Will SCOTUS Kill Federal Subsidies for Obamacare?

The Supreme Court surprised observers last week by agreeing to hear an appeal of King v Burwell, in which the plaintiffs argue that those who get their health insurance through the federal exchange rather than a state-instituted exchange are ineligible for subsidies. Those subsidies are absolutely crucial to Obamacare to ensure that the poorest Americans can afford to buy health insurance. Cue the reading of tea leaves. Barry Friedman and Dahlia Lithwick say the Supreme Court may uphold the subsidies despite fears from liberals.

In King v. Burwell, a unanimous decision by a panel of the U.S. Court of Appeals for the 4th Circuit sided with the Obama administration, rejecting the challengers’ argument that the provision of the ACA that authorizes tax credits for insurance purchased on an exchange “established by the State under section 1311” doesn’t authorize tax credits for insurance purchased on an exchange established by the federal government. Supporters of the ACA call this a mere “drafting error.” Opponents claim this is a clear case of statutory interpretation: The law says “state” exchanges, and that is what was intended. If this interpretation prevails, more than four million people lose those subsidies.

Why are the purveyors of doom, well, purveying doom? Because they are certain the decision to hear the case means the end of Obamacare, as the Supreme Court typically does not take a case for review unless it really has to or really wants to. We just saw that with the same-sex-marriage cases: The Supreme Court declined to take them and—just before that decision came down—Justice Ruth Bader Ginsburg suggested that unless there was a division among the appellate courts on gay marriage, there is “no need for us to rush.” (The federal appeals courts finally split on same-sex marriage just last week, so now it is likely that the justices will weigh in.) On the ACA issue, there is no formal circuit split—a panel of the D.C. Circuit had ruled against the subsidies but the en banc court was reconsidering—and the Fourth Circuit had read the federal statute as the federal government would prefer. So why the rush?

The only reason to take the case, the doomsayers suggest, is because at least four of the justices want to—and this must be because they have it in for Obamacare. Of course, it takes four justices to grant a case for review, and five to rule in a particular way. So, let’s assume that the four conservative justices who voted to strike down the ACA in 2012—Alito, Kennedy, Scalia, and Thomas—are anxious to hear this case. They still need to come up with a fifth vote, so all eyes are on the Chief Justice, who was willing to scuttle the Medicaid expansion but not to strike down the ACA in its entirety the last time he had the chance to do so. The current thinking, then, posits that Roberts, having upheld the statute once, will now switch sides and do everything he can to undercut it…

Second, it is possible everyone has their political calculus wrong with regards to the Chief Justice, just as we did the first time the Supreme Court looked at the ACA. Roberts, according to all accounts, did a last-minute 180 on Obamacare in 2012. We may never know why, but it seems likely it had something to do with preventing a backlash against the court. While such a backlash is less likely now—especially given the just-completed midterms that gave Republicans control of the whole Congress—Roberts is savvy enough to know how a ruling against the federal government in this case could be perceived.

In a recent speech to the University of Nebraska College of Law, Roberts said that he didn’t want Americans to start to view the Supreme Court as a “political entity.” “I worry about people having that perception, because it’s not an accurate one about how we do our work. It’s important for us to make that as clear as we can to the public.” A 5-4 anti-Obamacare vote in King v. Burwell would accomplish the exact opposite: Eliminating the federal government’s subsidies, when there is such widespread agreement that Congress never, ever intended such a thing, would look like nothing but a political swipe.

Third, while ideology decides lots of cases, the justices happen to be lawyers as well. This is a statutory interpretation case, not a constitutional one. There are really good legal reasons why the best reading of this statute is the one that allows the federal subsidies. Indeed, Abbe Gluck explains on SCOTUSblog how voting to uphold the subsidies is right in line with Justice Scalia’s preferred method of interpreting statutes. Whether one is persuaded by this or not, the point remains that statutory interpretation cases often prove less ideological than purely constitutional ones.

None of this is implausible. But Noah Feldman has a very interesting analysis of the situation. He argues that if the Supreme Court strikes down all state bans on same-sex marriage in June, as I think they will, that might provide the cover necessary for Roberts to kill Obamacare in a “one for you, one for me” scenario.

Justice Kennedy, usually the court’s swing vote, will be the subject of linkage speculation this term as well. Kennedy is known to be an activist liberal when it comes to gay rights, and the question whether the Supreme Court will affirm the fundamental right to marry is really just a question of whether Kennedy himself is ready to do what he was not ready to do in 2013 when he struck down the Defense of Marriage Act. Yet it’s also well recognized fact about Kennedy that he considers himself a conservative justice. It’s therefore possible to speculate that, if Kennedy issues an important liberal decision — in the case of same-sex marriage, possibly the most important one of his career — he will also try to maintain his conservative bona fides with a corresponding conservative decision.

If you believe that Kennedy will decide in favor of gay marriage — and I do — then it seems almost guaranteed that he will vote with the conservatives against the Barack Obama administration in the new Affordable Care Act case. Indeed, Kennedy already voted to strike down the individual mandate as unconstitutional in 2012. Then, too, some speculated that the vote might be linked to the Defense of Marriage Act cases that were wending their way to the court.

That leaves Chief Justice John Roberts in the driver’s seat in the upcoming Obamacare case, as he was in 2012. For Roberts, linkage has a very different meaning than for Kennedy. Roberts seems strongly committed to the idea that a court associated with his name should not come to be seen as the most activist conservative court since the 1920s and 30s. His surprising vote to save the individual mandate two years ago was an act of judicial restraint that simultaneously saved the Roberts court from opprobrium.

But if the Roberts Court (without Roberts’s vote) announces a fundamental constitutional right to marry, its liberal legacy will be so prominent that Roberts may have reason that he can kill Obamacare without tarnishing the court’s reputation too much.

Also not an implausible prediction. Next June is going to be very interesting, and the lives of millions of people are going to be affected in a big way.

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  • eric

    Ideally the government to remove this as a legal issue atogether by revising the ACA legislation. It hinges on two clauses being unclear about whether the federal government can offer subsidies when there is no state exchange set up. One clause says the fed takes on the role of the state in setting up exchanges when there are no state exchanges. The other specifies State exchanges grant the subsidy. A two-word change in the latter to say “State and Federal…” would fix the problem.

    Sadly in this Congress, that sort of rational legislative correction ain’t gonna happen. One can only imagine what Obama would have to give up to get the GOP to go along with such a correction. An extra carrier group for DOD or elimination of all corporate taxes might do it. Nothing short of that.

  • http://en.uncyclopedia.co/wiki/User:Modusoperandi Modusoperandi

    Next June is going to be very interesting, and the lives of millions of people are going to be affected in a big way.

    Sure, but they’re mostly Democrats, who despite having the insurance that [potentially] will be stripped away or rendered unaffordable the Right, will continue to not vote for the Republicans who think they never should’ve had it in the first place. And the remainder are Republicans, who will blame Obama. Because Obama.

    So it’s win-win. Sure, a bunch of people too rich for Medicaid but too poor for private insurance will be screwed, but this isn’t about people. This is more important than people. This is politics. Besides, the Democrat party Does It Too®*. I mean, they only passed Obamacare to get people to vote for them. So they’re exactly the same as the Right trying to unpass Obamacare by any means necessary.


    * “Does it too” is a registered Trademark of False Equvalence, Inc.

  • D. C. Sessions

    One can only imagine what Obama would have to give up to get the GOP to go along with such a correction. An extra carrier group for DOD or elimination of all corporate taxes might do it. Nothing short of that.

    More like “have Biden dragged out and shot, then seppuku on the steps of the Captitol.” After that, negotiation betwen Congress and the White House.

  • garnetstar

    If Roberts doesn’t want his court to seem “political”, he’s going to have to resign and get rid of most of the other judges, too.

    Personally, I think Roberts will be inclined to uphold Obamacare subsidies because he doesn’t want to look foolish, after his upholding the law before. He wants to be proven right the first time, his pride won’t want to take a fall.

    And yes, that’s how his court works. Politics and egos.

  • karmacat

    I know the SCOTUS is supposed to focus just on intepretation of the law, but the law is not really an abstract idea. It is about people, so can’t they focus on how striking down the law will affect people. They have done similar actions if you look Brown vs board of education. It is frustrating to watch people getting hurt because of congress’ actions and there just aren’t enough people protecting these individuals. But I guess I am a bleeding heart liberal thinking that other people deserve to live and be healthy also