Yesterday the Supreme Court heard arguments in
King v. Burwell, a stealth challenge to the feasibility
of the "individual mandate" that underlies the Affordable Care Act
(ACA) -- so-called "Obamacare." (Not so stealthy anymore,
as it turns out; once something makes the
New York Times front page,
it's no longer flying under the radar.)
Coverage of the case
in
the Times and
elsewhere
has been extensive, and I won't delve into the nitty-gritty details here.
Here's a brief overview. The plaintiffs in the case are using some sloppy
wording in the statute as a sort of loose thread in the sweater: they
hope the Supreme Court will tug on that string and eventually unravel the
individual mandate provision, along with much else in the law.
The "individual mandate" is the ACA's requirement that most
individuals obtain a certain minimum amount of health insurance, either through
an employer, on the open market, or through so-called "exchanges" operated
by the federal government and some states. People who fail to obtain the
required insurance pay a tax penalty, which is due to kick in for the first
time during the current tax season. In 2012,
the Court upheld
the individual mandate against a constitutional challenge, with
Chief Justice John Roberts
as the necessary swing vote (joining the Court's four more-liberal justices).
Game over, right?
Not so fast. By the terms of the statute, a person is not subject to the
individual mandate if the costs of obtaining health insurance exceed a certain
percentage of her annual household income. For many lower-income people,
those costs are reduced by government subsidies in the form of tax credits
issued by the IRS. Without these subsidies, health insurance would exceed
the cost threshold for many Americans, and those people would become exempt
from the individual mandate. Many of them presumably would not buy
insurance at all.
Now here's the problem. The provision of the ACA that tells the IRS how
to calculate these tax credits, if read literally and in isolation, allows
credits only to taxpayers who purchase insurance "through an Exchange
established by the State." But the ACA also gives states the choice
of whether to establish their own exchanges, and
only
16 have done so (plus the District of Columbia); the rest are run by the
federal government. The plaintiffs in
King therefore argue that
taxpayers in 34 states are ineligible for the tax credits.
What would be the result if this argument succeeds? Denying tax credits
to these taxpayers -- eventually, roughly 12.5 million people -- would mean
that many (probably most) of them will no longer be subject to the individual
mandate. Many or most of them, in turn, probably will not purchase health
insurance, thus dropping out of the insurance pool. This will drive
insurance premiums up for those who stay in the pool; some of those people then
will exceed the cost-to-income threshold, removing themselves from the
individual mandate and, consequently, dropping out of the insurance pool.
Costs will go up even further for those remaining in the pool; some of them
will then escape the mandate and drop out, driving costs up even more.
And so on -- a vicious cycle, or
"death
spiral," that might eventually defeat the main purpose of the ACA,
which was to provide relatively low-cost health coverage to millions of
Americans who otherwise could not afford it.
And that, of course, is the whole point of the lawsuit in
King v. Burwell.
It's a back-door attempt to do what the ACA's opponents failed to do directly
in 2012, namely gut Obamacare.
Will the attempt succeed? I was skeptical before yesterday's arguments
and remain skeptical today. There are three main reasons for my
skepticism (or should I say optimism).
The first is simply that the law is against the plaintiffs in
King.
It's true that the single sentence they point to, if read literally and out of
context, seems to say that tax credits are not available for taxpayers in
states without their own exchanges. But this is one sentence in a
2,000-page piece of legislation. The Court -- including its most
conservative members, who like to focus on the literal meaning of texts -- has
frequently said that statutory language must be interpreted "by reference
to ... the broader context of the statute as a whole." (This quote
comes from
Justice
Clarence Thomas's opinion for the Court in a 1997 case,
Robinson v.
Shell Oil Co.) The "broader context" of the ACA makes clear
its goal of providing affordable insurance coverage to as many Americans as
possible. Reading the statute to deny tax subsidies to millions of
people, based on a single sentence in an obscure provision of the law, would
make hash of this purpose.
At worst, the ACA is ambiguous on the question whether taxpayers in
non-exchange states are entitled to the credits. And the Court has long
followed the rule (known as
Chevron deference) that in cases of
statutory ambiguity, the judiciary must defer to the reasonable interpretation
endorsed by the agency charged with administering the statute -- in this case,
the IRS. The IRS reads the statute to allow the tax credits, and if the
Court thinks the statutory language is ambiguous, it should uphold the IRS's
reading. (This is the basis on which the lower court in
King v.
Burwell rejected the plaintiff's challenge.)
But while the law is against the plaintiffs, it's not quite a slam dunk;
there's enough room for the Court to buy the plaintiffs' arguments if the
majority is inclined to do so. Which leads me to the second and third
reasons why I think the plaintiffs will lose.
The second reason is
a
comment made by Justice Anthony Kennedy during oral arguments
yesterday.
Justice
Kennedy told the attorney arguing for the plaintiffs that their position “
raises a serious constitutional question”
about the relationship between the state and federal governments. He was referring to the fact that denying tax
credits to people in non-exchange states would put those states to a Hobson’s
choice: either set up their own
exchanges or watch hundreds of thousands of their citizens lose their insurance
coverage (and the possible collapse of the health-insurance market in that
state). There are a couple
constitutional doctrines that might limit the federal government’s ability to
essentially force a state government to act in this way. The Tenth Amendment prohibits the feds from
“commandeering” state governments to enforce federal law; requiring states to
create insurance exchanges or watch their insurance markets crater might
conceivably qualify as prohibited “commandeering.” The Court also has imposed limits on
Congress’ ability to coerce states into action using the power of the purse;
Congress may entice states to regulate using federal money as a carrot, but it
may not deny the states a “legitimate choice” by using federal funds as a cudgel. Arguably a law that allows federal tax
credits only to citizens in states that establish their own exchanges crosses
this line.
I personally don’t think that either
of these arguments is a winner, assessed on its merits. But the point is that Justice Kennedy appears to think so. Justice Kennedy has established a reputation,
for better or worse, of taking positions in highly controversial cases that
tread a fine line, resolving the particular dispute at hand without committing
to deeply disputed principles. His
comment about federalism yesterday suggests he might do the same in King v. Burwell – perhaps endorsing the
government’s reading of the tax-credit provision in order to avoid the “serious
constitutional question” involving federal coercion of the states. That would be a crucial swing vote against
the plaintiffs – perhaps the fifth vote necessary to reject their challenge.
The third reason I think the
King plaintiffs will lose is Chief Justice
Roberts.
In
NFIB v. Sebelius, the 2012 case challenging several aspects of the
ACA on constitutional grounds, the Chief Justice surprised almost everyone by
siding with the government to uphold the individual mandate.
He took a big risk in doing so: his
vote
triggered the wrath of disappointed fellow conservatives.
I find it hard to believe that the Chief
Justice – having stuck his neck out to uphold the individual mandate in a squarely
presented constitutional challenge – would now meekly vote with his fellow
conservatives to kill the law by indirect means.
Of course,
there are other theories.
But I would not be surprised if the Chief Justice too sided with the
government in
King – either on
Chevron deference grounds, or as a way
of avoiding supposed federalism problems, in league with Justice Kennedy.
In other words, a 6-3 decision for the government in
King would not shock me.
(I
have no hope that Justices
Scalia,
Thomas, or
Alito will
bring themselves to vote in favor of Obamacare.)
But I’m only slightly better at picking the
results of controversial Supreme Court cases than I am at calling NCAA
tournament games, so I wouldn’t take my prediction to the bank.
We’ll find out (most likely) in late June.
