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?

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  1. user_385039 Inactive
    user_385039
    @donaldtodd

    Cato Rand:

    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.

    Cato, in this case I suggest that some insurance companies are already trying to identify what might be wanted based on what was wanted before Obamacare arrived on the scene.  I think the big issue is what it would cost an individual or a family if businesses are no longer subsidizing healthcare as a benefit.

    • #31
  2. gts109 Inactive
    gts109
    @gts109

    Cato Rand, I listened to your namesake think tank’s podcasts on the topic. Great stuff. It was David Ziff who presented the liberal textualist position. Although he’s a brilliant guy with a lot of clever arguments, he really overstated his position. He seems to think that the government can win on the argument that the statute unambiguously authorizes subsidies on federal exchanges. No court has come out that way.

    I thought Michael Cannon had some really great points about the political distortions that the IRS reg had caused, none of which had occurred to me before. Like, suppose that, if after the states refused to set up the exchanges, what would have happened? Either Obamacare as we know it would have ceased to exist or a political compromise could have been reached. But the IRS reg side-stepped all that and imposed taxes and gave out subsidies without any legislative authority.

    • #32
  3. x Inactive
    x
    @CatoRand

    gts109:Cato Rand, I listened to your namesake think tank’s podcasts on the topic. Great stuff. It was David Ziff who presented the liberal textualist position. Although he’s a brilliant guy with a lot of clever arguments, he really overstated his position. He seems to think that the government can win on the argument that the statute unambiguously authorizes subsidies on federal exchanges. No court has come out that way.

    I thought Michael Cannon had some really great points about the political distortions that the IRS reg had caused, none of which had occurred to me before. Like, suppose that, if after the states refused to set up the exchanges, what would have happened? Either Obamacare as we know it would have ceased to exist or a political compromise could have been reached. But the IRS reg side-stepped all that and imposed taxes and gave out subsidies without any legislative authority.

    That was an interesting thought experiment though it was of a piece with the Obama administration’s handling of the statute.  They’ve “fixed” so many things that would have killed the program off politically that this one’s hardly news.

    I do love Cato though.  If you liked this, subscribe.  It’s free and they put out an absolutely staggering amount of content like this on subjects of all kinds.

    • #33
  4. Howellis Inactive
    Howellis
    @ManWiththeAxe

    I just now finished reading the Cato Symposium, and I was not especially impressed by the arguments of those supporting the IRS position. The law says what it says, the plain meaning is not absurd, and is supported by a fair amount of the legislative history and the context of the rest of the statute, although alternative interpretations are also not absurd.

    Having said that, putting the ACA aside for the moment and looking at the bigger picture of statutory interpretation, it would be far better for the country and the courts to require a political fix to a case like this. Congress had plenty of opportunity to make the law clear on this point, and chose not to because it was the only way to get the thing passed. They could still have a bill to make this correction if it were not for the politics of it. That they (the Democrats) could not get it passed in the form they want then or now is indicative that there is no reason for the court to fear the consequences of upholding the plain meaning of the statute.

    • #34
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