Obamacare Will Probably Survive Its Second Trip To The Supreme Court


WASHINGTON, DC — Michael Carvin, the attorney arguing against Obamacare in King v. Burwell, is a bear of a man. He gestures grandly as he practically yells his legal arguments towards the justices. At various points during his time at the podium, he interrupts questions by the Court’s three women — Justices Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan. After Wednesday’s argument, however, it appears unlikely that his bluster will convince a majority of the Court to support his position.

Carvin’s core claim is that a provision of the Affordable Care Act which refers to “an Exchange established by the State” forbids tax credits which help people pay for their health care from being paid out in the nearly three dozens states with health exchanges operated by the federal government. Yet he was barely at the podium for ten minutes before Justice Stephen Breyer demolished this argument.

Breyer quotes two provisions of the law, the first defines the word “Exchange” as “an American Health Benefit Exchange established under section 1311” of the law. The second, which appears in section 1311, provides that “[a]n Exchange shall be a governmental agency or nonprofit entity that is established by a State.” Taken together, these two provisions define the word “Exchange” such that any exchange, whether operated by a state or the federal government, is deemed to be “established by the State.”

The most important moment in the argument, however, was probably a concern raised by Justice Anthony Kennedy, one of five Republicans that the Justice Department needs at least one of in order to win its case. If tax credits are cut off in states with federally run exchanges, premiums will spike, and healthy people will likely drop insurance that they can no longer afford. Once that happens, however, the insurance companies will no longer have enough revenue to pay for sick peoples’ costs, so they will have to raise premiums even further. That, in turn, will cause more healthy people to drop care. The result is a “death spiral” where higher premiums beget fewer customers, which beget higher premiums, which beget fewer customers.

This threat of a death spiral raises constitutional concerns, because the Supreme Court’s first Obamacare decision forbids Congress from coercing states into taking certain actions. If states are forced to choose between setting up their own exchange or watching their individual insurance markets collapse, that could amount to unconstitutional coercion.

Justice Kennedy appeared to believe that it did. There’s “something very powerful” to this coercion argument, Kennedy said, adding that Carvin’s interpretation of the law raises a “serious constitutional problem.” Later in the argument, he indicated that the Court may have an obligation, under something known as the “constitutional avoidance doctrine,” to read the law in a way that does not raise constitutional doubts.

Kennedy’s vote is not certain. At one point he did suggest that one of Solicitor General Donald Verrilli’s textual arguments cut against his position. At another he questioned whether the Court should apply the longstanding Chevron doctrine, which requires courts to defer to federal agencies, in a case such as this one. Yet he returned to the concern about coercion several times, and his questions on that point were the only time during the argument where he appeared to have real emotion in his voice. The smart money would bet that Kennedy will uphold the tax credits.

Justices Antonin Scalia and Samuel Alito were the only certain votes to strike down the credits, but their arguments at times painted them as political naifs. Alito, at one point, harped on the fact that only six states that refused to set up their own exchanges joined a brief urging the Court to uphold the tax credits — a fact that can be explained largely by partisan politics. Scalia asked: “won’t Congress fix” the problem if the Court breaks the law?

Verrilli had a sharp response to that later question: “This Congress, your honor?”

The biggest enigma on the Court was Chief Justice John Roberts, who was largely silent and chimed in only to remark on fairly minor issues. Roberts, however, famously crossed party lines to uphold the law in 2012. Though his vote is more uncertain, it would not be the least bit surprising if he did so again, this time with Kennedy providing him cover.

Obamacare is not out of the woods yet, and neither are the millions of people who will lose coverage or the thousands who will die if this case goes badly for the government. After Wednesday’s argument, however, those individuals have good reason to be optimistic. At least one of the Court’s Republicans appears to have come to work wearing his judicial robe, and not his partisan hat.