Will Obamacare Survive the Supreme Court Again?

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President Barack Obama’s signature health care reform law — the Affordable Care Act — is back on the docket of the Supreme Court.

Already the Supreme Court has made several key decision regarding the future of Obamacare, as the law is colloquially known. It was challenged immediately upon its passage in March 2010 by the attorneys general of 14 states. Lawsuits sprang up across the country, and eventually those cases were merged into a single Supreme Court case. In 2012, the 9-justice panel decided (by a narrow five to four margin) that the Affordable Care Act’s individual mandate was a valid exercise of Congress’s power to tax, meaning the tax penalty that was designed to ensure most Americans purchase insurance is constitutionally sound. Although that same decision did rule that the mandated expansion of Medicare was an undue burden on states. In June, the court decided that closely-held for-profit companies can claim an exemption to the Affordable Care Act’s contraceptive coverage requirement — a ruling that could provide a precedent for other for-profit companies to challenge a number of laws that may be said to violate their religious freedoms.

Then came a series of split decisions in the lower courts on the legality of the government subsidies, the element that creates affordable health insurance. Now the Supreme Court must now decide whether Congress meant to provide federal subsidies to both Americans who purchased insurance coverage through the exchanges set up by the states and those who bought plans via the exchanges designed and operated by the federal government on behalf of 36 states.

In July, two different courts — the United States Court of Appeals for the District of Columbia Circuit and the Court of Appeals for the 4th Circuit in Richmond — issued opposing rules on the subject, within hours of each other regarding the subsidy question. The D.C. court that rejected the administration’s implementation of subsidies has since agreed to reconsider the case, and the Supreme Court decided to take up the case despite no split in the lower courts.

Both the complexities of the law, as well as the intense political debate surrounding it, gave Obamacare critics the opportunity to attack the manner in which subsidies are awarding to qualifying Americans, meaning the reform is once again in the midst of a legal battle that could profoundly curtail the impact of the Affordable Care Act. If the Supreme Court upholds the ruling issued by the D.C. court, the law will essentially be gutted; the tax credits allowed more than 4 million Americans to purchase coverage through the Obamacare exchanges will be shrunk. And without the subsidies many will be unable to afford coverage, undermining the entire mission of the reform, which was to ensure many more Americans could have health insurance. A decision is expected in June.

The text of the 2010 law states that the Internal Revenue Service can authorize subsidies to Obamacare enrollees with annual incomes of up to 400 percent of the federal poverty level, in the form of tax credits. But it also stipulates that qualifying insurance consumers must purchase policies through an “exchanged established by the state.” Seemingly, especially to Obamacare critics, those four words in the 900-page law excludes the 36 states in which the federal government, rather than the state, operates the online insurance marketplaces from subsidy provision. Opponents of the Affordable Care Act argue that Congress never authorized the distribution of tax credits through the federally-facilitated marketplaces because lawmakers wanted to incentivize states to build their own marketplaces, rather than default to those operated by the federal government, an option only 14 states plus the District of Columbia chose. It may seem odd that lawmakers left such an important pillar of Obamacare to chance, but it is likely that the reforms authors did not expect the Affordable Care Act to be as controversial as it became soon after its passage. Nor did the administration expect so many states to decline to create and operate their own exchanges.

But in 2012 — after the passage of the law and the Republicans gained control of the House of Representatives — the Internal Revenue Service did adopt a regulation that allowed individuals who qualify for the subsidies but live in states that defaulted to the federally-facilitated exchanges to receive the tax credit, “regardless of whether the exchanges is established and operated by the state.”

Basically, the Obama administration did not expect that so many states would — out of protest for the law’s mandates — defer to the federally-facilitated exchanges. “It was always intended that the federal fallback exchange would do everything that the statute told the states to do, which includes delivering the subsidies,” Chris Condeluci — who worked with Republicans on the Senate Finance Committee as a tax and benefits counsel during the Affordable Care Act debate — told the Vox. “The evidence of Congressional intent here is overwhelming,” added John McDonough, who worked with the Health, Education, Labor and Pension committee during the health reform debate, in an email. “There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state, regardless of exchange status.”

To the staffers that crafted the health care reform law the debate is absurd; the Obama administration’s decision to distribute subsidies through the federal exchanges was not a flagrant misinterpretation of clear statutory language. For the law to work as intended, tax credits needed to be distributed to all Americans who met the income requirements. “Congress determined that the tax credits at issue here are essential to the Affordable Care Act’s goals of making affordable health coverage available to all Americans and ensuring functional insurance markets,” argued U.S. Solicitor General Donald Verrilli in court papers. And so the subsequent IRS regulation can be framed as an understandable response to an unforeseen development.

That rule was not enough for Republican lawmakers. “Nothing in the ACA supports the notion that Congress meant to create the legal fiction that the federal government acts on behalf of a state when it establishes an exchange,” argued a brief of amici curiae that GOP Senators John Cornyn of Texas, Ted Cruz of Texas, Orrin Hatch of Utah, Rob Portman, and Marco Rubio of Florida filed in support of the petitors in the Fourth Circuit case, David King, et al., v. Sylvia Burwell, Secretary of Health and Human Services.

Just as the Affordable Care Act was passed on a strict party-line vote, the individual mandate was upheld by a split decision of the Supreme Court. In 2012, when the justices first ruled on the constitutionality of the health care reform, Chief Justice John Roberts was rumored to have changed sides only at the last minute, providing the decisive vote. Roberts — who the New Yorker has described as a “professional Republican” — did not side with the conservative judges as usual. Instead, he sided with Democrat-appointed Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer and Elena Kagan in deciding the law is a valid exercise of Congress’s power to tax. A similar clash is expected with this case.

And while Obamacare may have been a secondary issue in Tuesday’s congressional midterm elections, the small share of eligible voters who did cast their ballots gave more power to Republican leaders in both the Senate and the House of Representatives who say the party’s “commitment to repeal Obamacare” has been renewed. And with the Supreme Court’s Friday announcement, the debate surrounding the Affordable Care Act is far from over. Meanwhile, the second enrollment period begins November 15.

Follow Meghan on Twitter @MFoley_WSCS

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