Will the Newest Obamacare Challenge Succeed at the Supreme Court?

 

I’ve been asked a lot recently what I think of the Supreme Court’s decision to take up King v. Burwell, one of the legal challenges to the IRS’s decision to allow tax credits and subsidies to be applied to federal insurance exchanges, even though the text of the law seems to indicate that they’re only allowed on exchanges established by the states. I think the chances are high that the administration will lose because:

1. The plain text of the statute denies subsidies to people who live in states without an exchange. This reading is not absurd, because it creates a powerful incentive for states to create an exchange in the first place. The obvious meaning of the text should only be discarded if it creates absurd or ridiculous results. We shouldn’t discount the possibility that the Justices just want to do the right thing!

2. There was no split in the circuits — the lower courts actually seemed to accept the Obama Administration’s misreading of its own law. If the Court agreed with the lower courts, or wasn’t sure about it, they could have just allowed the issue to further percolate (as the Justices themselves will often say when they pass on the opportunity to take a case).

3. I assume Chief Justice Roberts is with the original four dissenters from Sibelius two years ago. This gives him the chance to atone for his error in upholding Obamacare as a valid use of the taxing clause. In addition, the insincere misreading of the statute will grate especially hard on Roberts’ professionalism — he seems to take seriously getting the right lawyerly answer to technical statutory questions. Justice Kennedy, who is usually the swing vote, was strongly in the dissent against Obamacare two years ago, and I cannot see him engaging in legal gymnastics to save a law he thinks is already unconstitutional.

4. The Court will be acting in agreement with, rather than against, majority wishes. The last election gives the court political cover to cut back on Obamacare. Given the election results, a majority of Americans support repeal or radical restructuring of Obamacare. if the Court rules against Obama here, it will be acting with the support of a majority of Congress. What judge could resist that?

There are 34 comments.

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  1. Marion Evans Inactive
    Marion Evans
    @MarionEvans

    Dems deserve a complete repeal of the ACA because they passed it without a single Republican vote. Maybe we can start over with a better law and at least some bipartisanship.

    • #1
  2. user_86050 Inactive
    user_86050
    @KCMulville

    Sean Trende also discusses this over at Real Clear Politics. Not being a lawyer, I won’t attempt to do color commentary on the legal play-by-play. But the text is pretty straightforward, and the architect of the law is (embarrassingly) on the record about what the text was intended to say, from the point of view of the people who wrote the text.

    I’d argue that this is a test case for lawmakers. Lawmakers need to be held accountable for their use of language. If they aren’t held accountable for their words, they may win this battle but lose the war – because their words will no longer mean anything.

    • #2
  3. Mendel Inactive
    Mendel
    @Mendel

    My response to this got too long so I put it up as a post:

    http://ricochet.com/would-we-be-better-off-losing-on-obamacare-at-the-supreme-court-a-response-to-john-yoo/

    • #3
  4. user_57515 Member
    user_57515
    @TomDavis

    Obamacare has had the gas.  Roberts can, and almost certainly will, point out that Congress did it.  They were the guys who wrote the law.  If it doesn’t work, it ain’t the Court’s place to make it work; that’s Congress’s job.

    • #4
  5. Sisyphus Member
    Sisyphus
    @Sisyphus

    Tom Davis:Obamacare has had the gas. Roberts can, and almost certainly will, point out that Congress did it. They were the guys who wrote the law. If it doesn’t work, it ain’t the Court’s place to make it work; that’s Congress’s job.

    This is an excellent chance for Roberts to take the Mulligan, especially considering the vanishing of congressional members who voted for in the 111th, the ongoing disaster of the ObamaCare rollout, the impending employee mandate nearly at the gates. Roberts had it right, the opinion was written, and then flubbed it for mysterious reasons last time with a bizarre and opaque decision that included Justice Roberts creating a tax in defiance of the Constitution which leaves that power solely and firmly in the hands of the House. Obama is not the only notorious scofflaw in DC these days.

    Enough already with protecting the will of the 111th Congress against the will of the American people and the soon to be sitting 114th Congress. Sending it back to a Congress with a perverse motivation to let this devilish piece of incompetent overreach continue to grind America’s innocent patients in its gears and to that petulant lame duck Veto Obama in the White House would be blind justice indeed.

    • #5
  6. ParisParamus Member
    ParisParamus
    @ParisParamus

    I am well beyond the point of assuming we are not living in a lunatic asylum. So I have no faith SCOTUS will do the right thing.

    • #6
  7. Sisyphus Member
    Sisyphus
    @Sisyphus

    In this case the right thing is at odds with the correct result. By default, I always hope for the correct result where the court creates fine examples jurisprudence. In this case, given that it was known by all at the time that the bill was not read, much less proofread, before it was passed, this will not be denying the will of the people (which this bill never ever was) but driving a stake through the heart of a ridiculous but terribly harmful abomination.

    • #7
  8. user_82762 Thatcher
    user_82762
    @JamesGawron

    Sisyphus:In this case the right thing is at odds with the correct result. By default, I always hope for the correct result where the court creates fine examples jurisprudence. In this case, given that it was known by all at the time that the bill was not read, much less proofread, before it was passed, this will not be denying the will of the people (which this bill never ever was) but driving a stake through the heart of a ridiculous but terribly harmful abomination.

    I hope Roberts has the stomach for it.

    Regards,

    Jim

    • #8
  9. x Inactive
    x
    @CatoRand

    Cato (the Institute, not me) did a very nice day long symposium on these cases just a week or two ago.  (It’s available on iTunes free).  I have not studied the statutory language, but the Obama administration defender on the panel made quite a persuasive sounding textual case that the law provided for subsidies in the federal exchange.  I emphasize that I have not studied the language.  I would have to tick and tie out the specific provisions before I would vouch for the validity of his claims.  But he sounded like he was being precise and careful with the text from the vantage point of the driver’s seat in my car.

    They also had discussions on the consequences for the insurance market and the political fallout of a plaintiff win in King.

    I must say I can see an awful lot of market disruption doing harm to a lot of people if that happens.  The individual market appears to have been pretty much killed off by ObamaCare, so if the ObamaCare exchanges collapse, there are going to be a lot of people, and not just the subsidized, with nowhere to go for coverage.  Somebody’s gonna catch hell if that happens.

    I’m less sure who will take the blame though.  Of course the lefties were already saying that Republicans would get creamed for it because they couldn’t leave well enough alone, and it’s possible they’re right.  I could also see most of the blame falling on the Democrats though, for getting us into this mess to begin with, and for doing it in a way that put everyone at risk because they had to cram through a bill that nobody had read.

    My bottom line though is that there are issues here that are a lot more interesting (and important, frankly) than the legal ones.  I actually think that in itself might weigh on the Court and push it toward giving the administration another win.  The Court may just not want to be responsible for the ensuing chaos.

    • #9
  10. user_82762 Thatcher
    user_82762
    @JamesGawron

    Cato Rand:Cato (the Institute, not me) did a very nice day long symposium on these cases just a week or two ago. (It’s available on iTunes free). I have not studied the statutory language, but the Obama administration defender on the panel made quite a persuasive sounding textual case that the law provided for subsidies in the federal exchange. I emphasize that I have not studied the language. I would have to tick and tie out the specific provisions before I would vouch for the validity of his claims. But he sounded like he was being precise and careful with the text from the vantage point of the driver’s seat in my car.

    They also had discussions on the consequences for the insurance market and the political fallout of a plaintiff win in King.

    I must say I can see an awful lot of market disruption doing harm to a lot of people if that happens. The individual market appears to have been pretty much killed off by ObamaCare, so if the ObamaCare exchanges collapse, there are going to be a lot of people, and not just the subsidized, with nowhere to go for coverage. Somebody’s gonna catch hell if that happens.

    I’m less sure who will take the blame though. Of course the lefties were already saying that Republicans would get creamed for it because they couldn’t leave well enough alone, and it’s possible they’re right. I could also see most of the blame falling on the Democrats though, for getting us into this mess to begin with, and for doing it in a way that put everyone at risk because they had to cram through a bill that nobody had read.

    My bottom line though is that there are issues here that are a lot more interesting (and important, frankly) than the legal ones. I actually think that in itself might weigh on the Court and push it toward giving the administration another win. The Court may just not want to be responsible for the ensuing chaos.

    When the next 50 million people get busted out of their existing plans that will be chaos.  Ending it now is the least amount of pain.

    Regards,

    Jim

    • #10
  11. TerMend Inactive
    TerMend
    @TeresaMendoza

    Sisyphus:In this case the right thing is at odds with the correct result. By default, I always hope for the correct result where the court creates fine examples jurisprudence. In this case, given that it was known by all at the time that the bill was not read, much less proofread, before it was passed, this will not be denying the will of the people (which this bill never ever was) but driving a stake through the heart of a ridiculous but terribly harmful abomination.

    I’m sorry – I don’t understand what you mean.  What is the “right thing” and what is the “correct result”?

    • #11
  12. Z in MT Member
    Z in MT
    @ZinMT

    If the court does rule against the administration then I don’t think they will completely remove the law. It is likely that the court will just send it back to Congress saying you gotta fix this and that might be a time that the Republicans can use to make changes and reforms to the law effectively repealing much of the bad aspects of the law.

    • #12
  13. The Forgotten Man Inactive
    The Forgotten Man
    @TheForgottenMan

    Z in MT:If the court does rule against the administration then I don’t think they will completely remove the law. It is likely that the court will just send it back to Congress saying you gotta fix this and that might be a time that the Republicans can use to make changes and reforms to the law effectively repealing much of the bad aspects of the law.

    The Republicans had a great time last Tuesday largely because not one Republican voted for Obamacare and shared in the disaster which is Obamacare.  Repeal it completely and let Obama veto the repeal? Yes that would be the best of all possible worlds. Try to fix Obamacare and let the Media remake it into a Republican problem?Aah, no. Stupidity has  consequences.  Let the Democrats Stu.

    • #13
  14. x Inactive
    x
    @CatoRand

    The Forgotten Man:

    Z in MT:If the court does rule against the administration then I don’t think they will completely remove the law. It is likely that the court will just send it back to Congress saying you gotta fix this and that might be a time that the Republicans can use to make changes and reforms to the law effectively repealing much of the bad aspects of the law.

    The Republicans had a great time last Tuesday largely because not one Republican voted for Obamacare and shared in the disaster which is Obamacare. Repeal it completely and let Obama veto the repeal? Yes that would be the best of all possible worlds. Try to fix Obamacare and let the Media remake it into a Republican problem?Aah, no. Stupidity has consequences. Let the Democrats Stu.

    I think we’re all forgetting that laws too have consequences.  ObamaCare, like it or not, has been law for 5 years.  The insurance market has adapted and I defy you to go find a non-exchange individual policy today.  The individual market is made up of an ever shrinking group of grandfathered policies (which you can’t buy as a new policy holder) and ObamaCare.  It’s policies suck.  I get that.  They’re expensive, have high deductibles and narrow networks, and come in basically “one size fits all.”  It’s a crappy law.  But just “repeal” in a fit of pique isn’t an option.  I hate to say it, but we’re now in a position where we basically have to do what the Democrats should have done instead of ObamaCare — make incremental changes in hope of improving the situation, and learn from the consequences before we take the next step.  “Comprehensive [anything] reform” is a guaranteed [bleep]show.  It is built upon the hubris of thinking you can map out all the reactions and consequences of a law in advance.  That hubris by the Dems got us ObamaCare.  We won’t improve the situation or benefit politically by exhibiting it ourselves.

    • #14
  15. gts109 Member
    gts109
    @gts109

    Cato Rand, I’ll have to find that podcast. The other side of this has a good, plausible argument. It takes a lot of forms, but essentially asks why would the statute devote an entire section to a federal exchange if it could not do the single most important thing that an exchange does in the scheme: provide subsidies to help the poor buy insurance? But this position makes a very large assumption, which is that everything in the statute must be read to expand the availability of health insurance coverage, even when the statute’s text appears to say otherwise.

    Thus, if you stick with the plain language of the section at issue (the only place in the entire statute that authorizes subsidies), it very clearly only permits subsidies to be granted by exchanges “established by the states.” It would have been so easy for Congress to have written “or the federal government,” but it did not. And, plaintiffs’ interpretation of the language at issue has a plausible, policy explanation, supported by legislative history and other commentary (most notably the Gruber comment): the scheme strongly encouraged states to create their own exchanges because, if they did not, their citizens would be denied billions of dollars in subsidies. Perhaps if the IRS had not interpreted the phrase “established by the states” to mean “established by the states or the federal government” the scheme would have worked as intended.

    When you have plain language, coupled with a very plausible explanation for how that language was to work within the context of the scheme, you’ve got a very good argument that the statute is unambiguous.

    • #15
  16. Proud Skeptic Inactive
    Proud Skeptic
    @ProudSkeptic

    This is going to be interesting.

    I think this has the potential to create a serious rift in the Supreme Court.

    On the one hand, there will be justices who will simply look at the law, read what it says, and rule accordingly.  From what I understand, the law is pretty darn clear.

    On the other hand there will be justices who will use all kinds of twisted logic to justify allowing the law to say what it clearly does not say…presumably in the interest of achieving some perceived higher goal.

    In the middle, there may be Roberts and Kennedy…or maybe not.  I understand Roberts’ decision on the previous case.  Over the years, I have grown to respect Kennedy…a Progressive, perhaps but possessing of common sense.

    In the end I suspect it will be the girls vs. the boys…and we should be very concerned that the girls on the bench have a different idea what “interpreting a law in the context of The Constitution” means from what most of us think it means.

    If a law…any law…can arbitrarily be interpreted as saying what it “should have said” or can be “fixed” at the Supreme Court level, then we as a nation have a serious problem.

    • #16
  17. gts109 Member
    gts109
    @gts109

    Question for judicial conservatives: if you had to lose either this case or the gay marriage case, which would you chose? Why?

    • #17
  18. x Inactive
    x
    @CatoRand

    gts109:Cato Rand, I’ll have to find that podcast. The other side of this has a good, plausible argument. It takes a lot of forms, but essentially asks why would the statute devote an entire section to a federal exchange if it could not do the single most important thing that an exchange does in the scheme: provide subsidies to help the poor buy insurance? But this position makes a very large assumption, which is that everything in the statute must be read to expand the availability of health insurance coverage, even when the statute’s text appears to say otherwise.

    Thus, if you stick with the plain language of the section at issue (the only place in the entire statute that authorizes subsidies), it very clearly only permits subsidies to be granted by exchanges “established by the states.” It would have been so easy for Congress to have written “or the federal government,” but it did not. And, plaintiffs’ interpretation of the language at issue has a plausible, policy explanation, supported by legislative history and other commentary (most notably the Gruber comment): the scheme strongly encouraged states to create their own exchanges because, if they did not, their citizens would be denied billions of dollars in subsidies. Perhaps if the IRS had not interpreted the phrase “established by the states” to mean “established by the states or the federal government” the scheme would have worked as intended.

    When you have plain language, coupled with a very plausible explanation for how that language was to work within the context of the scheme, you’ve got a very good argument that the statute is unambiguous.

    I understand your point, but this was a very textual argument.  Beginning with the relevant section, and then looking to the express definitions of the terms in that section and tracing them in a way that lead to the conclusion that the federal exchange could give subsidies.  It wasn’t just a “the statute doesn’t make sense any other way” argument.  I’ve written plenty of legal briefs in my day.  I know the difference.  Again, not having reviewed the language myself, I’m not vouching that he didn’t take a wrong turn, or omit something important somewhere.  But he definitely laid out an entirely textual argument.

    • #18
  19. x Inactive
    x
    @CatoRand

    For anybody who wants to listen and has iTunes, the Cato Institute symposium is numbers 4 through 7 (it’s broken up — it was all day — several different speeches and panels) on this page.  Note, I suspect the numbers will change as they add new events (which they do a ton of).  The name though is “Pruitt, Halbig, King & Indiana.”  It’s well worth a listen if you’re interested in this issue.

    • #19
  20. Howellis Inactive
    Howellis
    @ManWiththeAxe

    I am not as sanguine about the outcome of this case as John Yoo.

    As much as I hate Obamacare and believe it is unconstitutional, and as much as I hate judicial activism, in the sense of judges deviating from the text of laws, there is plenty of precedent for the court to do just that in this case.

    From Church of the Holy Trinity v. United States, 143 U.S. 457 (1892):

    “It is a familiar rule that a thing may be within the letter of the statute and yet not within the statute because not within its spirit nor within the intention of its makers. This has been often asserted, and the reports are full of cases illustrating its application. This is not the substitution of the will of the judge for that of the legislator, for frequently words of general meaning are used in a statute, words broad enough to include an act in question, and yet a consideration of the whole legislation, or of the circumstances surrounding its enactment, or of the absurd results which follow from giving such broad meaning to the words, makes it unreasonable to believe that the legislator intended to include the particular act.”

    In Trinity Church the law prohibited anyone to prepay the transportation of any alien to do work of any kind in the U.S. The court ruled that this clear language did not apply to a church prepaying the transportation of a minister from England to serve in New York. Wait. What?

    Congress could have made exceptions for ministers. especially given that it did think to make exceptions for actors, artists, lecturers, singers, and domestic servants.

    In Trinity, and subsequent cases that cite it approvingly, the court has weighed the perversity of the outcome more heavily than the issue of the plain meaning of laws.

    • #20
  21. gts109 Member
    gts109
    @gts109

    I feel like a textual argument claiming that “A” means “A and B” is a pretty crappy one, unless the statute defines “A” to mean “A and B.” Which I don’t think the ACA does. I’m pretty sure it has references to exchanges established under the state section, and references to exchanges established under the federal section. Anyway, I’ll listen to the podcast, and report back.

    • #21
  22. gts109 Member
    gts109
    @gts109

    I think David Ziff may have been the smart liberal textualist guy on the Cato panel. I think he’s written about this elsewhere too, but I found this article very good, as did Adler, who linked to it on Volokh. https://ziffblog.wordpress.com/2014/07/29/halbig-statutory-interpretation-and-lessons-i-learned-in-practice/

    • #22
  23. x Inactive
    x
    @CatoRand

    gts109:I feel like a textual argument claiming that “A” means “A and B” is a pretty crappy one, unless the statute defines “A” to mean “A and B.” Which I don’t think the ACA does. I’m pretty sure it has references to exchanges established under the state section, and references to exchanges established under the federal section. Anyway, I’ll listen to the podcast, and report back.

    And at some point when I’m really bored, I’ll dig up the statute and see if I can actually follow the argument through the text.  I’d been hoping to avoid that.

    • #23
  24. user_385039 Inactive
    user_385039
    @donaldtodd

    Cato Rand: #14 “I think we’re all forgetting that laws too have consequences.  ObamaCare, like it or not, has been law for 5 years.  The insurance market has adapted and I defy you to go find a non-exchange individual policy today.”

    If the insurance industry finds that it has to serve a lot of people who need insurance and those people are not limited by government hubris, then the insurance industry will work hard to provide policies which will serve people willing to pay for that insurance.  The policies may be Spartan or they may be all encompassing but they will be there and payments will be made to doctors/clinics/hospitals/drugstores quickly and efficiently based on those policies.

    Insurance is a business and good business people know what to do.

    • #24
  25. x Inactive
    x
    @CatoRand

    Donald Todd:Cato Rand: #14 “I think we’re all forgetting that laws too have consequences. ObamaCare, like it or not, has been law for 5 years. The insurance market has adapted and I defy you to go find a non-exchange individual policy today.”

    If the insurance industry finds that it has to serve a lot of people who need insurance and those people are not limited by government hubris, then the insurance industry will work hard to provide policies which will serve people willing to pay for that insurance. The policies may be Spartan or they may be all encompassing but they will be there and payments will be made to doctors/clinics/hospitals/drugstores quickly and efficiently based on those policies.

    Insurance is a business and good business people know what to do.

    I completely agree with that, but there will be a turnaround time, and while we’re waiting, there will be a lot of pain.

    • #25
  26. Mendel Inactive
    Mendel
    @Mendel

    gts109:I feel like a textual argument claiming that “A” means “A and B” is a pretty crappy one, unless the statute defines “A” to mean “A and B.” Which I don’t think the ACA does.

    The very well-reasoned arguments by both sides on SCOTUSblog seemed like they could be distilled down into the following 4 points:

    1) There is a passage which explicitly says that exchanges “created by the State” may pay out subsidies.

    2) There is no equivalent passage concerning the federal exchange

    BUT

    3) There are a number of other passages which very clearly imply that the federal exchange is designed to pay subsidies.

    4) The use of the phrase “exchange created by the State” is used quite inconsistently throughout the law, calling its significance into question.

    If you just look at criteria 1+2, there is an open-and-shut case against the federal subsidies.

    But the thoughtful liberals point out that even Antonin Scalia has often written of the need to interpret the meaning of a law based on its entirety, and not to single out individual passages when the overall context might clearly point in another direction.

    There might therefore be a reasonable case for genuine ambiguity.

    • #26
  27. gts109 Member
    gts109
    @gts109

    There are good arguments on both sides. The thing I fear the most is that the justices will look at the manner in which the law was passed and will decide that the language is just sloppy, the words (particularly the references to the various types of exchanges) don’t have precise meaning, and will eschew strict interpretation of the text.

    Nonetheless, I have no idea why the drafters would only allow subsidies in an “Exchange established by the State under Section 1311 [the section relating to state-established exchanges]” if they really meant that the federal exchanges, established under Section 1321, could also offer subsidies. It would have been the easiest thing in the world to clarify that point by adding the phrase “and an Exchange established by the federal government under Section 1321,” yet the language is simply not there. It must be inferred, and teased out from other sections, read in conjunction with other sections, all the while accepting the government’s contention that the over-arching purpose of the scheme was to provide subsidized insurance to everybody, everywhere, regardless of the text of the law or the highly plausible alternate possibility, supported by legislative history, the structure of many other federal schemes, and Gruber’s comments (among others), that the law’s purpose was really to make the states do the heavy lifting.

    The government must argue through context exclusively, before turning to the language of the section at issue, when it interprets away the whole phrase “established by the State under Section 1311.” And, I think that will ultimately doom them. It is really hard for a judge who’s not in the tank for Obama to write an opinion in which he declares that “established by the state” means “established by the state and the federal government.” You have to strain to reach that conclusion.

    • #27
  28. Mendel Inactive
    Mendel
    @Mendel

    gts109:Nonetheless, I have no idea why the drafters would ….

    I think there are a few plausible explanations.

    It shouldn’t be surprising that something may have been omitted from a 2,000 page bill, especially one only intended to be a draft and not a final version, which was written under time pressure by a disparate group of people.

    I also think there were probably a lot of Democrats who genuinely couldn’t imagine that states wouldn’t set up their own exchange (who would want to turn down a request by the federal government?). If the federal exchange was never intended to actually be implemented, there would be less need to pay close attention when drafting that section of the legislation.

    This latter point could make things interesting if the question of legislative intent comes up (which hopefully it won’t, since legislative intent is such a poor criterion). If most legislators didn’t expect the federal exchange to even exist, then there would be no intent either way with regard to the federal subsidies.

    • #28
  29. Mendel Inactive
    Mendel
    @Mendel

    gts109:The government must argue through context exclusively, before turning to the language of the section at issue, when it interprets away the whole phrase “established by the State under Section 1311.” And, I think that will ultimately doom them.

    I agree that the onus is on the government, not the challengers, to explain their view. The clear language speaks against federal subsidies. And realistically, the most solid case that Obamacare supporters can make is that the law is ambiguous, not that it clearly mandates federal subsidies.

    Nonetheless, I do think the notion that context matters is valid, and apparently so does Scalia. If a law says “X is prohibited” once, but also contains 1,000 references to X which would imply X is actually legal, it would be fair to say that law is ambiguous. The question then becomes: how many times does a law’s context have to contradict one of its clear declarations before that law can be deemed ambiguous? And that would seem to be a very, very subjective question.

    • #29
  30. Proud Skeptic Inactive
    Proud Skeptic
    @ProudSkeptic

    Here is something that will kill Obamacare faster than anything else:

    Take a look at your phone or electric bill.  It lists all of the components of the bill.  Federal, state and local taxes are specifically broken out.  No doubt, this is done because the people sending you the bill want to give you a chance to see what the actual cost of the services is…$30 phone use, $5 federal taxes.

    Let’s do this…

    Every insurance quote and bill should break out the cost of the services and list the share of the “subsidy” you are paying for…Basic coverage, $200.  Obamacare upcharge (to pay for other people’s subsidies), $50.

    As the man said…lack of transparency is critical to the law.

    • #30

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