Supreme Court Upholds Obamacare Subsidies In 6-3 Vote
In a case that either threatened or promised, depending on your outlook, to bring the entire fiscal structure of the Affordable Care Act crashing down, the Supreme Court has ruled today that the subsidies provided by the Affordable Care Act are available to consumers regardless of whether they purchased insurance on exchanges established by the individual states, or the exchange set up by the Federal Government for states where the legislature declined to establish an exchange:
WASHINGTON — The Supreme Court ruled on Thursday that President Obama’s health care law allows the government to provide nationwide tax subsidies to help poor and middle-class people buy health insurance, a sweeping vindication that endorsed the larger purpose of Mr. Obama’s signature legislative achievement.
The 6-to-3 ruling means that it is all but certain that the Affordable Care Act will survive after Mr. Obama leaves office in 2017, and will give it a greater chance of becoming an enduring part of America’s social safety net.
For the second time in three years, the law t survived an encounter with the Supreme Court. But the court’s tone was different this time. The first decision, in 2012, was fractured and grudging, while Thursday’s ruling was more assertive.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John G. Roberts Jr. wrote for the majority.
The court’s three most conservative members — Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. — dissented. Justice Scalia called the majority’s reasoning “quite absurd.”
“The court’s decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery,” he wrote.
“It is up to Congress to design its laws with care,” he added, “and it is up to the people to hold them to account if they fail to carry out that responsibility.”
Justice Scalia announced his dissent from the bench, a sign of bitter disagreement. His summary was laced with notes of incredulity and sarcasm, which sometimes drawing amused murmurs in the courtroom as he described the “interpretive somersaults” he said the majority had performed to reach the decision.
“We really should start calling this law SCOTUS-care,” Justice Scalia said, to laughter from the audience.
Chief Justice Roberts wrote that the words must be understood as part of a larger statutory plan. “In this instance,” he wrote, “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.”
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” he added. “If at all possible, we must interpret the act in a way that is consistent with the former, and avoids the latter.”
SCOTUSBlog’s Amy Howe summarizes the Court’s ruling “in plain English”:
Chief Justice John Roberts wrote the Court’s opinion, which Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan all joined. The Court acknowledged that, at first blush, the phrase “established by the State” does not appear to include the federal government. After all, the ACA specifically defines “State” as “each of the 50 States and the District of Columbia.” But other parts of the law, the Court explained, suggest that the “meaning of the phrase ‘established by the State’ is not so clear.” For example, one provision that defines who is qualified to purchase insurance on an exchange refers to an individual who “resides in the State that established the Exchange” – which on the plaintiffs’ reading would mean that no one would be qualified to buy health insurance on exchanges established by the federal government.
And if the phrase “established by the State” is in fact not clear, the Court continued, then the next step is to look at the Affordable Care Act more broadly to determine what Congress meant by the phrase. And when you do that, the Court reasoned, it becomes apparent that Congress actually intended for the subsidies to be available to everyone who buys health insurance on an exchange, no matter who created it. If the subsidies weren’t available in the states with federal exchanges, the Court explained, the insurance markets in those states simply wouldn’t work properly: without the subsidies, almost all of the people who purchased insurance on the exchanges would no longer be required to purchase insurance because it would be too expensive. This would create a “death spiral,” in which insurance premiums would go up and enrollment would go down. It is “implausible,” the Court concluded, “that Congress meant the Act to operate in this manner.”
Justice Antonin Scalia dissented, in an opinion joined by Justices Clarence Thomas and Samuel Alito that began by describing the majority’s conclusion as “quite absurd.” The tone only gets even more strident from there, with Scalia lamenting that “words no longer have meaning if an Exchange that isnot established by the State is ‘established by the State.'” And he concludes by complaining that the majority’s opinion- as it did three years ago in upholding the individual mandate – “changes the usual rules of statutory interpretation for the sake of the Affordable Care Act.” Perhaps, he suggested, “We should start calling this law SCOTUScare.”
Howe’s SCOTUSBlog colleague Lyle Denniston has a more detailed analysis.
Overwhelmingly, the Federal Courts that have considered this issue have sided with the Federal Government in their interpretation of the law. District Courts in the District of Columbia and Virginia both ruled in favor of the government, as did the Fourth Circuit Court of Appeals in the Virginia case, which is the one that the Court ruled on today.. A Federal Judge in Oklahoma, meanwhile, has ruled against the Federal Government, as did the Court of Appeals for the D.C. Circuit in a decision released on the same day as the Fourth Circuit decision that was ultimately voided when the D.C. Circuit granted en banc appeal in the matter. A fourth case is currently on hold in Federal District Court in Indiana. Those two cases are now obviously moot given the Court’s ruling today.
This is a long, detailed opinion that is likely going to be picked apart and digested by all sides in the days, weeks, and years to come. However, as a general first impression reaction, my thought is that the Court probably got it right here. There’s no question that the law was inartfully drafted, and indeed Chief Justice Roberts made mention of this while reading his opinion from the bench today. At the same time, as Roberts says at multiple points in the opinion, the Court’s job in a case such as this is to look at the law as a whole rather than merely the sentence or two that is creating a particular legal issue. When they do that, courts have consistently held that statutory language should be interpreted in a manner that upholds the overall statutory scheme that Congress intended to create. The only real caveat is that this interpretation should be a reasonable one and that it would be improper to read things into a statute that aren’t there or to ignore certain parts of a law that are plainly there. In that regard, I think the Chief’s closing paragraphs are instructive:
Petitioners’ arguments about the plain meaning of Section 36B are strong. But while the meaning of the phrase “an Exchange established by the State under [42 U. S. C. §18031]” may seem plain “when viewed in isolation,” such a reading turns out to be “untenable in light of [the statute] as a whole.” Department of Revenue of Ore. v. ACF Industries, Inc., 510 U. S. 332, 343 (1994). In this instance, 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.
Reliance on context and structure in statutory interpretation is a “subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.” Palmer v. Massachusetts, 308 U. S. 79, 83 (1939). For the reasons we have given, however, such reliance is appropriate in this case, and leads us to conclude that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.
In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined—“to say what the law is.” Marbury v. Madison, 1 Cranch 137, 177 (1803). That is easier in some cases than in others. But in every case we must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan. 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. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.
As an aside, I have to smile every time I see the citation in the last paragraph. A case decided 212 years ago is still being cited today, because that’s how important it was.
Justice Scalia’s dissent is, understandably, quite strong. He accuses the Court of essentially ignoring the plain-meaning of the statute in his usual florid language, remarks at one point that the law should be called “SCOTUSCare” given the fact that the law has been upheld by the Court twice now, and even manages to sneak in some Shakespeare. It’s a serious argument and it deserves serious consideration, but in the end it seems to me that the majority has the better legal argument here. As Chief Justice Roberts noted, Courts have always been deferential when it comes to statutory interpretation in order to ensure that Judges are not substituting their judgment for elected representatives. The fact that there is a drafting error, or that language in a bill that was more than a thousand pages long is inexact in some way should not necessarily mean that a Court must interpret a law in a manner that brings down an entire statutory scheme. The alternative would be a world where the lack of a single word, or an in-artfully drafted sentence, would bring down an entire law, and that’s never been the way the Courts have interpreted statutes. In my past comments about this subsidy issue, I’ve been somewhat sympathetic to the argument of the Plaintiffs in this case, but reviewing the pleadings and the oral argument in this case have caused me to reconsider that position. I’m still not a fan of the PPACA, and I think that it’s going to create long-term economic incentives that will make health care more expensive rather than less expensive, but that is a policy matter not a legal one. As it stands, it seems clear to me that the Justices in the majority got it right.
In addition to the legal arguments, this case and its potential consequences quickly became a huge political issue. Had the Court ruled the other way in this matter, it would have meant that as many as six to eight million people would have lost their subsidies for health insurance. For most of them, this probably would’ve meant that they could no longer afford health insurance, thus pushing them back into the ranks of the uninsured. A ruling such as this also would have likely increased premium costs across the board, which would have caused any healthier, younger people to drop insurance altogether and make the risk pools even more, well, risky. In a short period of time, the entire fiscal structure of the law would have been in peril. Because of this, the prospect of what to do if the Court struck down Federal subsidies was a hot topic of discussion. Polling leading up to day was showing that the vast majority of Americans believe that Congress should fix the PPACA if the Justices rule for the Plaintiffs in King and that a narrow majority of Americans. As a result, Republicans on Capitol Hill have been working behind the scenes to try to come up with some legislative solution. Additionally, the issue has already become a subject of heated political debate between President Obama and Congressional Republicans. Now, with the Court upholding the decision all of that is avoided.
This is the end of the legal challenges to the Affordable Care Act.
It started virtually from the moment the law was signed by President Obama as a number of states filed challenges to the Constitutionality of the law’s mandate that all person’s not otherwise covered by employer-provided insurance purchase their own policy or pay a penalty to the Internal Revenue Service. While several lower courts agreed with the argument that this mandate was not supported by the powers granted to Congress under Article I, Section 8 of the Constitution, the Supreme Court ended up sustaining the law not under the Commerce Clause but under Congress’s Taxing Power, which is virtually unlimited. After that, the focus of the challenges shifted to specific requirements of the law, including the mandate from the Department of Health and Human Services that employer-provided insurance include coverage for contraceptives. When business owners claimed that this requirement violated their religious beliefs, another series of lawsuits were filed that primarily relied on the Religious Freedom Restoration Act, which effectively operates to give people exemptions from generally applicable laws if abiding by them would violate their religious beliefs. Last year, the Supreme Court ruled in favor of religious employers such as Hobby Lobby in a ruling that remains controversial and seems likely to become an issue in areas related to same-sex marriage. With this outcome, there are very few legal issues remaining regarding the PPACA and certainly none that would have the potential to undue the case like this case and the case related to mandates did. In some sense, what the Court is saying today is that they are not going to be the ones to strike down Obamacare. Whether legal activists will get that message remains to be seen.
Politically, of course, this is far from the end of the road. Republicans will continue trying to fight the law, candidates for President will make their promises about repealing the law, and Congress itself will probably try to do just that at least once more before the 2016 elections. Objectively speaking, I don’t believe that there is any more likelihood that the law will be repealed now than there was at any point since the law was passed in 2010 and President Obama won re-election in 2012. It’s possible, if not likely, that at some point in the future we may see the law reformed in some way to fix problems that crop up, but that is a different matter from repeal. As a political and legal matter, the PPACA, also known as ObamaCare, is here to stay.
Here’s the opinion:
- None Found