Corporate Accountability

Obamacare case: All eyes on 2 justices

The keys to the case are expected to be John Roberts and Anthony Kennedy.




The future of Obamacare again falls on the shoulders of John Roberts and Anthony Kennedy.


As the Obama administration and Obamacare opponents prepare for another Supreme Court showdown Wednesday, both sides are tailoring their arguments to win over the chief justice, who cast the saving vote for the Affordable Care Act in 2012, and Kennedy, the perennial swing vote on the Supreme Court.


The court is likely to split largely along ideological lines with Kennedy or Roberts casting crucial votes. Some Obamacare backers are even making a pitch to Justice Antonin Scalia to look at a broad reading of the law, although winning him over seems like a long shot.


The challengers — four Virginia residents who don’t want to abide by the mandate that Americans buy health insurance — argue that the Obama administration is illegally giving out Obamacare subsidies. They say a phrase in the text of the massive law — that subsidies go to “exchanges established by the state” — only allows the money to go to residents of the 16 states, plus Washington, D.C., that set up their own insurance exchanges. If the plaintiffs prevail, more than 7 million people now receiving the subsidies in 34 states would lose them.


The opponents’ lawyer, Michael A. Carvin of the law firm Jones Day, will argue that Congress all along intended to direct the subsidies through the state-run exchange as an incentive for the states to take on that task instead of leaving it to the federal government. The plaintiffs point to early versions of health reform legislation, one considered in the Senate Health, Education, Labor and Pensions Committee, that tied together subsidies and a state’s insurance reforms.


The first goal of Solicitor General Don Verrilli is to take apart the challengers’ narrative. Several Democratic members of Congress who wrote the law told the court that there was never a plan to use the subsidies as an incentive to states. Of all the congressional debate over Obamacare in 2009 and 2010, no one considered that Democrats were setting up a scheme in which blue states would get a benefit that most red states wouldn’t accept, the government will say.


“If there was any ambiguity that not everyone [would be eligible for subsidies] there would have been a war among the Democratic Caucus that you all could not have helped but noticed,” said John McDonough, who was a senior health staffer on the HELP Committee at the time.


The Obama administration hopes to set up a scenario in which the justices agree it’s clear that Congress intended for subsidies to go to everyone. That would make it much harder for them to rule that the subsidies must end merely based on the one clause. It’s an argument that could resonate with Roberts and Kennedy.


However, the law’s critics are hoping that the two justices do precisely the opposite: that they find the phrase about the state exchanges so clear-cut that they don’t embark on a quest to sort out what Congress intended.


Both the chief justice and Justice Kennedy have shown textualist sympathies, have shown that they care about the parsing of statutes.

“Both the chief justice and Justice Kennedy have shown textualist sympathies, have shown that they care about the parsing of statutes,” said Case Western University law professor Jonathan Adler, who was one of the first to argue that the subsidies were not authorized.


Even if the text of the law is not perfectly crystal clear, the Obama administration plans to argue, the federal agencies should receive deference to sort out details and ambiguities. That’s a concept that Neal Katyal, a former acting solicitor general who defended the 2012 health care challenge for the Obama administration, says is favored by the court’s conservative justices. In this case, the IRS is the agency that has been responsible for the subsidies, which come in the form of tax credits.


“I think it will be particularly hard for the conservatives on the court to adopt the challengers’ position on this issue,” said Katyal, who is representing hospitals in this case.


However, opponents of the law say it would be a mistake to let an agency decide to offer tax credits, which affect tax refunds and equate to direct payments out of the U.S. Treasury.


“Decisions of a certain magnitude are not the sort of thing that Congress would delegate to an agency,” Adler said. “It would really be quite something to conclude that Congress had delegated the decision whether to offer tax credits to the IRS.”


One argument the White House and its allies are directing at Roberts: Ruling for the challengers would cause chaos in the insurance system — an idea some lawyers believe will worry the chief justice.


Several economic groups, health industries and think tanks that support the Affordable Care Act have released reports outlining the damage that would be done if the court rules against the White House. The Urban Institute says stopping the subsidies would increase the number of uninsured by 8.2 million and eliminate $28.8 billion in tax credits in 2016. They further outline ripple effects that would create chaos in insurance markets.


Republican supporters of King are trying to address the chaos theory, too — and signal to the justices that they’ll prevent it. Three prominent Republican senators, including Finance Committee Chairman Orrin Hatch, wrote in a Washington Post op-ed this weekend that they are working on plans to allow the subsidies to continue on a transitional basis while the GOP-led Congress works out an Obamacare alternative. They haven’t spelled out details, and it’s not clear how much support they have even among fellow Republicans.


Some legal experts sympathetic to the challengers are similarly trying to downplay the significance of the case or its political fallout.


“The prior Obamacare case was momentous,” said Georgetown University law professor Nicholas Rosenkranz. “A Justice Kennedy or a Justice Roberts will bend over backwards to avoid concluding that Congress violated the Constitution. … This case is just about what the words of the statute mean. … There’s nothing at all daunting about this.”


The Obama administration, in its formal brief, focuses on three specific rulings in which Roberts appears to have played a role. The most obvious, cited at least three times, was the chief justice’s decisive vote to uphold the health law in the 2012 case challenging the constitutionality of the individual mandate.


Government lawyers also rely on a 6-3 decision Roberts wrote last year, rejecting use of a federal chemical weapons law to prosecute a Pennsylvania woman who used toxic chemicals to attempt to poison her husband’s mistress.


In that case, the chief justice effectively added some more language to the statute to avoid what appeared to be an unintended result — the same kind of reading Obamacare defenders want the justices to adopt in the King case.


“The notion that some things ‘go without saying’ applies to legislation just as it does to everyday life,” Roberts wrote in the mistress-poisoning case.


Obamacare supporters say the chief justice doesn’t have to resort to the same degree of statutory surgery to side with the White House in this case.


Backers of the health care law have other things to worry about, though. They are nervous that Roberts might fall into a pattern of punting tough decisions to Congress even when it’s virtually certain that perpetually gridlocked lawmakers won’t act.


In a landmark ruling on the Voting Rights Act two years ago, Roberts struck down a key formula that subjected parts or all of 15 states to advance clearance of voting-related changes by the Justice Department or a federal court. The chief justice argued that if Congress didn’t like the decision, it could devise a new formula more suited to the times.


“He seemed to suggest it would be no big deal for Congress to come up with a new coverage formula to determine which states needed extra voting supervision,” said University of California at Irvine law professor Rick Hasen. “He knew full well that Congress was not going to do that.”


Roberts acted similarly in a decision last year striking down aggregate campaign contribution limits, repeatedly suggesting that Congress could fix any problems the court’s decision might create.


Hasen said it’s implausible that Roberts is unaware that Congress is struggling simply to fund government agencies, let alone hammer out politically polarizing legislation.


“Either the chief justice is quite naive about how politics in Washington works, or he’s very smart and he likes to act like he’s naive,” Hasen said, adding, “I tend to believe he’s really smart.”


The government is also trying to appeal to Kennedy — and to a lesser extent Roberts — via their interest in protecting the states from being pushed around by the federal government.


If Congress had aimed to put some muscle on states considering refusing to set up exchanges, then lawmakers were rather duplicitous, the Obama administration argues. It urges the justices to reject a reading of the law where such a consequential “threat” was obscurely tucked away in a giant piece of legislation.


Twenty-two states, most led by Democrats, wrote a friend-of-the-court brief, saying that they never interpreted the law to say that setting up an exchange was a precondition for subsidies. 


“The justices focused on federalism, Anthony Kennedy for example, will find very persuasive the argument from the states that … the states never got that message,” said Elizabeth Wydra, chief counsel of the Constitutional Accountability Center.


Obama administration lawyers hang part of this argument on a case that might particularly appeal to Roberts. In their brief, they point to a 1981 ruling, which said that Congress had to provide “clear notice” to states on obligations for accepting federal funds. The opinion was written by then-Justice William Rehnquist, and Roberts was one of his clerks at the time.


Advocates for the law acknowledge that Kennedy came down hard against Obamacare in the 2012 case about the individual mandate. But the King case asks different questions.


“We know how he felt [in 2012.] The question is whether Justice Kennedy will be able to look at this case as separate from that case? He really should,” said Yale law professor Abbe Gluck, who has written extensively about the legal case for the subsidies.


And Roberts and Kennedy might not be the only justices in play for the government.


Justice Antonin Scalia, a famous proponent of the textualist movement, is known for his disdain for considering the history of legislative machinations on Capitol Hill. Yet he often rejects as caricature the notion that it means reading every word in a statute for its literal meaning.


The government’s brief points to Scalia’s words in a decision on greenhouse gas emissions last year, where he cautioned against interpreting a law in a way that would be “inconsistent with [or] in fact, would overthrow — the Act’s structure and design.”


Katyal says that many members of the court may feel the court needs to look at the big picture and not just four words.


“All the members of the court have come to adopt this ‘whole text’ interpretation of statutes and it’s really hard once you adapt that philosophy to really see a way that the challengers” win, he said. “The conservatives on the court, particularly [former] Chief Justice Rehnquist have really cautioned the court against reading legislation in this way.”

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