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In my new piece for Defining Ideas from the Hoover Institution, I’m taking readers through the Supreme Court’s oral arguments last week in the case of King v. Burwell, which will decide the fate of Obamacare subsidies in states that are serviced by a federal health insurance exchange. (I also covered this topic at length in a Libertarian podcast with Troy Senik last week.) As I note there, perhaps the most inventive (and alarming) argument of the day came courtesy of Justice Anthony Kennedy:
In one sense the most novel argument of the day was an ill-thought-out suggestion by Justice Anthony Kennedy that the ACA might be unconstitutional if it were read to deny subsidies to health care policies purchased on the federal exchanges. Justice Kennedy never bothered to state whether his suggestion would require invalidation of the entire statute, or the creation of a massive subsidy that Congress itself had never authorized. There is, fortunately, no need to choose between these two unappetizing alternatives. Kennedy tossed off an argument that no one ever raised throughout the litigation: the denial of the federal subsidies would coerce individual states to set up exchanges in order to benefit their citizens.
The supposed precedent for this argument was the earlier decision in NFIB v. Sebelius that struck down part of Title II of the ACA that required states to forfeit all their current Medicaid benefits if they failed to sign up for the expanded set of Medicaid benefits under the ACA. Chief Justice Roberts held that this provision was coercive. No state could possibly withstand that financial hit. But in this instance, many states refused to establish the exchanges precisely because they were not threatened with the loss of any collateral benefits.
Shortly after the oral argument, Oklahoma Attorney General Scott Pruitt protested Justice Kennedy’s argument, noting that Oklahoma knew what the law required and was prepared to live with its consequences, given the heavy costs that it would have to incur to establish a state exchange. Indeed, the Kennedy provision leads to the bizarre conclusion that the statute would be unconstitutional if it omitted the possibility of purchasing any coverage under the federal exchanges, and his argument would invalidate dozens of statutes under which states are entitled to get benefits if they first undertake some particular action. The section is constitutional as written.
We will see how this plays out. As I noted in last week’s podcast, I initially predicted a 5-4 ruling against the Obama Administration in this case. Considering the questions Justice Kennedy and Chief Justice John Roberts issued from the bench, I am no longer quite as confident in that outcome. What do you expect?