Supreme Court Upholds Federal Subsidies in Obamacare

Supreme Court Upholds Federal Subsidies in Obamacare June 26, 2015

In a decision that came out pretty much exactly as I expected, the Supreme Court yesterday upheld the distribution of tax subsidies in the federal health care exchanges created by the Affordable Care Act by a 6-3 vote. Chief Justice Roberts and Justice Kennedy joined the four liberals on the court and Roberts wrote the majority opinion.

The premise of the plaintiffs’ argument was ridiculous from the very start. The ACA said that federal subsidies were available to qualified applicants for health insurance in any “Exchange established by the State.” But some states refused to create their own health insurance exchanges, so residents of those states got insurance through the federal exchange. Plaintiffs argued that because of those five words, it was illegal to subsidize the purchase of insurance in the federal exchange because they were “established by the State” but by the federal government.

This case really was quite a simple one, despite the fevered protests from conservatives eager to find any way, no matter how absurd, to bring down Obamacare. It is a well-established matter of statutory interpretation that when the wording of a law is vague, you must interpret the words in a manner consistent with the purpose and intent of the law. Since the purpose and intent of the ACA was to make health insurance available and affordable to as many of the uninsured as possible, could Congress really have intended to exclude the federal exchange, which covers about 2/3 of the country, from such subsidies? Of course not. To interpret the text that way would be to say that Congress explicitly intended to destroy the effectiveness of the very law that text resides in.

And here’s the thing: No one thinks that Congress actually intended that, including the plaintiffs in this case and the conservative activists supporting this case. They can’t cite a single member of Congress who believed at the time the law was passed that the subsidies would not be available to every qualified applicant for insurance in the country. In fact, groups like the Heritage Foundation specifically acknowledged that this was the case at the time the law was passed. Everyone in Congress understood that to be what the law intended and said. Best of all, the very justices who dissented in this case said so in the first challenge to the ACA and Chief Justice Roberts actually quotes them in his opinion:

The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. One study predicts that premiums would increase by 47 percent and enrollment would decrease by 70 percent. Another study predicts that premiums would increase by 35 percent and enrollment would decrease by 69 percent. And those effects would not be limited to individuals who purchase insurance on the Exchanges. Because the Act requires insurers to treat the entire individual market as a single risk pool, premiums outside the Exchange would rise along with those inside the Exchange.

It is implausible that Congress meant the Act to operate in this manner. See National Federation of Independent

Business v. Sebelius, 567 U. S. ___, ___ (2012) (SCALIA, KENNEDY, THOMAS, and ALITO, JJ., dissenting) (slip op., at 60) (“Without the federal subsidies . . . the exchanges would not operate as Congress intended and may not

operate at all.”).

So the position being taken by the three justices in dissent — Scalia, Thomas and Alito — is that Congress must have intended to destroy the very law they just passed with that wording. That is, of course, patently ridiculous. Scalia, naturally, threw quite a tantrum about it in his dissent, ignoring his own inconsistency on the matter and raging against the majority. He even read his dissent from the bench, something justices typically only do when they feel really strongly about the wrongness of the decision. Apparently, Scalia was so upset that he missed out on a chance to take health care away from more than 6 million people that he decided that he must sound his barbaric yawp for all to hear.

You can read the full ruling here.

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