Opinion, Berkeley Blogs

Why did the supreme court decide yet another ObamaCare case today?

By Brad DeLong

This morning, Republican-appointed Supreme Court Chief Justice John Roberts wrote and five of his colleagues -- Democrat-appointed Breyer, Ginsburg, Sotomayor, and Kagan; and Republican-appointed Kennedy -- agreed that:

Section 18031 [of the Affordable Care Act--i.e., the ObamaCare Law--] provides that “[e]ach State shall . . . establish an American Health Benefit Exchange..." [But] if [a] State chooses not to do so, Section 18041 provides that the Secretary [of Health and Human Services] “shall . . . establish and operate such Exchange..." (emphasis added [by Roberts]).... The phrase “such Exchange”... instructs the Secretary to establish and operate the same Exchange that the State was directed to establish.... Black’s Law Dictionary 1661... (defining “such” as “That or those; having just been mentioned”).... State Exchanges and Federal Exchanges are equivalent—they must meet the same requirements, perform the same functions, and serve the same purposes...

A simple matter of black-letter law, no? The plain meaning of the phrase "such Exchange" means that anything legal that is true of a health-insurance exchange established by, say, the state of New York is also true of a health-insurance exchange established by the federal government for, say, the state of Florida if the state of Florida fails to establish its exchange, no?

Yet a great many right-wing lawyers, right-wing think-tank talking-points warriors, right-wing partisan journalists, and others have spent the past several years trying to convince the Supreme Court to ignore the plain meaning of *"such Exchange"* and to rule, instead, that while the IRS can pay taxpayers tax credits to help cover their health-insurance costs if they purchase insurance on exchanges established by state governments, it cannot do so if they purchase insurance on exchanges established by the federal government. That was the claim made by David M. King--or at least made by his lawyers--and by his co-plaintiffs--or at least made by the same lawyers.

Why would anyone want to ask the Supreme Court to block the IRS from providing tax credits to health-insurance exchange purchasers in those states--red states and reddish states, plus a few weirdo political outliers like Maine--that rely on federally-run exchanges?

As John Roberts put it, because then:

the combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. One study predicts that premiums would increase by 47 percent and enrollment would decrease by 70 percent.... And because the Act requires insurers to treat the entire individual market as a single risk pool, 42 U. S. C. §18032(c)(1), premiums outside the Exchange would rise along with those inside the Exchange...

And if that could be made to happen via Supreme Court ruling, the plaintiffs' lawyers, the think-tank talking-points warriors, the partisan journalists, and the others hoped, they would "win". With health-insurance premiums spiking and large numbers of people unable to afford health insurance dropping coverage, ObamaCare would be seen to have failed -- in red states at least -- to the partisan political advantage of the Republican Party, and perhaps the policy advantage of the right wing. Never mind that a great many more people--in red states, ruled by Republican and right-wing governors and legislatures--would then face a choice between either failing to go to the doctor or going broke.

And never mind that the partisan calculus did not quite seem to compute. Blaming the Democrats for the collapse of ObamaCare in red states *and only in red states* as a result of an activist legal strategy pursued by right-wing think tanks and validated solely by Republican-appointed justices--that would be a political strategy that might not come off.

And never mind that ObamaCare is, in its essentials, RomneyCare: the health-insurance reform policy designed and successfully implemented by Mitt Romney's administration in Massachusetts. Unless Mitt Romney was deeply mistaken about what Republican principles and policy are, ObamaCare is, in its essentials, a relatively conservative health-care reform, based on principles that the Republican Party has, historically, been very comfortable with.

It is true that President Obama and his Democratic allies have been selling ObamaCare's success as a success of Democratic policy and Democratic governance based on Democratic principles. But their saying that does not make it true. There is no substantive policy or governance reason why the Republican Party is not now taking victory laps over the largely-successful adoption and implementation by the liberal President Obama of what is a largely conservative health-care reform and pro-market restructuring of health-care finance.

By this time, Gentle Reader, your reaction should be: "Huh?!?!" Why would anyone think the Supreme Court would make such a ruling? Why did three justices -- the three horsemen of the right wing Scalia, Alito, and Thomas -- agree with plaintiffs' lawyers in their dissent that the IRS should be prohibited from paying tax credits for policies purchased on federal exchanges?

Why? Because there is a drafting error in the Affordable Care Act. In "a sub-sub-sub section of the Tax Code" the Affordable Care Act states that the amount of tax credit is tied to the taxpayer's enrollment in an insurance plan offered by “an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act..." The phrase should have been "Exchange established in the State" or "Exchange established for the State".

The "plain meaning" of this portion of the bill is that the IRS can only pay tax credits for a state exchange. But the "plain meaning" of the portion of the bill directing the Secretary of HHS to step up and establish "such Exchange" is that it does not matter whether a state's Exchange was established by the state or by the federal government: they are the same exchange.

So which "plain meaning" wins?

John Roberts -- and the other five justices who agree with him -- write that:

Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions.”... [A] limit [of] tax credits to State Exchanges... would have done so in the definition of “applicable taxpayer” or in some other prominent manner... not... [in] such a winding path of connect-the-dots provisions about the amount of the credit...

And that:

In a democracy, the power to make the law rests with those chosen by the people... 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... Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt...

After all, the beginning of the Affordable Care Act is:

Quality, Affordable Health Care for All Americans

The beginning of the Affordable Care Act is not:

Quality, Affordable Health Care for Americans Who Happen to Live in States That Establish State Health Exchanges

But all's well that ends well, right? There was a drafting error in the tax credit session, and congressional gridlock has so far prevented the kind of "technical corrections" bills that pass by unanimous consent that usually correct such drafting errors. But the inclusion of the phrase *"such Exchange"* inoculated the law against this particular drafting error's having major consequences. And six justices headed by John Roberts were willing to read the law with rather than against the grain--as a plan "to improve health insurance markets, not to destroy them".

But all is not well. For one thing, lots of people are angry:

The University of Chicago's Harold Pollack is angry:

I remain saddened.... Cases such as King v. Burwell... are naked invitations to crude judicial activism.... It was obvious... that subsidies were intended to be provided to [all].... Conservative Wisconsin Gov. Scott Walker stated the obvious on this point in 2013. Especially early on, many Republicans privately acknowledged the weak and opportunistic nature of the plaintiff’s argument....

[But] the best health policy minds in the Democratic and Republican parties were bogged down for months battling over a conspicuously weak case that should never have reached the Supreme Court. This brought huge costs.... Both parties need measures that could grant them ownership over key components of health coverage and health care delivery to address these concerns in a politically dignified fashion.... Hospitals and insurers want to break the political logjam that has locked almost five million impoverished Americans out of Medicaid, mostly in southern states....

Briefly put, King was one of the great trolling exercises in the history of American health policy. Thank goodness it has been resolved. Good riddance to it.

There are no prospects that we here in America will make up the year spent not figuring out how to better regulate and structure health-care financing that has been King vs. Burwell's gift to all of us.

George F. Will is angry:

The paramount injury [from Roberts's decision] is the court’s embrace of a duty to ratify and even facilitate lawless discretion exercised by administrative agencies.... Rolling up the sleeves of his black robe and buckling down to the business of redrafting the ACA, Roberts cites a doctrine known as “Chevron deference.”... The doctrine is that agencies charged with administering statutes are entitled to deference when they interpret ambiguous statutory language. As applied now by Roberts, Chevron deference obligates the court to ignore language that is not at all ambiguous but is inconvenient...

One problem is that George F. Will seems not to have read John Roberts's opinion before writing. He decided to attack John Roberts for expanding the deference that the Supreme Court offers the President. But Chief Justice John Roberts says expressly that he is not -- repeat NOT -- deferring to the IRS in the manner of the Chevron case. He is not expanding the deference that the Supreme Court offers the President: he is, in fact, narrowing it:

John Roberts:

We often apply the two-step framework announced in Chevron.... “In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation” [to an agency.] This is one of those cases.... Whether... credits are available on Federal Exchanges is... central to this statutory scheme.... It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy.... This is not a case for [deference to] the IRS. It is instead our task to determine the correct reading of Section 36B...

Because of Roberts, no future President with a different IRS can change the implementation so that tax credits flow only to state exchanges.

The honest thing for Will to have done -- after he got around to reading Roberts's opinion -- would have been to pull an Emily-Litella-"never-mind" and pulled his piece.

Instead, he has tried to silently edit it -- at least the version appearing in National Review Online:

George F. Will:

>Rolling up the sleeves of his black robe and buckling down to the business of redrafting the ACA, Roberts cites a doctrine known asinvents a corollary to “Chevron deference.”... It says that agencies charged with administering statutes are entitled to deference when they interpret ambiguous statutory language. As applied now by Roberts, Chevron deference obligates the court to **While purporting to not apply Chevron, Roberts expands it to empower all of the executive branch to** ignore or rewrite congressional language that is not at all ambiguous but is inconvenient...

The rest of National Review is angry: Quin Hilyer:

With today’s Obamacare decision, John Roberts confirms that he has completely jettisoned all pretense of textualism. He is a results-oriented judge, period, ruling on big cases based on what he thinks the policy result should be or what the political stakes are for the court itself. He is a disgrace. That is all.

And Nino Scalia is very angry:

Words no longer have meaning...

Faced with overwhelming confirmation that “Exchange established by the State” means what it looks like it means, the Court comes up with argument after feeble argument to support its contrary interpretation...

The Court’s next bit of interpretive jiggery-pokery involves other parts of the Act that purportedly presuppose the availability of tax credits on both federal and state Exchanges.... Pure applesauce...

The somersaults of statutory interpretation they have performed... will be cited by litigants endlessly, to the confusion of honest jurisprudence. And the cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites...

We should start calling this law SCOTUScare...

The only observer I can find who is happy is vox.com's Ezra Klein:

This wasn't a 'win for Obamacare.' Obamacare is words written on paper. This was a win for the more than 6 million people who will keep their health insurance. It's a win for parents who can be sure their children can go to the doctor, and for minimum-wage workers who can call an ambulance without worrying about debt. Basic health security for millions of people was on the line in this decision. Everything else was secondary to that.

This was also a win for common sense, and for judicial restraint. On some level, what's most surprising... is... that [the Court] ever took the case.... This was a ridiculous case, based on a ridiculous argument, where the only hope of victory was that the Supreme Court had become an irreversibly partisan institution....

The correct reading of the law, Roberts writes, is the government's reading.... In the end, the basic finding here isn't very complicated: Obamacare was designed to work the way everyone understood Obamacare was designed to work... the only way Obamacare actually will work.... The plaintiffs, and many Republicans, were asking the Court to engage in judicial activism of breathtaking scale--using an unclearly worded sentence to upend the clear intent of one of the most significant laws passed in the last generation. In the end, the Court's four Democratic appointees, and two of its Republicans, refused. We should all be glad they did.

But I am not so happy: three of the Republican justices were eager to become what the court was in Bush vs. Gore--an openly and unrestrained partisan institution.

That is at least three too many.

In the past -- think of Marbury vs. Madison, or McCulloch vs. Maryland, or Dred Scott vs. Sanford, or Lochner, or Plessy, or Brown -- justices who have ruled against the grain of legal doctrine, tradition, and history have done so in the service of some deeply-held conception of justice. This time is indeed different. This time the three horsemen whose dissent runs so strongly against the grain have no deeply-held conception of justice behind them -- only the belief that they are against Team Obama...

As Harold Pollack said:

Naked invitations to crude judicial activism... [are] nihilistic approaches to statutory interpretation [that] might render unworkable complex legislation in the divided institutional turf of American democracy. President Barack Obama was vulnerable to legal/partisan guerilla warfare this time.... Had the plaintiffs prevailed, the hallmark legislative initiative of some conservative Republican successor would prove equally vulnerable on something else. Shakespeare reminds us: Such instructions, once taught, have a way of returning to plague their inventors...