Would We Be Better Off Losing on Obamacare at the Supreme Court? A Response to John Yoo

 

384px-Official_roberts_CJA few days ago, Ricochet’s John Yoo predicted that Supreme Court will decide that the PPACA (Obamacare) does not allow for the federal exchanges to pay out subsidies in the upcoming King v Burwell case. Although I am a legal ignoramus, I have been following the excellent symposium on this case over at SCOTUSblog, and I wonder whether we might see an unexpected result here.

Based on the evidence from both sides, two points become clear. There is indeed no explicit passage in the law that mandates the federal subsidies, as exists for state exchanges. Still, there are a number of passages which make no sense if the federal exchanges are forbidden from paying out subsidies. More to the point, the law is so inconsistent and muddled that a good-faith argument could be made that it is simply ambiguous and incoherent on this issue; if so, the IRS will have the authority to come up with its own interpretation (the so-called Chevron deference).

Prof. Yoo suggests that Chief Justice Roberts may be eager to atone for his prior sins in the NFIB v Sibelius case, especially after the last election in favor of Republicans. Yet I find it strange to imagine that a man who only two years ago twisted himself into pretzel-like contortions to save the law will reverse himself and let the law twist in the wind. Instead, I wonder if he has something more nefarious up his sleeve.

There are essentially three ways the Court could decide: a) The law does not allow federal exchanges to pay out subsidies; b) The law does allow the subsidies; or c) The law is ambiguous on this matter.

This is where my scenario becomes somewhat unorthodox. It all comes back to the Chevron deference. If the Supreme Court were to rule that the law is genuinely ambiguous, the IRS would decide the issue, and we know how the current IRS will decide. But in two years, there will be a new election, and a new president who can choose a new head of the IRS. In other words, by deciding that the law is ambiguous, Roberts could hand the keys to the next president to legally hollow out Obamacare single-handedly.

On Ricochet, we often lament Obama’s use of executive authority to counteract or ignore laws that are perfectly clear. But if the Supreme Court itself determines the law to be unclear, the president (whomever he is) would be obligated to act alone. Considering how difficult the filibuster makes full repeal of the law — even with a Republican president and majorities in both houses of Congress — having the Supreme Court’s seal of approval to single-handedly change the implementation of the law would be a political godsend.

It’s also worth considering the issue from the Court’s perspective. Roberts obviously prefers legislative fixes to judicial ones, and wants to preserve the public’s faith in the Court and the judiciary. Yet, if the Supreme Court rules completely against the government in King v Burwell — option a from above — the ruling will become the left’s Roe v Wade for the next generation: their textbook example of judicial overreach.

I imagine everyone on Ricochet would be perfectly content if the Supreme Court gave Obamacare a coup de grace, regardless of the political fallout. But from the standpoint of good governance, this should be determined by elected officials chosen directly by the people.

Giving the president explicit authority to decide on these subsidies would likely turn the next presidential election into a referendum on Obamacare. If the bill is truly as unpopular as polls suggest, a Republican candidate running on a platform of eliminating federal subsidies (which would almost inevitably lead to the unravelling of the entire law) should be a shoo-in. And given the difficulty for Republicans to win 60 Senate seats, it would provide voters an unprecedented and historic opportunity to roll back an entitlement program at the ballot box.

A reasonable predication or too clever by half?

Image Credit: “Official roberts CJ” by Steve Petteway – http://www.supremecourthistory.org/history-of-the-court/the-current-court/chief-justice-john-roberts-jr/. Licensed under Public domain via Wikimedia Commons.

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  1. Guruforhire Member
    Guruforhire
    @Guruforhire

    Its possible, but I think its fairly simple to demonstrate that the interpretation against the subsidies is not absurd.  Cooperative federalism is not unheard of, was mentioned in the session, and advocated after the session.  A miscalculation of strength of the political incentives is not the same as absurdity.

    Plus we can quote john roberts to john roberts, that it isn’t the job of the court to save the legislature from unwise policy.

    • #1
  2. gts109 Member
    gts109
    @gts109

    Too clever by half. If the Supreme Court did nothing, a Republican president elected in 2016 could likely change the relevant IRS regulation. I’m not sure exactly how that would work administratively, but regulations are changed all the time. And, I don’t think that the electorate is likely to take the time to understand this issue. They might vote for someone who ran against Obamacare or big government in general, but this is too nuanced a position to gain traction in a presidential election, IMO.

    Liberals might call this judicial overreach, but the plaintiffs’ basic premise is truly straightforward: in the key provision, subsidies are only permitted to be given to people who purchase insurance on exchanges “established by the states.” There are no other provisions that allow subsidies to be granted. To arrive at the government’s position, you must read “established by the states” to mean “established by the states or the federal government.”

    I see this as nothing like a new constitutional right, ala Roe v. Wade. If Congress intended subsidies to be permitted on the federal exchange, it can amend the law, to give the IRS that authority. The issue is political because of the law involved, not because of the wording of the statute or the legal issues it creates. In short, this is quite different from the Supreme Court creating new rights that are plainly not stated in the Constitution’s text, and which are only subject to legislative change if the Constitution is amended.

    • #2
  3. Mendel Inactive
    Mendel
    @Mendel

    gts, I agree completely that this case, on its merits, is nothing like Roe v Wade. It doesn’t deal with any question of constitutionality; indeed, it would be a pretty boring, dry case if the subject matter weren’t so controversial.

    But that’s the point: the left doesn’t care for distinctions such as what is actually constitutional, what the merits of a case might be, or why the Court might decide one way or another. They would simply see the result that the Court negated their dream of universal healthcare and go on a 20-year-long rage.

    • #3
  4. gts109 Member
    gts109
    @gts109

    I think you’re probably right that Roberts may be the one on the fence. Yoo’s point that the four justices who think the law is plainly unconstitutional are highly unlikely to bend over backwards to interpret its crappy wording in a way that’s favorable to the law or its framers is well taken. If the conservatives can bring Roberts into the fold, they’ve taken it. I suppose it’s odd to uphold a law, and then gut it, but I think it’s easy to make the distinction as a matter of logic. It’s understandable if a justice would be uncomfortable in striking down a law on constitutional grounds when the issue was novel, but perhaps not if it came down to a matter of statutory wording and the accidents of the law’s implementation.

    • #4
  5. Mendel Inactive
    Mendel
    @Mendel

    gts109:Yoo’s point that the four justices who think the law is plainly unconstitutional are highly unlikely to bend over backwards to interpret its crappy wording in a way that’s favorable to the law or its framers is well taken.

    One difficulty here is that apparently back in 2012, the four conservative justices essentially agreed in their dissent that the federal exchanges may pay out subsidies:

    “Congress provided a backup scheme; if a State declines to participate in the operation of an exchange, the Federal Government will step in and operate an exchange in that State.”

    If those same 4 justices now decide to rule that the law doesn’t allow for those subsidies, they risk look pretty stupid. Obviously that would have no professional consequences, but Supreme Court justices often have big egos and may find it difficult to admit to being wrong. Perhaps the “ambiguity” approach could be an easy out from this dilemma.

    • #5
  6. Valiuth Inactive
    Valiuth
    @Valiuth

    I doubt a Republican president would order the IRS to gut the subsidies if Obama puts them in place. If the Supreme Court guts them because the Democrats were too stupid to write the law well then we can wave it in their face and demand that now we have to fix their mess. If on the other hand we gut the subsidies after they have been in place for several years we will have created the mess on our own and we would have to own it. Way better politically to have the Supreme Court wield the knife here. They can claim their hands were tied by the text of the law, which they did not write and can not undo.

    • #6
  7. x Inactive
    x
    @CatoRand

    Mendel, I think another very practical point is that a SCOTUS decision has a very sudden effect.  It’s like hitting a wall at 50 mph.  There’s going to be a lot of disruption for a lot of people.  If this is addressed by the political branches, on the other hand, they can provide a grace period to allow for the market to adjust to what’s going to be the new reality.

    • #7
  8. x Inactive
    x
    @CatoRand

    Mendel:gts, I agree completely that this case, on its merits, is nothing like Roe v Wade. It doesn’t deal with any question of constitutionality; indeed, it would be a pretty boring, dry case if the subject matter weren’t so controversial.

    But that’s the point: the left doesn’t care for distinctions such as what is actually constitutional, what the merits of a case might be, or why the Court might decide one way or another. They would simply see the result that the Court negated their dream of universal healthcare and go on a 20-year-long rage.

    I think we can all agree with this.

    • #8
  9. x Inactive
    x
    @CatoRand

    Cato Rand:

    Mendel:gts, I agree completely that this case, on its merits, is nothing like Roe v Wade. It doesn’t deal with any question of constitutionality; indeed, it would be a pretty boring, dry case if the subject matter weren’t so controversial.

    But that’s the point: the left doesn’t care for distinctions such as what is actually constitutional, what the merits of a case might be, or why the Court might decide one way or another. They would simply see the result that the Court negated their dream of universal healthcare and go on a 20-year-long rage.

    I think we can all agree with this.  There will be heads exploding on MSNBC.

    • #9
  10. x Inactive
    x
    @CatoRand

    Mendel, your quote in no. 5 just says the feds can operate an exchange.  It says nothing about subsidies.  There is no dispute that the feds can operate an exchange.  The statute very expressly provides for that.  The entire dispute is over whether, when it does so, it can include the subsidies.

    • #10
  11. Steve C. Member
    Steve C.
    @user_531302

    If you want salvation, look to the Lord, not the Spreme Court. I lost any respect I had for that institution when they ruled that the phrase “shall make no law” was more like a guideline than an injunction.

    • #11
  12. TeamAmerica Member
    TeamAmerica
    @TeamAmerica

    @Mendel- “the left doesn’t care for distinctions such as what is actually constitutional, what the merits of a case might be, or why the Court might decide one way or another. They would simply see the result that the Court negated their dream of universal healthcare and go on a 20-year-long rage.”

    Yes, which would give Republicans the opportunity to do real reform -HSA accounts that roll over, interstate competition, etc, and perhaps subsidies for those with chronic conditions.

    • #12
  13. x Inactive
    x
    @CatoRand

    TeamAmerica:@Mendel- “the left doesn’t care for distinctions such as what is actually constitutional, what the merits of a case might be, or why the Court might decide one way or another. They would simply see the result that the Court negated their dream of universal healthcare and go on a 20-year-long rage.”

    Yes, which would give Republicans the opportunity to do real reform -HSA accounts that roll over, interstate competition, etc, and perhaps subsidies for those with chronic conditions.

    HSA Accounts do roll over.

    • #13
  14. Mendel Inactive
    Mendel
    @Mendel

    Cato Rand:Mendel, I think another very practical point is that a SCOTUS decision has a very sudden effect. It’s like hitting a wall at 50 mph. There’s going to be a lot of disruption for a lot of people. If this is addressed by the political branches, on the other hand, they can provide a grace period to allow for the market to adjust to what’s going to be the new reality.

    I agree, and it wouldn’t surprise me if this rationale prevents Roberts (or Kennedy, or whoever might be the 5th vote) from finding the guts to pull the rug out from under federal subsidies.

    That’s why I wonder if tossing the ball to the president/IRS might not be an attractive third option for the Court: they don’t have to kill the PPACA themselves, but they make the route to killing it much easier than legislative repeal, which would likely require 60 votes in the Senate (and I know that a Republican majority will try to use reconciliation to pass repeal with only 51 votes, but by then some Republican Senators may be getting cold feet).

    • #14
  15. Mendel Inactive
    Mendel
    @Mendel

    gts109:Too clever by half.

    I readily concede that my idea in this post is pretty far-fetched and has a lot of moving parts.

    But is it any stranger or less probable than John Robert’s declaring the individual mandate unconstitutional as a penalty, but suddenly finding it constitutional as a tax even though it was specifically drafted not to be a tax?

    If Roberts can come up with an idea that hairbrained, my proposal shouldn’t be too Rube Goldbergish for him.

    • #15
  16. user_494971 Contributor
    user_494971
    @HankRhody

    Too clever by half.

    Expecting the Republicans to be able to use the IRS to reform obamacare is like… it’s like using the One Ring as a weapon against Mordor. You can’t do it successfully without losing what you were fighting to save.

    So, assuming we get a republican president in 2016 (not improbable, but it’s still uncertain.) He nominates a new head of the IRS. He promptly sets out new policies on the new regulations which his underlings are going to write, and they’re promptly ignored. Or subverted. The permanent bureaucracy is not on our side, and will not be on our side whatever their nominal superior says. I’d rather that he spend his time rooting out the Lois Lerhner types root and branch. And all that doesn’t even mention what happens four to eight years down the road when the white house flips again.

    • #16
  17. x Inactive
    x
    @CatoRand

    Mendel:

    Cato Rand:Mendel, I think another very practical point is that a SCOTUS decision has a very sudden effect. It’s like hitting a wall at 50 mph. There’s going to be a lot of disruption for a lot of people. If this is addressed by the political branches, on the other hand, they can provide a grace period to allow for the market to adjust to what’s going to be the new reality.

    I agree, and it wouldn’t surprise me if this rationale prevents Roberts (or Kennedy, or whoever might be the 5th vote) from finding the guts to pull the rug out from under federal subsidies.

    That’s why I wonder if tossing the ball to the president/IRS might not be an attractive third option for the Court: they don’t have to kill the PPACA themselves, but they make the route to killing it much easier than legislative repeal, which would likely require 60 votes in the Senate (and I know that a Republican majority will try to use reconciliation to pass repeal with only 51 votes, but by then some Republican Senators may be getting cold feet).

    There’s also the not entirely simple process of changing the law administratively to consider.  It’s not like the president gives and order and the IRS flips a switch and makes a change.  The Administrative Procedure Act creates a process that takes time and is exposed to public scrutiny in order to make this change.  Plus in theory, the decision is supposed to be an honest interpretation of the law by a professional agency, not a political one directed by a new president.  I think altering it in a satisfactory way administratively is going to be more difficult than you are assuming.  Not necessarily that it won’t happen, but this is a hot button and the process is going to require the IRS to make a public announcement of its proposal before it takes effect, and will allow time for the Democrats and the MSM to very loudly lose it and scare the bejezus out of the public.

    • #17
  18. gts109 Member
    gts109
    @gts109

    A Republican president could reverse the IRS reg, and still avoid the problems of an insurance market disruption by simply giving the states time to create their own exchanges, or if they were not so inclined, find some other solution to the problem, perhaps through new legislation. This would work especially well if Republicans still held Congress in 2017. No thinking politician would just yank subsidies from millions of people in 30 some states. There’d have to be a back-up plan.

    And, Mendel, I don’t think your vision is totally far-fetched. It’s an interesting thought experiment. As a legal matter, however, the president is always going to have the authority to reconsider the IRS’s current interpretation of the statute. At best for the gov’t, the Supreme Court will hold that the statute is ambiguous, and the IRS gave it a reasonable interpretation. But, that would not foreclose any future administration from deciding (through the APA, as Cato Rand notes) that the prior interpretation was incorrect.

    • #18
  19. gts109 Member
    gts109
    @gts109

    P.S. The dissent in the individual mandate case, in no way, endorses the government’s position in King. They simply recognized that the statute has an entire section (1321, I think) on federal exchanges. That much is as plain as day. The issue of whether the statute authorizes subsidies to be granted to those who buy insurance on a federal exchange was not before the justices then, the parties did not brief it, and the quoted language does not discuss the issue (it refers to the federal gov’t “operat[ing]” an exchange, which no one disputes it can).

    • #19
  20. Z in MT Member
    Z in MT
    @ZinMT

    gts109,

    Many thinking politicians want to repeal Obamacare, which would yank subsidies from millions of people.

    • #20
  21. gts109 Member
    gts109
    @gts109

    I get that, but doing so through an IRS interpretation and in only some of the states would be strange. And, even if the whole law is someday repealed, it’ll have to be replaced with something.

    • #21
  22. Mendel Inactive
    Mendel
    @Mendel

    Cato Rand:Mendel, your quote in no. 5 just says the feds can operate an exchange. It says nothing about subsidies.

    gts109:

    P.S. The dissent in the individual mandate case, in no way, endorses the government’s position in King. They simply recognized that the statute has an entire section (1321, I think) on federal exchanges.

    Points taken. Looking back at my comment, I also missed the money quote from the dissent:

    Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges, and some insurers may be unwilling to offer insurance inside of exchanges. With fewer buyers and even fewer sellers, the exchanges would not operate as Congress intended and may not operate at all.

    Although even then I concede that the dissenters did not say the law validateds federal subsidies, only that Congress intended for them.

    • #22
  23. Mendel Inactive
    Mendel
    @Mendel

    gts109:I get that, but doing so through an IRS interpretation and in only some of the states would be strange. And, even if the whole law is someday repealed, it’ll have to be replaced with something.

    I agree completely.

    Your second sentence is what frightens me. A clean repeal of Obamacare with nothing in its place would leave many people without healthcare, at least for a while (and that while may well be too long for the chronically and critically ill). Thus, I can’t envision a Republican-led legislature and President repealing without putting something – be it a short-term patch or long-term replacement – in place.

    But given the stakes of this issue (literally life and death), its incredible complexity, and the squeamishness of many Republicans in DC, I can easily imagine them kicking this ball down the road for several years, by which point Obamacare may well be too entrenched.

    Giving the President a Supreme Court-sanctioned means of single-handedly unraveling the law might allow a Republican President to essentially put a gun to Congress’ head and force them to put pen to paper on the Obamacare replacement.

    Of course, if the issue is indeed that politically charged, there’s also no guarantee a Republican President would have the cojones….

    • #23
  24. user_358258 Member
    user_358258
    @RandyWebster

    Mendel:

    Still, there are a number of passages which make no sense if the federal exchanges are forbidden from paying out subsidies – and even more to the point, the law is so inconsistent and muddled that a good-faith argument could be made that it is simply ambiguous and incoherent on this issue.

    From the time it was proposed, to Nancy Pelosi’s “We have to pass it to find out what is in it,” to Harry Reid’s stripping out a House revenue bill and inserting the text of Obamacare, and passing it using reconciliation, there has NEVER been a good faith argument made for the APA.  Every step of the way has been fraught with deception and lies.  Though I guess, with the American voter being so stupid, you gotta do what you gotta do.

    • #24
  25. user_358258 Member
    user_358258
    @RandyWebster

    Mendel:  “Congress provided a backup scheme; if a State declines to participate in the operation of an exchange, the Federal Government will step in and operate an exchange in that State.”

    Nothing in the quoted passage indicates that the justices thought that the feds could pay subsidies through federal exchanges.  I don’t follow you.

    • #25
  26. virgil15marlow@yahoo.com Member
    virgil15marlow@yahoo.com
    @Manny

    I don’t expect Roberts to feel any compunction for that disasterous decision.  He will judge this as he sees the merits of this issue, and so will the others.  I just want to see Obamacare dead.

    • #26
  27. Goldgeller Member
    Goldgeller
    @Goldgeller

    Roberts is really lucky. After a disastrous ruling the first ACA case he gets another bite at the apple. Let’s see what he does. I predict that the left will launch another campaign to shame Roberts into agreeing with them.

    The Supreme Court should end the subsidies on the Federal Exchanges. The IRS shouldn’t be allowed this type of discretion. It’s one thing to interpret unclear passages or develop rules when the law gives them the power to develop rules, it’s another thing– and illegitimate– for them to use their discretion to rewrite the law. I don’t want to wake up one day and find that bureaucrats (and I don’t mean that as a slur) can simply change a law to say whatever they think they want it to say.

    • #27
  28. hawk@haakondahl.com Inactive
    hawk@haakondahl.com
    @BallDiamondBall

    “Prof. Yoo suggests that Chief Justice Roberts may be eager to atone for his prior sins in the NFIB v Sibelius case, especially after the last election in favor of Republicans.”

    Three wrongs don’t make a right. Roberts is a hack, unfit to serve. He writes law. Obama writes law. How is Boehner’s lawsuit coming along?

    • #28
  29. Mendel Inactive
    Mendel
    @Mendel

    Ball Diamond Ball:Three wrongs don’t make a right. Roberts is a hack, unfit to serve.He writes law.

    This sentiment underpins the thinking behind my post.

    I don’t think any of us really know what makes Roberts tick. His decision in Citizens United shows that he is not solely driven by public opinion, since that verdict was universally reviled by the MSM and their ilk.

    But his twisted, tortured logic in the individual mandate case makes it apparent that he has some strange aversion to killing Obamacare. My post is almost sort of a plea to justice Roberts: if he really doesn’t have the guts to directly dismantle the PPACA, can he at least provide the next President a Supreme Court-sanctioned method for gutting it without Congressional approval?

    • #29
  30. hawk@haakondahl.com Inactive
    hawk@haakondahl.com
    @BallDiamondBall

    “Prof. Yoo suggests that Chief Justice Roberts may be eager to atone for his prior sins in the NFIB v Sibelius case, especially after the last election in favor of Republicans.”

    Three wrongs don’t make a right. Roberts is a hack, unfit to serve. He writes law. Obama writes law. How is Boehner’s lawsuit coming along?

    “Roberts obviously prefers legislative fixes to judicial ones, and wants to preserve the public’s faith in the Court and the Judiciary”

    That’s not his job. His job is to defend the Constitution, not the court.

    Unable to edit comment, finally gave up. Cripes.

    • #30

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