SCOTUS looks likely to uphold Obamacare in second Court challenge

March 5, 2015

SCOTUS ClipboardYesterday, the Supreme Court heard oral arguments in King v. Burwell, the second challenge to the Affordable Care Act (ACA) to reach the Supreme Court in the five years since its enactment.

Rather than the grand constitutional issues at stake in the previous challenge, NFIB v. Sebelius, King involves a dispute over the meaning of a four-worded phrase within the law itself: “established by the State.”

The phrase is so pertinent because, according to the challengers, the federal government is currently operating under the assumption that it means something that it doesn’t.

The phrase in question is found in a provision that provides tax credits for individuals in the amount of their monthly premiums that were “enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act.”  Section 1311 (specifically, Section 1311(b)(1)) states that “[e]ach State shall…establish an American Health Benefit Exchange (referred to in this title as an ‘‘Exchange’’) for the State…”

Obviously, since 34 states have not set up their own exchanges, the section isn’t as mandatory as it seems.  And the ACA was prepared for this, since Section 1321 provides that, if a state fails to set up an exchange, “the Secretary [of the Department of Health and Human Services] shall…establish and operate such Exchange within the State.”

There’s a lot of text of the statute that is thrown back and forth by both sides, but the gist of it all is that the challengers are arguing that federal income tax credits for insurance premiums only go to those who have an insurance policy through an exchange actually set up and managed by the state in which they reside.

That wouldn’t be the end of the impact of a decision in favor of the challengers: experts predict that these individuals wouldn’t only lose their tax credits, but also their insurance coverage.  Furthermore, the individual and employer mandates would likely be invalidated.  However, insurance companies would still be obligated to cover applicants with preexisting conditions, and as such, insurance rates would likely skyrocket within those states, which would send those states’ insurance markets into a so-called “death spiral” that would cause them to collapse.

Given the implications of the decision, it’s easy to understand how the stakes are so high even though the broader legal implications are mostly inconsequential.

So what did we learn about the justices’ leanings from yesterday’s oral arguments?

First, there were some justices whose alignments came as no surprise: the four liberals (Justices Ginsburg, Breyer, Sotomayor, and Kagan) came out strongly in favor of the government’s position, seemingly acting as though the challengers’ interpretation of the law was nonsensical.

And on the other side of the spectrum is Justice Scalia, who was even more brazen in his support of the challengers’ position, not only with his lobbing softballs at the challengers’ counsel during arguments, but also with his actively trying to find some way for the Court to rule in the challengers’ favor while also avoiding these “death spirals” (although his position seemed to lose a lot of credibility when he suggested that “this Congress would act” to avoid these disastrous consequences).

Also likely in the challengers’ camp is Justice Alito, who, though not as outspoken in his support for the challengers as Justice Scalia, still seemed to ask questions that steered the argument in the challengers’ favor.

Justice Thomas maintained his usual silence, but he is likely in the same camp as Justice Scalia.

That leaves Chief Justice Roberts and Justice Kennedy.

The swing vote last time around, the Chief Justice was careful not to give away any of his leanings during oral arguments yesterday.

Justice Kennedy, on the other hand, expressed deep concern about the consequences of a ruling in favor of the challengers – namely, these “death spirals.”

More specifically, Kennedy mused that accepting the challengers’ argument meant that “the States are being told either create your own Exchange, or we’ll send your insurance market into a death spiral.”  And that creates a “serious constitutional problem” in Kennedy’s words, since such a choice would be unconstitutionally coercive to the states.  And the doctrine of constitutional avoidance dictates that the Court should avoid ruling on constitutional issues in a case if it could be resolved on other grounds.

Kennedy further compared this coercive “choice” to the federal government forcing states to build highways or else face the imposition of a statewide 35 mile per hour speed limit.

It’s hard to tell for sure from these comments how committed Kennedy is to one side or the other, but if nothing else, Kennedy provided a pro-Federalism rationale for supporting the federal government’s position – one that may appeal to Chief Justice Roberts if Kennedy ultimately changes his mind.

In light of the practical considerations – that the ACA is currently more firmly entrenched in the nation’s legal and economic landscape than it was three years ago – it may be a more difficult decision for either of the Court’s two more pragmatic conservatives (Roberts and Kennedy) to cause such turmoil nationwide when there’s a perfectly sound legal argument for maintaining the status quo.

Thus, my prediction for the outcome of this case is 6-3, with Chief Justice Roberts and Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan in the majority, and Justices Scalia, Thomas, and Alito in the dissent.