Supreme Court Ruling – Obamacare Subsidies Stay

Supreme Court Ruling – Obamacare Subsidies Stay

My soundbite: “The Supreme Court today rewrote Obamacare in order to save Obamacare. The plain meaning of the term ‘Exchange established by the State’ was contorted to mean established by the State or Federal government. That contortion, Justice Scalia correctly noted in dissent, effectively has turned Obamacare into SCOTUScare.”

———-

Decision just in in King v. Burwell. Here.

In a 6-3 ruling authored by Chief Justice Roberts, the Court held that subsidies are available on the federal exchanges. Those voting in the majority were Roberts, Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan.

Had the court ruled otherwise, it would have put all of Obamacare in jeopardy, since 38 states do not have exchanges and Obamacare is too expensive for most people without a subsidy.

SCOTUS holds individuals who get their health insurance through exchange established by federal gov will be eligible for tax subsidies.

— SCOTUSblog (@SCOTUSblog) June 25, 2015

Administration wins health care

— SCOTUSblog (@SCOTUSblog) June 25, 2015

The issue was whether only state-established exchanges could issue tax credits, or whether the federal exchanges could also. Challengers to IRS regulations pointed to the words “established by the State” in the legislation as clear and unambiguous that subsidies were limited to state exchanges.

The Court rejected this assertion:

These provisions suggest that the Act may not always use the phrase “established by the State” in its most natural
sense. Thus, the meaning of that phrase may not be as clear as it appears when read out of context. [at 11.]

As he did in upholding an Obamacare constitutional challenge in 2012, Roberts found a way to read the law so as to save the law:

The upshot of all this is that the phrase “an Exchange established by the State under [42 U. S. C. §18031]” is properly viewed as ambiguous. The phrase may be limited in its reach to State Exchanges. But it is also possible that the phrase refers to all Exchanges—both State and Federal—at least for purposes of the tax credits. If a State chooses not to follow the directive in Section 18031 that it establish an Exchange, the Act tells the Secretary to establish “such Exchange.” §18041. And by using the words “such Exchange,” the Act indicates that State and Federal Exchanges should be the same. But State and Federal Exchanges would differ in a fundamental way if tax credits were available only on State Exchanges—one type of Exchange would help make insurance more affordable by providing billions of dollars to the States’ citizens; the other type of Exchange would not.2 [at 12-13]

The Court found Obamacare so “inartfully drafted” that the Court essentially wrote the law for Congress through “statutory interpretation.”

The Affordable Care Act contains more than a few examples of inartful drafting. (To cite just one, the Act creates three separate Section 1563s. See 124 Stat. 270, 911, 912.) Several features of the Act’s passage contributed to that unfortunate reality. Congress wrote key parts of the Act behind closed doors, rather than through “the traditional legislative process.” Cannan, A Legislative
History of the Affordable Care Act: How Legislative Procedure Shapes Legislative History, 105 L. Lib. J. 131, 163 (2013). And Congress passed much of the Act using a complicated budgetary procedure known as “reconciliation,” which limited opportunities for debate and amendment, and bypassed the Senate’s normal 60-vote filibuster requirement. Id., at 159–167. As a result, the Act does not reflect the type of care and deliberation that one mightexpect of such significant legislation….

Anyway, we “must do our best, bearing in mind the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Utility Air Regulatory Group, 573 U. S., at ___ (slip op., at 15) (internal quotation marks omitted). After reading Section 36B along with other related provisions in the Act, we cannot conclude that the phrase “an Exchange established by the State under [Section 18031]” is unambiguous. [at 14-15]

Nowhere in any of the opinions is the term “Gruber” mentioned. Jonathan Gruber, one of the architects of the law, stated on numerous occasions that there was a specific purpose of the language to exclude the federal exchange, so as to pressure states to get subsidies for their citizens by establishing exchanges.

The Court rejected the Gruber view of Congressional intent:

The whole point of that provision is to create a federal fallback in case a State chooses not to establish its own Exchange. Contrary to petitioners’ argument, Congress did not believe it was offering States a deal they would not refuse—it expressly addressed what
would happen if a State did refuse the deal.

Somewhere, Jonathan Gruber is laughing his ass off https://t.co/83I455hF9m pic.twitter.com/gHWikyx7FK

— Legal Insurrection (@LegInsurrection) June 25, 2015

Having found the term “established by the State” ambiguous, the Court read it in a way such as to save Obamacare and prevent a “death spiral” of the law:

Given that the text is ambiguous, we must turn to the broader structure of the Act to determine the meaning of Section 36B. “A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme . . . because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.” United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 371 (1988). Here, the statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very “death spirals” that Congress designed the Act to avoid. [at 15]

Reliance on context and structure in statutory interpretation is a “subtle business, calling for great wariness lest
what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.” Palmer v. Massachusetts, 308 U. S. 79, 83 (1939). For the reasons we have given, however, such reliance is appropriate in this case, and leads us to conclude that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid. [at 21]

Roberts and the majority did not want to be the ones to take down Obamacare, and that drove everything:

Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt. [at 21]

Scalia’s dissent, joined by Thomas and Alito, was stinging, and in my opinion correct as to the absurdity of the Court contorting itself to save the law (as Roberts did in the original Obamacare challenge):

The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so. [at 1]

Scalia points out that the words have a plain meaning:

This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.

Words no longer have meaning if an Exchange that is not established by a State is “established by the State.” …. [at 2, italics in original]

Scalia argued — persuasively — that the overriding goal seems to be saving Obamacare, not exercising normal judicial interpretation of plain language:

“[T]he plain, obvious, and rational meaning of a statute is always to be preferred to any curious, narrow, hidden sense that nothing but the exigency of a hard case and the ingenuity and study of an acute and powerful intellect would discover.” Lynch v. Alworth-Stephens Co., 267 U. S. 364, 370 (1925) (internal quotation marks omitted). Under all the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved. [at 2-3]

Scalia wrote that the majority opinion rewrote the law “with no semblance of shame”:

The Court interprets §36B to award tax credits on both federal and state Exchanges. It accepts that the “most natural sense” of the phrase “Exchange established by the State” is an Exchange established by a State. Ante, at 11. (Understatement, thy name is an opinion on the Affordable Care Act!) Yet the opinion continues, with no semblance of shame, that “it is also possible that the phrase refers to all Exchanges—both State and Federal.” Ante, at 13. (Impossible possibility, thy name is an opinion on the Affordable Care Act!) [at 3]

Scalia then delivered the best line of the day. Looking back over multiple decisions from the Court to rewrite Obamacare in order to save it, Scalia insisted that the law now should be called SCOTUScare:

Today’s opinion changes the usual rules of statutory interpretation for the sake of the Affordable Care Act. That, alas, is not a novelty. In National Federation of Independent Business v. Sebelius, 567 U. S. ___, this Court revised major components of the statute in order to save them from unconstitutionality. The Act that Congress passed provides that every individual “shall” maintain insurance or else pay a “penalty.” 26 U. S. C. §5000A. This Court, however, saw that the Commerce Clause does not authorize a federal mandate to buy health insurance. So it rewrote the mandate-cum-penalty as a tax. 567 U. S., at ___–___ (principal opinion) (slip op., at 15–45).

The Act that Congress passed also requires every State to accept an expansion of its Medicaid program, or else risk losing all Medicaid funding. 42 U. S. C. §1396c. This Court, however, saw that the Spending Clause does not authorize this coercive condition. So it rewrote the law to withhold only the incremental funds associated with the Medicaid expansion. 567 U. S., at ___–___ (principal opinion) (slip op., at 45–58). Having transformed two major parts of the law, the Court today has turned its attention to a third. The Act that Congress passed makes tax credits available only on an “Exchange established by the State.” This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere.

We should start calling this law SCOTUScare. [at 20-21, emphasis and hard paragraph breaks added.]

The legacy of this Court, Scalia wrote, will live on just as Obamacare, but in infamy:

Perhaps the Patient Protection and Affordable Care Act will attain the enduring status of the Social Security Act or the Taft-Hartley Act; perhaps not. But this Court’s two decisions on the Act will surely be remembered through the years. The somersaults of statutory interpretation they have performed (“penalty” means tax, “further [Medicaid] payments to the State” means only incremental Medicaid payments to the State, “established by the State” means not established by the State) will be cited by litigants endlessly, to the confusion of honest jurisprudence. And the cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.

I dissent.

(This post will be updated)

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