Manhattan Contrarian

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Obamacare: What Will Be The Reasoning Of The "Liberal" Justices?

The latest court challenge to the so-called Affordable Care Act ("ACA" or "Obamacare"), called King v. Burwell, is scheduled for argument before the Supreme Court on March 4.  This is the case where the Petitioners assert that the government cannot provide Obamacare premium subsidies to healthcare purchasers unless the policy in question was purchased on an exchange "established by the State."  Turns out that some 36 states never established these exchanges.  When those states refused, the federal government stepped in and set up its own exchange to be used by the citizens of the refusing states.  The IRS then promulgated a regulation providing that Obamacare's premium subsidies are equally available whether the exchange where you bought your policy was established by a state or by the federal government.  But can that IRS regulation be squared with the language of the statute?

This turns out to be a great issue to examine the two fundamental ways of looking at the world.  In one worldview, the limitations on the government's powers are fundamental to our freedom and our success, and as one example the government cannot spend any money unless by statute duly approved by Congress.  In the other world view, there is a tremendous moral imperative requiring the government to do everything possible to achieve economic fairness and equity, generally to be done by passing out government money and benefits, and all statutes must be interpreted toward that end, no matter what they actually say.

The basic argument of the King Petitioners is that the statute clearly says that the subsidies are only available to policies purchased on state-created exchanges.  From page 18 of their brief:

The ACA grants a tax credit “equal to the premium assistance credit amount,” which is the sum of monthly assistance amounts for “all coverage months of the taxpayer” during the year. 26 U.S.C. § 36B(a), (b)(1). A “coverage month” is one in which “the taxpayer … is covered by a qualified health plan … enrolled in through an Exchange established by the State under section 1311 of the [ACA, 42 U.S.C. § 18031].” Id. § 36B(c)(2)(A)(i) (emphasis added).  These provisions are thus perfectly clear: Unless a taxpayer enrolls in coverage “through an Exchange established by the State under section 1311 of the [ACA],” he has no “coverage months” and therefore no “premium assistance amounts.”

Did it make sense for the ACA to restrict the subsidies in that way?  Well, there's this famous quote from Obamacare architect Jonathan Gruber from 2012:

In the law, it says if the states don’t provide [exchanges], the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. I think what’s important to remember politically about this, is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.

So I've been spending some quality time with the government's brief and with the many, many briefs from amici supporting the government (all available here).  And what is remarkable to me is the extent to which they steer away from arguments directed to the statutory text and toward arguments having little or nothing to do with the law and everything to do with what they see as the moral imperative.  Children will die!  Old people will suffer!  Everyone will be sick!  OK, I exaggerate somewhat, but not by much.

For example, from a brief for AARP, National Health Law Program, National Council on Aging, and others:

Lack of adequate and affordable health insurance among pre-Medicare adults results in worse health outcomes and death, and negatively impacts financial stability, the health care system, federal programs, and the national economy.

Or from the American Academy of Pediatrics, American Academy of Family Physicians, and many others:

Petitioners' construction of the ACA could deprive millions of children of insurance coverage and access to affordable healthcare.

Or from America's Health Insurance Plans:

Premium assistance tax credits in federally facilitated exchanges are an essential safeguard against the destabilization and failure of these essential insurance markets.

And there are a couple of dozen more like these.  Guys, would you care to address the law even a little?  Oh, did I mention that essentially all of these guys supporting the government are on the receiving end of big payments from the subsidies?

The government, to its credit, does take a stab at a statutory construction argument, which appears at pages 20-25 of its brief.   It's too long and convoluted for me to go into detail here, but read it yourself and see what you think.  The gist is that an exchange established by the federal government is an exchange "established by the State" because . . . well, because.  And then they continue with lots more about how the "structure and design" of the Act should trump the actual language.  Of course, Mr. Gruber has articulated why the "structure and design" of the statute are consistent with the opposite construction.

But the funny thing about this kind of case is that you can predict which way the Justices are going to come out by their political leanings much more than by anything about the merits of the legal arguments.  In other words, which of the two views of the world do they subscribe to?  I have no doubt that Justices Breyer, Ginsburg, Kagan, and Sotomayor will vote to uphold the IRS regulation.  In their heart of hearts, they know that Congress must have meant to get the subsidies to everyone who might need them, and they can't let this critical statute get tripped up by what can only be some technical drafting glitch.  The question I have is, what will be the basis for their decision?  I predict an opinion with lots about suffering children and dying old people.  I hope I'm wrong, but I'll bet I'm not.