally send the law back the land’s highest court. In­stead, Obama­care’s im­me­di­ate fu­ture will be de­term­ined as both sides ap­peal the de­cisions that didn’t go their way.

Obama’s next move
The Justice De­part­ment lost the first of Tues­day’s cases, Hal­big v. Bur­well, in which a three-judge pan­el of the D.C. Cir­cuit Court of Ap­peals lim­ited Obama­care’s sub­sidies to state-run ex­changes.

The Justice De­part­ment said Tues­day it will ap­peal the pan­el’s rul­ing to the full D.C. Cir­cuit Court. The full D.C. Cir­cuit is dom­in­ated by Demo­crat­ic ap­pointees, so the Justice De­part­ment has a good chance of win­ning this ap­peal.

The chal­lengers’ next move
The ad­min­is­tra­tion won the day’s second case, King v. Se­beli­us, which was de­cided by a three-judge pan­el of the 4th Cir­cuit Court of Ap­peals.

The chal­lengers who lost in King could also seek a re­view be­fore the full 4th Cir­cuit, but they would prob­ably lose. (That court is also mostly made up of Demo­crats.) So they’ll prob­ably skip that step and ap­peal straight to the Su­preme Court, says Uni­versity of Rich­mond law pro­fess­or Kev­in Walsh.

Why a Su­preme Court ap­peal might work
The Su­preme Court is more likely to take a case when there’s a split between cir­cuit courts, the situ­ation the two con­flict­ing rul­ings cre­ated Tues­day. That’s why the chal­lengers are likely to ap­peal dir­ectly to the high court — the land­scape right now is fa­vor­able to them.

But if the Justice De­part­ment wins its ap­peal in the Hal­big case — which, again, is likely — there will no longer be a split between Ap­peals Courts, and the case could be­come less at­tract­ive to the Su­preme Court justices. So it’s in the chal­lengers’ in­terests to move quickly, be­fore the full D.C. Cir­cuit Court rules.

But even af­ter­ward, they still might have a shot, ac­cord­ing to Walsh.

“The Court has dis­cre­tion wheth­er to grant [the ap­peal], of course, but a cir­cuit split on such an im­port­ant part of a massive reg­u­lat­ory scheme is the sort of thing that the Su­preme Court should hear,” he wrote.

Why it might not work
Does the Su­preme Court really want to get in­volved in this case? That’s the biggest ques­tion.

If it does, it’ll have an op­por­tun­ity to. But the Court could also simply sit on the King ap­peal pending the fi­nal out­come in Hal­big. At that point, there’s a good chance lower courts won’t be di­vided — both will have said the sub­sidies are leg­al. So there would be no open ques­tion the Su­preme Court needed to ad­dress, and it wouldn’t have to wade back in­to an­oth­er polit­ic­ally charged elec­tion-year fight over a law­suit that threatens to de­rail the Af­ford­able Care Act.

The im­plic­a­tions in King and Hal­big are just as big as the case against Obama­care’s in­di­vidu­al man­date. That one was on track for the Su­preme Court from the day it was filed, but it raised con­sti­tu­tion­al ques­tions that King and Hal­big don’t.

In oth­er words, the real-world and polit­ic­al im­plic­a­tions are just as big this time around, but the leg­al is­sues at stake are smal­ler. If the Su­preme Court wants to avoid the Obama­care fray, there’s a way out.

But, after Tues­day, if the justices are de­term­ined to have an­oth­er shot at Pres­id­ent Obama’s sig­na­ture le­gis­lat­ive achieve­ment, they can.

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