Obamacare Comes Out Stronger Than Before

In a decision that surely disappointed far right politicians, a strong 6-3 majority today rejected a pitifully transparent and legally ridiculous effort to destroy Obamacare.

The King v. Burwell plaintiffs claimed that Congress intended to make healthcare insurance subsidies via tax credits available to Americans in certain states (ones where the state exchange was set up by the state itself) but not in others (states where the exchange was set up by the federal government).  Fortunately, six Justices refused to go along with this.

The majority opinion was written by Chief Justice Roberts, and joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan.  They acknowledged that the phrase “established by the state,” if completely stripped of all context, could be interpreted to exclude exchanges established by the federal government.  But looking at congressional intent and the structure of the ACA as a whole, they concluded that – of course – Congress did not mean to deny subsidies to Americans in the federal-exchange states.

While the Court upheld the Fourth Circuit’s judgment against the anti-ACA activists, the legal reasoning isn’t exactly the same.  In fact, the Court closes off a future avenue of attack against Obamacare that the Fourth Circuit had left open.

Specifically, the Fourth Circuit had found the phrase in question ambiguous in meaning.  Therefore, it turned to how it was interpreted by the federal agency charged with interpreting it and carrying out its commands – in this case, the Internal Revenue Service.  Under a doctrine called “Chevron deference,” courts generally defer to agencies’ interpretations of ambiguous statutory commands as long as they are reasonable.  The Fourth Circuit noted that the IRS interprets the ACA to allow subsidies to be made available to people in all states, and it upheld that interpretation as reasonable.

Note that this approach could have left the ACA vulnerable to a future presidential administration proffering a different interpretation – i.e., the ones pushed by the anti-Obamacare plaintiffs and their conservative activist backers.

That threat would seem to be gone.  The Supreme Court noted that the subsidies are a critical component of the congressional plan to reform healthcare, and if it had wanted to delegate a question as critically important as that to a federal agency, it surely would have said so.  So Chevron deference wasn’t even a factor here.

The Court then looked at the statute as a whole and made the only obvious conclusion: Of course Congress did not mean to deny subsidies to people based on whether their state set up its own exchange or instead relied on the federal government to set it up.  That would have disrupted the entire system Congress was setting up:

Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.  If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.

Quoting an earlier case, the majority observed that “[w]e cannot interpret federal statutes to negate their own stated purposes."

Even today’s dissenters once acknowledged the majority’s interpretation.  The Chief Justice quotes their dissent in the first ACA case, where they argued the law was unconstitutional.  In that dissent (which Kennedy was also part of), they agreed that “[w]ithout the federal subsidies . . . the exchanges would not operate as Congress intended and may not operate at all.”

The majority concludes that the context and structure of the ACA “compel” the interpretation assumed by Congress, the Obama Administration, and everyone else when the law was debated and passed: Subsidies are available in every state.

“Compel.”  And no Chevron deference.  That means a future conservative president cannot direct the IRS to revisit the subsidies issue and thus put Obamacare into a death spiral.  That puts the law on a stronger footing than it was under the Fourth Circuit’s ruling.

Given that the plaintiffs were confident of a 5-4 victory, today’s 6-3 defeat is not just a loss, it is a powerful rebuke.

But this case should never have been before the Court in the first place.  There was no circuit split (a contrary DC Circuit panel ruling had been vacated en banc), and the plaintiffs’ legal reasoning was laughable.  The fact that we went into this morning not knowing what the result would be shows just how much of the Court’s legitimacy the Court’s five conservatives have sacrificed in their effort to remake the law to fit their political ideology.  While today’s ruling is a great outcome, it should not blind anyone to the nature of the Roberts Court overall.

PFAW Foundation