Corporate Accountability

Five myths about King v. Burwell

Elizabeth B. Wydra is chief counsel at Constitutional Accountability Center. CAC filed an amicus brief with the Supreme Court on behalf of current and former members of Congress and state legislatures supporting the nationwide availability of tax credits under the Affordable Care Act.


Once again, the future of the Affordable Care Act is in the Supreme Court’s hands. In King v. Burwell , which will be argued before the court Wednesday, opponents of Obamacare are claiming that under the law, subsidies for health insurance should be available only to people buying coverage on exchanges “established by the state,” i.e. state-run marketplaces. But 34 states don’t have their own exchanges, so their residents rely on the federally run marketplace. If the court rules in favor of King, the tax credits would end in those states. Let’s separate fact from fiction about this legal battle stemming from a mere four words.


1. Congress made a mistake when it wrote the Affordable Care Act.


Advocates on both sides have referred to the language at issue as a “glitch” or a “drafting error” by Congress. After the ACA passed in 2010, opponents of the law seized on this so-called error when they started to look for a way to invalidate Obamacare. Meanwhile, some supporters of the law decried taking away health insurance from millions of Americans based on a “typo.” But now neither side is treating the part of the law before the Supreme Court as a mistake; instead they are battling it out over what those words mean and why they are in the law.


The act’s challengers argue that Congress included those words as a way to push states to establish their own exchanges by threatening to withhold tax credits from their citizens — and that this “threat” was necessary to secure the crucial vote of then-Sen. Ben Nelson (D-Neb.). But Nelson has gone on record saying that is absolutely false.


The Obama administration has explained that the act makes tax credits available to all Americans who need them to afford health insurance. It says the law’s reference to exchanges “established by the state” is simply a term of art to make clear that exchanges — even those run by the federal government in states that didn’t set up their own — are to be administered at the state level, not as a single national marketplace. The authors of the law, as well as the state legislators who implemented it, say they never understood that the subsidies would be applied only to state-based exchanges.


2. A ruling against the tax credits would suggest that the Affordable Care Act is unconstitutional.


The last time the ACA was before the justices, they confronted a rigorous question of constitutional law. This time they’re addressing a narrow question of statutory interpretation, not the constitutionality of the entire act. However, as the health-care law’s defenders describe in briefs filed with the court, a ruling against the tax credits would devastate the law so completely that it would have an effect similar to a ruling striking down the law.


This is because there is no easy fix for a court ruling gutting the ACA. Even though Congress could address any problems created by a ruling against Obamacare, that’s unlikely to happen. Conservatives, including congressional Republicans, are so hostile to the law that fixing it would be nearly impossible. There is a reason the law’s opponents are treating this case as repeal by another name.


3. This battle pits states against the federal government.


Despite challengers’ claims that they are defending states’ rights, their interpretation of the law is less state-friendly than the law itself. They argue that Congress’s intention was to force states to either establish exchanges or deprive their citizens of tens of billions of dollars. But the authors of the law have explained that they never made such a threat — they certainly wouldn’t have hidden it in such an obscure provision — and none of the states viewed the law as issuing such an ultimatum.


This is what everyone involved with the ACA, whether in Congress or in the states, whether for or against the law, understood, which is why you see briefs from more than 100 state legislators and 22 states and the District of Columbia supporting the nationwide availability of tax credits. Indeed, the theory that Congress intentionally put those four words in the statute to force the states to set up insurance exchanges wasn’t even thought up by opponents of the ACA until months after the law passed. What the law actually does is give states the choice of setting up their own insurance marketplaces or letting the federal government run the state-level exchanges for them.


4. The health-care industry wants the ACA challengers to win.


Some think that business interests want the law to fall. But everyone involved in the health-care system — hospitals, insurers, doctors, nurses and others — strongly supports the widespread availability of tax credits. The credits are good for business and the economy. A brief filed by small businesses in support of the ACA explains how the availability of affordable health insurance, via the exchanges, encourages entrepreneurship and economic opportunity.


On the other hand, if the Supreme Court sided with the ACA challengers, it could substantially disrupt the health-care industry, creating what experts have called a “death spiral” in the market. A brief filed by a trade association representing the health insurance industry warns that limiting tax credits to individuals who live in states that set up their own exchanges — which would exclude residents of 34 states — would cripple the insurance market.


5. The case pits the conservative justices against the more liberal justices.


Conservative lawyer John Yoo has described this newest challenge to the ACA as a way for Chief Justice John G. Roberts Jr. to “atone for his judicial sin” of upholding the health-care law three years ago. And Michael Carvin, the lawyer for the ACA’s challengers, has suggested that he thinks he has the votes of the five conservative justices. But the chief justice certainly doesn’t view his role as doing the Republican Party’s bidding, and he has emphasized that he doesn’t want the court to be engaging in partisan politics.


The last time the court considered the health-care law, it wrestled with fundamental questions about the role and power of the federal government under the Constitution, and ended up sharply divided. But this case can and should be decided based on long-accepted principles of statutory interpretation. If Justice Antonin Scalia follows his own maxim that “the words of a statute must be read in their context and with a view to their place in the overall statutory scheme,” he should rule to uphold the tax credits. Same with the other justices. Legal scholars from across the ideological spectrum — including the former solicitor general under President Ronald Reagan — have weighed in to support tax credits being available to all Americans.


Independent judges applying straightforward legal principles should easily conclude that the Affordable Care Act provides financial assistance to all Americans who need it, regardless of who administers the insurance marketplace in their state.