A clearly divided Supreme Court on Wednesday put Obamacare under the microscope once again, with the tentative prognosis looking rather positive for the president’s signature health care law.
During an unusually long oral argument, several members of the court, including potential swing Justice Anthony Kennedy, warned of a “death spiral” that might occur from a ruling that cuts off insurance subsidies in 34 states that rely on a federal health exchange.
“You get these disastrous consequences,” Justice Ruth Bader Ginsburg declared.
Immediately at stake are the tax-credit subsidies that have helped make health insurance affordable for millions of Americans in dozens of states.
At issue is the legality of the subsidies for an estimated 7.5 million subscribers in the 34 states that chose not to run their own health insurance exchanges, leaving it to the federal government. Critics argue that the law, as written, permits the subsidies to go only to people who use state-run exchanges. The administration says the subsidies were intended to be available in all states.
Justices Elena Kagan, Sonia Sotomayor and Stephen Breyer posed questions or made statements that suggested sympathy for the administration’s position. Pointedly, Kennedy, as well, identified what he termed a serious problem with the argument made by the law’s opponents.
In particular, justices questioned whether the opponents’ interpretation of the law puts the federal government in a position of coercing states, which the court generally frowns on.
“There is something very powerful to the point that if your argument is accepted, the states are being told, ‘Either create your own exchange or we’ll send your insurance market into a death spiral,’ ” Kennedy told Michael A. Carvin, the attorney for the law’s opponents.
Possibly keeping his powder dry, Chief Justice John Roberts Jr. was uncharacteristically quiet during much of the 85-minute argument.
Once considered an esoteric long shot, the case, King v. Burwell, could still shake the foundations of the Affordable Care Act, the 900-plus-page health care law that Congress passed and Obama signed in 2010.
The court previously upheld the law against an explicit constitutional challenge, in a 2012 decision written by Roberts that concluded Congress had the authority to impose the so-called individual mandate. The mandate requires individuals either to buy insurance or pay a penalty.
The new challenge is focused more on the text of the law than on the Constitution, although the Constitution might still come into play.
The health care law encourages states, but does not require them, to establish exchanges to offer one-stop shopping for insurance coverage. As inducement, the law offers tax credits to people qualified by income who buy insurance through an exchange “established by the State.” The challenge turns on this four-word phrase.
Driven primarily by Republican resistance, 34 states declined to establish health insurance exchanges. Nevertheless, the Internal Revenue Service has extended tax credit subsidies to residents of these states who buy insurance through the federal exchange, HealthCare.gov.
Challengers say the law’s black-and-white text means what it says: A health exchange must be established by “the state” for the subsidies to be available. The federal government, by this reasoning, cannot substitute when states have declined to act.
“It may not be the statute they intended,” Justice Antonin Scalia said. “The question is whether it’s the statute they wrote.”
Even the possibility of “disastrous consequences,” Scalia added, shouldn’t distract the court from its understanding of the text.
“This is a straightforward case of statutory construction where the plain language of the statute dictates the result,” Carvin agreed.
Supporters of the law counter that the questionable phrase makes sense only in context. Citing everything from the expectations of states to the deal-making that shaped the legislation, they insist on a broader interpretation.
“We look at the whole text,” Kagan said. “We don’t just look at the four words.”
Defenders of the law say, as well, that Congress wouldn’t bury a big burden on the states beneath such ambiguous language.
“Their reading produces an incoherent statute that doesn’t work,” Solicitor General Donald Verrilli Jr. said of the health care law’s opponents. “It revokes the promise of affordable care for millions of Americans.”
Justice Clarence Thomas, in keeping with his customary practice, was the only one of the nine justices not to speak or ask questions during the argument, which drew an unusual number of reporters. Outside the court, demonstrators rallied and enthusiasts lined up especially early for seats inside to hear the argument.
A decision is expected by the end of June. In public, Obama administration officials have said they aren’t preparing backup plans in case the court strikes down the crucial subsidies.
“We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision,” Health and Human Services Secretary Sylvia Burwell wrote senators last month.
Underscoring the stakes, Burwell attended the argument, along with her predecessor, Kathleen Sebelius, under whom the Affordable Care Act came to pass. Several key lawmakers were also in attendance, including House Minority Leader Nancy Pelosi, D-Calif.; House Majority Leader Kevin McCarthy, R-Calif.; and Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee.
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