Because 11.4 million Americans are enrolled in insurance plans through healthcare.gov, with as many as 8 in 10 qualifying for subsidized coverage, the health care reform cannot be wiped away as if it had never existed. It has reshaped how Americans, and which Americans, access health care. It has pushed down the uninsured rate to 12.3% from a peak at 18.0% in the third quarter of 2013. An alternative must be suggested. While it remains true that any legislative attempt to repeal the Affordable Care Act during Obama’s presidency is doomed to failure, the future of the reform remains uncertain. Beginning on March 4, the Supreme Court began hearing oral arguments for the King v. Burwell, the case that contends subsidies distributed through the exchanges created by the federal government after 37 states refused to participate are illegal. If that court agrees with that argument, as many as 7.5 million people in at least 34 states could face premium hikes of as much as 256%.
Primarily those hurt would be white, high-school graduates, employed, and from the South.
History of King v. Burwell
Last summer, two lower courts returned opposing rulings on the legality of the government subsidies, the element that creates affordable health insurance. That split decision prompted the Supreme Court to take up the case, leaving the nine-justice panel to 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 37 states. The text of the 2010 law states that the Internal Revenue Service can authorize subsidies — which are awarded to Obamacare enrollees with annual incomes of up to 400% of the federal poverty level in the form of tax credits — to qualifying insurance consumers who purchase policies through an “exchange established by the state.” Seemingly, to Obamacare critics and the plaintiffs in the case, those four words of the 900-page law excludes the 37 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 (including 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 reform’s authors did not expect the Affordable Care Act to be as controversial as it became during 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 after the Republicans gained control of the House of Representatives — the IRS 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 exchange is established and operated by the state.”
First day of court proceedings
As oral arguments began Wednesday morning, “#DontTakeMyCare” trended on Twitter and protesters took to the steps of the Supreme Court with signs bearing the same message.
It will be important to watch Chief Justice John Roberts in the proceedings. Experts in the American judiciary system expect that court proceedings will reflect the ideological divide among the court justices, just as in the last challenge to the Affordable Care Act. The court voted five to four in 2012, with the conservative chief justice casting the decisive ballot, to uphold the constitutionality of the Affordable Care Act’s individual insurance mandate as a valid exercise of Congress’s power to tax, while the expansion of Medicaid was deemed to be an undue burden on states. Roberts has been described by the New Yorker as a “professional Republican,” and so it was somewhat surprising that he did not side with the conservative judges as usual. Instead, he joined Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer and Elena Kagan. And, in this second case, he is also expected to cast one of the decisive votes.
The hour-and-a-half of arguments saw thousands of words, a myriad of provocative questions, and two very active lawyers — Solicitor General Donald Verrilli and Michael Carvin, the lawyers for the plaintiffs who are challenging the most important provision of the Affordable Care Act. In fact, both sides had so much to say that Roberts gave them each an extra 10 minutes. But contrary to his usual style, Roberts asked no questions of the petitioners. The chief justice, who typically is one of the most vocal questioners on the bench, made only two significant comments. He put an end to Ginsburg’s interrogation of an attorney over whether the plaintiff had the standing to sue and noted that if the current interpretation stands, a future Republican president could read the law differently than the Obama administration, meaning that even if this case fails, Obama’s successor could change the law. And that second point — along with questions raised by Justice Kagan and Justice Breyer — are extremely important for how the court decides on the case.
Watch for the Chevron defense. Justice Anthony Kennedy asked Verrilli about what is known as the Chevron defense,” a legal doctrine that provides the court to defer to the chief executive’s interpretation if a law is unclear. Unsurprisingly, Verrilli argued that the Chevron doctrine gave the Obama administration more-than-adequate license to read that law as allowing subsidies to be distributed by all exchanges. “If you’re right about Chevron,” Roberts said, “that would indicate that a subsequent Administration could change that interpretation?” A point Verrilli conceded.
Ambiguity is indeed a key feature of the debate; from one perspective it does seem likely that Obama administration did not foresee such a moment in the history of the Affordable Care Act where so many exchanges would be operated by the federal government rather than the states, and therefore had no intention of limiting the distribution of tax credits to state-operated insurance exchanges. However, the plaintiffs do have the text of the law to support their argument, as well as concerns for states’ rights. But because the law has been implemented and with the complexity of the statute itself, context cannot be ignored. Kagan forced the lawyers for the plaintiffs to concede that context, rather than the actual text of the law, is essential to understanding the Affordable Care Act. Alongside Breyer, Sotomayor, and Kennedy, Kagan expressed skepticism that Obamacare could function as it was meant to, that it could function in a reasonable fashion, or even be constitutionally sound, if the tax credits are limited to exchanges created by states.
For reference, no entitlement program has ever been reversed in U.S. history.
Who benefits if the court rules in favor of the plaintiffs? Justice Kennedy, who is usually described as the court’s swing vote, worried that accepting the plaintiff’s reading of the health care reform law would potentially destroy the insurance system in states that deferred to the federal exchange. By accepting that only state exchanges had the authority to offer subsidized insurance, the Supreme Court would essentially be coercing states (that now have federally facilitated insurance marketplaces) to create their own exchanges, both because their citizens would be denied benefits and because that state insurance system will fail without the mandate and subsidies. To him, such a reading is a “serious constitutional problem.” This concern echoes the argument he made in 2012, when the Court upheld the constitutionality of the individual insurance mandate, but judged the expansion of Medicaid to be an undue burden on states. And Kennedy’s vote, like Roberts’, is in play.
No, the government’s defense does not require the court to remake the Affordable Care Act rather than just interpret it. Breyer did not so much make an issue of the difference between what the Obama administration intended and how the text reads. He noted that the health care reform law makes clear that the federal government should establish exchanges in the case a state fails to do so, but there is no practical difference between the state-operated and federally facilitated insurance marketplaces. Sotomayor made a similar argument. “The choice the state had was establish your own exchange or let the federal government establish it for you. That was the choice. If we read it the way you’re saying, then we’re going to read a statute as intruding on the federal-state relationship, because then the states are going to be coerced into establishing their own exchanges,” she said. “Tell me how that is not coercive in an unconstitutional way.”
The court’s responsibility is not to make law but to interpret it. And the government’s case does not rest entirely on the “what-will-happen-if-the-plantiffs-win” scenario in which millions lose access to health care, an argument that is considered to be consequentialist and not strictly legal. Rather, the government’s case rests on the fact that the law cannot be read opportunistically. What the law says outside of the words, “exchanges established by the state,” matters just as much.
Can we predict how the justices will vote? Judging from both questions they asked and their voting records, all four Democratic appointees — Ginsburg, Breyer, Sotomayor, and Kagan — are expected to uphold the law in its current form. And the manner in which Justices Samuel Alito and Antonin Scalia questioned Verrilli suggested they may decide in favor of the plaintiffs, as will Justice Clarence Thomas, according to many Supreme Court observers. Thomas, incidentally, has not asked a “real” question during Supreme Court oral arguments since 2006, according to the New Yorker’s tally. And this is why Robert’s vote is so important.
Perhaps the most important insight into how Roberts will vote can be gleaned from the question he asked of Verrelli regarding the Chevron defense. Roberts’ legal career began with a clerkship with conservative Justice William Rehnquist and a position in the Attorney General’s office during the Reagan Administration, and there he developed a strong believe in the breadth of executive power under the Constitution. By siding with Republican appointees Alito, Scalia, and Thomas, Roberts would be effectively limiting the power of all presidents, an action his record suggests he would like to avoid. However, if he chooses to support the Obama administration’s reading of the Affordable Care Act, he would leave the next president the ability to reverse Obama’s interpretation upon taking office in 2017. The next election season is nearing, and undoubtedly Obamacare will be a contentious issue in the debates. And if Roberts votes in that manner, he will be suggesting that the future of the health care reform should be left to voters, not justices.
But Roberts is but one vote. Verrelli stressed how limiting the tax credits to state-operated exchanges would cause millions of Americans to lose their insurance. But Scalia argued that such a reality would force Congress to legislate a Band-Aid. “You really think Congress is just going to sit there while all of these disastrous consequences ensue?… Congress adjusts, enacts a statute that takes care of the problem,” he said. “It happens all the time. Why is that not going to happen here?”
That the Supreme Court could invalidate such an essential support of the health care reform makes it all the more necessary for the Republican party to find a suitable alternative.
What will Congress do?
“We have a plan for fixing health care,” proclaimed the title of a Washington Post op-ed penned by three Republican senators — Lamar Alexander of Tennessee, chair of the Health, Education, Labor, and Pensions Committee, Orrin Hatch of Utah, chair of the Finance Committee, and John Barrasso of Wyoming, chair of the Republican Policy Committee.
The senators acknowledged that most Obamacare enrollees “have gone through the wringer to get this insurance.” Millions were sent cancellation letters in the fall of 2013 because their plans did not meet the requirements of the Affordable Care Act. “Others no longer have access to the doctors or hospitals they were accustomed to; millions spent weeks trying to purchase insurance on the flawed website rolled out by the administration; and many have seen their out-of-pocket health costs or premiums skyrocket,” the senators wrote. And so the lawmakers promised that Congress will continue to provide “transitional” financial assistance to help Americans keep the insurance coverage they bought to comply with the individual insurance mandate. “People do not deserve further disruption from this law.”
As a second pillar of this plan to fix health care, states will be granted the flexibility to create their own insurance markets. No other details were given, but the senators concluded that if the court protects the “delicate balance of powers between the three branches of government” by deciding the Obama administration illegally rewrote laws “passed by Congress to meet its political objectives,” then Congress will have an opportunity to “create a pathway to reforms that move our health-care system in the direction of freedom, choice and lower costs.”
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Meghan on Twitter @MFoley_WSCS