Corporate Accountability

King ruling dims hopes of crippling the ACA through the courts

By Lisa Schencker


The U.S. Supreme Court’s 6-3 decision Thursday upholding premium subsidies for Americans in all states put to rest months of fretting over the immediate future of the Affordable Care Act. While it didn’t necessarily drive a stake through the heart of all anti-Obamacare litigation, legal experts agreed it did send a discouraging message to the law’s legal foes.


Thursday’s decision in King v. Burwell should be a “big hint” to ACA challengers that the Supreme Court is not going to tolerate attempts to use the courts to change the law, said Elizabeth Wydra, chief counsel for the liberal Constitutional Accountability Center, during a call with reporters. She said the strength of the majority opinion upholding subsidies should be a signal to ACA opponents that they need to work through the political process, not the courts. 


Even some opponents of the law who backed the King plaintiffs expressed pessimism about rolling back the ACA through the courts. Hans von Spakovsky, a senior legal fellow at the conservative Heritage Foundation, said King v. Burwell may be the last major legal attack against the ACA. “We’re kind of on the downward spiral,” he said.


Von Spakovsky said he’d still like to see the law repealed because he believes it’s damaging the healthcare system but that big changes likely will have to wait until voters elect a Republican president.


The King case was considered the biggest remaining legal challenge to the law. But it isn’t the end of the line for Obamacare foes seeking to hobble the ACA through the courts.


The high court majority, led by Chief Justice John Roberts, sided with the Obama administration in the landmark decision Thursday. The justices said the law allows Americans in all states—not just those that established their own exchanges—to receive the subsidies. Had the justices ruled against the administration, an estimated 6.4 million Americans in at least 34 states would have lost their subsidies, making coverage unaffordable for many of them. 


The court majority rejected the King plaintiffs’ narrow focus on a small part of the law that states subsidies are available only to those who enroll through “an exchange established by the state.” Instead, the justices looked at the broader context and structure of the law in determining that it authorizes subsidies to Americans in all states. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Roberts wrote in the majority opinion.


The justices declined to use the argument that the law’s wording is ambiguous as their reason for upholding the subsidies. Such reasoning would have left the matter of subsidies open to re-interpretation by future presidential administrations.


ACA supporters say the decision should put questions about the ACA’s immediate future to rest. “It’s here to stay now. The Supreme Court has said so twice,” said Neal Katyal, former acting U.S. solicitor general, who is now a partner at Hogan Lovells.


Still, there are other pending court challenges to the healthcare reform law, and it’s always dicey to predict the outcome of litigation. 


Perhaps most notably, a federal district judge in Washington, D.C. is considering a lawsuit filed by House Republicans arguing that the Obama administration is spending $175 billion that Congress never appropriated for the ACA’s cost-sharing provisions. Those provisions offer lower-income exchange plan members reduced deductibles, co-pays and co-insurance. The cost-sharing subsidies are seen as key to making healthcare accessible to people with incomes under 250% of the federal poverty level.


The Obama administration says the House Republicans lack legal standing to bring the suit. To have standing, they must show they were injured by the administration’s actions, which legal experts say could be difficult because of Supreme Court precedent. But if they can get past the standing issue, their substantive arguments stand a chance of success, experts say. During a hearing on the standing issue last month, Judge Rosemary Collyer, a George W. Bush nominee, appeared highly skeptical of the administration’s arguments against granting the plaintiffs standing and she asked the administration to provide for additional documentation.


Nicholas Bagley, an assistant professor of law at the University of Michigan, called the House lawsuit the “biggest wildcard” when it comes to the ACA’s future in the courts. “The elimination of the cost-sharing subsidies would be a substantial blow to the act,” he said. “But most legal observers, including me, think the House doesn’t have standing to challenge the administration’s decision.”


Other legal observers say a different line of litigation poses a potentially serious threat to the ACA. The plaintiffs in those cases say the ACA is unconstitutional because it is a revenue-raising law that should have originated in the House rather than the Senate. Democrats say the bill did originate in the House as a different measure centering on first-time homebuyers’ credit for military members. 


Appellate courts already have dismissed at least two of those cases. The plaintiffs have asked the appeals courts to rehear those cases before full panels of judges.


There is other ACA-related litigation, but no cases pose as central a threat to the law as King v. Burwell did, Bagley said.


For example, a number of cases filed by religious organizations are working their way through the courts challenging the ACA’s contraception coverage mandate. Those organizations say they shouldn’t be required to notify insurers of their intent not to provide birth control to their employees. The mandate was a workaround designed by the Obama administration to ensure those organizations’ employees got access to contraception without forcing their employers to directly facilitate such coverage. The organizations, however, say requiring them to take any action to help their employees get contraception violates their religious beliefs.


A number of federal appeals courts have upheld the administration’s workaround. And the issue doesn’t threaten the foundations of the law as King v. Burwell did.


Nevertheless, some diehard Obamacare foes predict legal challenges will continue. “I don’t think plans of challenging various aspects of Obamacare end with this (King) decision,” said Josh Blackman, an assistant professor at South Texas College of Law who filed an amicus brief in the case on behalf of the Cato Institute supporting the King plaintiffs.


Blackman said the King v. Burwell decision merely ends the “second act” of Obamacare. The first act, he said, was the 2012 Supreme Court case involving a challenge to the constitutionality of the law’s individual mandate; the court upheld the mandate in a 5-4 decision. The third act, Blackman said, will commence in the next few years, after a new president is in office and controversial provisions of the law such as the so-called Cadillac plan tax—a 40% tax on high-cost employer health plans—go into effect.


Michael Cannon, director of health policy studies for the libertarian Cato Institute and a key architect behind the King v. Burwell legal challenge, said it’s hard to know whether King v. Burwell will be the last major legal challenge to the ACA. He acknowledged that Chief Justice Roberts’ reasoning in the case signals that it may be difficult for ACA challengers to win future cases at the high court. Roberts seemed “willing to create Obamacare exceptions to all sorts of legal rules and principles” in King v. Burwell, he contended.


Ankur Goel, a partner with McDermott Will & Emery who co-authored an amicus brief in support of the administration in the King case, said it will be more difficult for Obamacare foes to win their cases in the wake of the King ruling. “I’m not quite ready to say this is the last,” he said. “But I do think the longer the Affordable Care Act is in place and operating, and the more entrenched it becomes, that affects how successful court challenges (will be).”

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