Court shows judicial restraint, rejects threat to Obamacare subsidies

Posted at 12:51 PM, Jun 25, 2015
and last updated 2015-06-25 16:24:52-04

Six Supreme Court justices Thursday came down for common sense and judicial self-restraint by rejecting, over bitter dissents, a legal challenge that had threatened to cripple President Obama's Affordable Care Act in 34 states.

Because the court sided with the president, Obamacare will continue in effect with no change from the current pattern of distributing to many millions of low-and-middle-income people in all 50 states the premium subsidies (in the form of tax credits) that make health insurance affordable for many or most of them.

Obama declared soon after the decision was announced that “the law is working and it’s going to keep doing just that. This is health care in America.”

Chief Justice John Roberts, the author of the opinion, and Justice Anthony Kennedy joined the four more liberal justices over a strong dissent by the three more conservative ones, wisely bowing to the clear, though incompetently expressed, intent of Congress to make health insurance affordable in all 50 states.

Roberts and Kennedy did the right thing despite Kennedy's vote three years ago to strike down a key provision; despite the furious attacks they could expect from conservatives calling them traitors; and despite the tensions between Thursday's decision and the principles of "textualist" statutory interpretation that both men largely espouse. (More on that below.)

Ironically, many Republican officeholders and politicians also will welcome the decision, at least privately.

They would be in a very difficult position had the Court adopted the dissenters' view that a few words buried deep in the law's 2,700 pages made almost 6.4 million low-and-middle-income people in the 34 affected states ineligible for subsidies and thus, in most cases, unable to afford insurance.

Roberts wrote persuasively for the majority that taken as a whole, the language, contextual meaning, structure, history, and overarching purpose of the Affordable Care Act (ACA) made legal in all 50 states the subsidies that the Obama administration has been distributing to make their health insurance affordable.

While admitting that the arguments of the dissenters and the plaintiffs about the "plain meaning" of the relevant ACA provision were "strong," the chief justice held that "the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase."

Spirited dissent

Justice Antonin Scalia's dissent, joined by Clarence Thomas and Samuel Alito, was characteristically hyperbolic.

They thundered that the decision was "absurd," "feeble," "indefensible," "interpretive jiggery--pokery," and shows that "[w]ords no longer have meaning," while concluding that "the discouraging truth [is] that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes top uphold and assist its favorites."

The dissenters, like the plaintiffs in the case, King v. Burwell, argued that people in the 34 states that have left it to the federal government to establish the ACA-required online insurance "exchanges," or marketplaces, rather than establishing exchanges for themselves, do not qualify for the premium subsidies.

They claimed that section 36B of the ACA means what it says when read literally and without regard to Congress' intent: that subsidies are available only to people "enrolled . . . through an exchange established by the state."

Chief Justice Roberts, however, held that while the law was "ambiguous," the majority's interpretation was both consistent with "the way different provisions in the statute interact" and necessary to avoid defeating the ACA's purpose by sending insurance markets in the federal-exchange states into an "economic death spiral."

Without premium subsidies, he explained, many people in those states could not afford insurance; many of those would become exempt from the law's mandate that they buy insurance; other healthy people would also drop insurance; and premiums would soar.

Roberts further explained that the ACA "contains more than a few examples of inartful drafting," because "Congress wrote key parts of the Act behind closed doors, rather than through the traditional legislative process. . . . As a result, the Act does not reflect the type of care and deliberation that one might expect of such significant legislation."

Still, he said, a "fair reading" must take into account the fact that Congress passed the ACA "to improve health insurance markets, not to destroy them."

Scalia retorted in his dissent that the Roberts interpretation "is not merely unnatural; it is unheard of. Who would ever have dreamt that 'Exchange established by the State" means 'Exchange established by the State or the Federal Government"? He added that "[o]nly when it is patently obvious to a reasonable reader that a drafting mistake has occurred may a court correct the mistake."

The closest the dissent came to addressing the law's clear purpose of improving health insurance markets was to say that "even if making credits available on all Exchanges advances the goal of improving healthcare markets, it frustrates the goal of encouraging state involvement in the implementation of the Act."

Scalia added that "[w]e lack the prerogative to repair laws that do not work out in practice," and that the Court's "revision" of the ACA was not "respectful of congressional authority" but rather "judge-empowering" -- and in a way that authorizes the federal government "to spend tens of billions of dollars every year in tax credits on federal Exchanges."

Opposite decision

A decision going the other way could have caused the collapse of health insurance markets in the 34 affected states, with few but sick people continuing to be insured and, thus, soaring premiums.

Such a ruling against the president also would have sown conflict among Republican politicians and presidential candidates.

Congress would have been under heavy Democratic pressure to adopt federal legislation nullifying the Court's decision lest Republicans be blamed for helping the Court take health insurance away from millions of Americans. Republican officials in the affected 34 states would have been under great pressure to create their own insurance exchanges.

But efforts to help Democrats "save" Obamacare would have offended Republican base voters.

Unlike the constitutional challenge to the ACA's so-called  "individual mandate" that the justices rejected by 5-4 on June 28, 2012, Thursday's decision focused on deciding what the subsidy provisions of the massive, hastily drafted ACA mean.

Roberts stunned Court-watchers when he sided with the four liberal justices and upheld the individual mandate in the 2012 decision, National Federation of Independent Business v. Sebelius.  His usual allies -- Kennedy, Scalia, Thomas, and Alito -- angrily assailed him. Many other conservatives called him a traitor.

This barrage was intensified by a well-sourced news report that Roberts had initially voted to strike down the individual mandate and changed his mind after liberals led by Obama had preemptively denounced any decision to strike down the mandate as politically motivated conservative "judicial activism."

The mounting crescendo of conservative denunciations of Roberts will be even more bitter this time.

Had Roberts (and Kennedy) voted against Obama, on the other hand, it would have fed the kind of attacks that the chief justice dreads on the Roberts Court's conservative, Republican-appointed majority as a bunch of robed politicians.

Textualism vs. intent

King v. Burwell, brought against Health Secretary Sylvia Mathews Burwell by four Virginia plaintiffs, posed a problem of principle for Roberts and Kennedy that is not widely understood. As noted above, both largely espouse the "textualist" approach to statutory interpretation embraced by the court's other conservatives, and many others.

Textualism ignores the "congressional intent" proclaimed by congressional leaders and heeds only the words of a law's text. One major justification for this approach is that a statute's text is usually the best guide to what Congress meant, and the most resistant to manipulation by politicized judges. The other is to force Congress to say what it means and mean what it says for the sake of clarity and consistency in the law.

Textualism works pretty well with garden-variety statutes. But what's a textualist to do when Congress quite obviously did not mean the words ("established by the state") that some bleary-eyed staffer inserted into a massive pile of paper that no member (or few) ever read? And that nobody caught because of the peculiar politics that prevented that pile of paper from going to a conference committee for vetting? And when the law, like it or not, is enormously important?

Is the best answer Justice Antonin Scalia's suggestion at the March 4 oral argument that the court must read "established by the state" literally even if the wording "may not be the statute [that Congress] intended" and even assuming that it might "produce disastrous consequences?"

Roberts and Kennedy appear not to think so, and it's a good thing too. Their votes, if not the main thrust of the Roberts majority opinion, seem to embody what a pragmatist might say: 

"We all know that those four words were a huge blunder, saying the opposite of what Congress meant. But like it or not, this law is so important, and the wreckage caused by rigorous application of textualism would be so great, that we should rise above principle, put clarity and consistency aside this time, and do what we know Congress intended."

Solicitor General Donald Verrilli made no such pragmatic argument in defense of the Obama interpretation, probably out of concern that it might seem unprincipled to textualist justices. Instead, he argued that in the context of other ACA provisions, the words "provided by the state" are a "term of art" that mean the opposite of what they say.

Verrilli's argument was a stretch. But it worked -- if only because Roberts and Kennedy were willing to temper their textualism with a dose of pragmatism.

Another challenge

King v. Burwell is not the last major legal challenge to Obamacare. Another case raises a possibility that despite the ruling for Obama on Thursday, billions of dollars in ACA subsidies for insured people with modest incomes may still be in peril. 

In House of Representatives v. Burwell, the Republican-led House argues that the president violated the Constitution by using Treasury funds that Congress had not appropriated to pay for $175 billion in subsidies over 10 years. The administration has been using the money to reimburse insurance companies, as provided by the ACA, for helping modest-income insured people reduce out-of-pocket costs including deductibles and copayments.

The administration initially asked Congress to appropriate the money. Then, when Congress did not act, it claimed that it already had authority to use a separate account established for tax credits and refunds. Calling the payments an urgent priority, it proceeded with the spending in early 2014.

The House claims that Obama thereby violated Article I, Section 9 of the Constitution. It says: “No money shall be drawn from the Treasury, but in consequence of appropriations made by law.”

This "power of the purse" is seen by Congress as its most important protection against presidential usurpation of power.

The lawsuit got an apparently respectful reception from Judge Rosemary Collyer, of the U.S. District Court for the District of Columbia, at a spirited hearing on May 28. She aggressively challenged Justice Department lawyer Joel McElvain's argument that the House had no legal standing to sue.

“So it is your position that if the House of Representatives affirmatively voted not to fund something… then that vote can be ignored by the administration, because after all no one can sue them?” Collyer asked McElvain. She added: “I want you to explain . . . why it's not an insult to the Constitution.”

Judge Collyer, who was appointed by President George W. Bush, said she had "no idea" how she would rule on the standing issue, which is so far the only one before her.

The House filed its highly unusual lawsuit challenging the administration's spending last November; the suit also seeks a ruling that the administration violated the ACA when it delayed implementation of the ACA's mandate that certain employers provide health insurance to their workers.

Stuart Taylor Jr., is a Washington writer, lawyer, and Brookings nonresident senior fellow.

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