Corporate Accountability

A hint of good news for Obamacare, but don’t get your hopes up too much

By Greg Sargent


Supreme Court oral arguments have wrapped up in King v. Burwell, and the initial reports suggest reasons for a hint of optimism, but absolutely do not get your hopes up: It is still very plausible that Anthony Kennedy and John Roberts could rule with the challengers in spite of what we heard today. Until we see a full transcript later this afternoon, much will remain murky, but there are a few things we can glean from the initial reporting.


As every single report thus far has pointed out, perhaps the most significant thing to happen today was that Kennedy repeatedly said siding with the challengers would raise serious federalism and Constitutional concerns. As Sahil Kapur reports:


Kennedy appeared to sympathize with the challengers’ argument that the plain text of the law forbids subsidies on the federal exchange serving some three-dozen states that didn’t build their own. But he also seemed deeply worried about an intrusion on states’ rights if the subsidies were stripped away without a clear warning.


“Even if you prevail on the plain text of the statute,” Kennedy told the challengers’ lawyer, “there’s a serious constitutional problem if we adopt your argument.”


Brian Beutler quotes Kennedy addressing the challengers’ lawyer this way:


“Court and counsel should both confront that your argument creates a serious constitutional question.”


This would be in keeping with the idea, which I laid out the other day, that Kennedy might be susceptible to the argument by some 20 states that the challengers’ reading — and the gutting of the subsidies — would retroactively impose a punishment that “would upend the bargain the states thought they had struck,” positing a “novel kind of coercion” that would “threaten to injure a state’s citizens and to destroy its insurance markets in order to force state government officials to implement a federal program.” The states continued that the Justices must opt for a reading of the statute that doesn’t raise attendant Constitutional concerns. As one Kennedy scholar put it, Kennedy believes it’s a “vital safeguard” of states’ sovereignty that conditions attached to federal spending be “expressed unambiguously.” Kennedy’s questioning today suggests he may


Supporters of the law are taking solace from this. Simon Lazarus, the senior counsel for the Constitutional Accountability Center, who watched oral arguments, tells me:


“By far the most significant thing about this argument, which is undeniable, is that Justice Kennedy takes seriously the argument that the petitioners interpretation of the statute would create a serious Constitutional question, because it would impose very serious consequences on the states. There are serious questions about whether the statute provides clear notice of that. He came back to that several times. Unless the statute is unambiguously required to be interpreted the way petitioners say it is, than it must be interpreted to avoid that reading.”


However, there is still a way Kennedy could rule against the law. “It would still be possible for him to conclude the statute unambiguously must be construed the way the challengers insist it must be construed,” Lazarus continued.


Kennedy appeared inclined towards the challengers’ interpretation of the disputed phrase, but the question is how inclined towards it he is. He could decide his federalism concerns win the day; or he could be expressing those federalism concerns to appear even-handed before deciding the phrase is unambiguous and requires a ruling against the law.


Some experts have posited that Chief Justice John Roberts could also be susceptible to the federalism argument. But Roberts said very little today to signal agreement (or disagreement) with either side. Ultimately, we’ll have to look to the transcript for a clearer sign of how both Kennedy and Roberts approached the dispute over the isolated phrase, in particular whether they seemed inclined to agree that its plain meaning in isolation is inescapable, or whether they are open to the argument that when it’s put in its larger statutory context, it becomes ambiguous. If they agree with the latter, that could lead them to decide for the government on federalism grounds.


Either way, if the Court does rely on the federalism argument to uphold the ACA subidies, it could be a way for Kennedy or Roberts (or both) to save the ACA while throwing a bone to conservatives, who see such a precedent as potentially helpful in going after more federal programs later. Jonathan Adler, one of the legal architects of the challenge, tells me: “Were the Court to uphold the IRS rule on federalism grounds, it would likely come at the expense of other federal programs that rely upon inducements for state cooperation.”


Conclusion: Today’s arguments went better for the government than they might otherwise had. They suggest Kennedy sees a way to upholding the subsidies. But there’s no telling whether he’ll actually take it. I’d still put the outcome at 50-50.

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