On Wednesday, a lawsuit seeking to defund much of the Affordable Care Act appeared to hit a roadblock when Justice Anthony Kennedy expressed concerns that the plaintiffs’ reading of the law is unconstitutional. Though Michael Carvin, the lead lawyer challenging the law, attempted to extract himself from this roadblock, he quickly ran into an entirely different obstacle — his own past writings.
Carvin claims, in a case called King v. Burwell, that Obamacare should be read to deny tax credits that enable millions of Americans to afford health insurance in states that elected not to set up their own health exchange (under the Affordable Care Act, states have “flexibility” to decide whether to set up their own exchange or to allow the federal government to do so). During oral arguments on Wednesday, however, several justices raised concerns about the catastrophic damage Carvin’s reading of the law could inflict on those states’ insurance markets.
If the tax credits disappear, millions of people’s out-of-pocket costs for their insurance will more than triple, leaving many healthy individuals unable to afford to remain insured. Yet, as healthy consumers drop out of the health insurance markets, the insurers will lose revenues they need to cover the costs of their sick consumers, forcing them to raise premiums even more. The result is a “death spiral,” where higher premiums beget fewer customers, which beget higher premiums.
During oral arguments, Justice Kennedy said that this risk of a death spiral raised a “serious constitutional problem” for Carvin. Under the Supreme Court’s first Obamacare decision, Congress may not coerce states into acting against their will, and Kennedy was concerned forcing states to choose between setting up an exchange or having their individual insurance markets collapse amounted to unconstitutional coercion. Given two different ways of reading a law, Kennedy indicated that he may be obligated to choose the one that doesn’t raise this constitutional concern.
Carvin tried to downplay the risk that consumers would simply stop buying plans in the law’s health exchanges if the tax credits were cut off, claiming that these consumers would still be attracted to exchange plans by the fact that the exchanges offer “one-stop shopping” for people looking to buy insurance. He also claimed that Congress wasn’t worried about the risk of death spirals if the tax credits get cut off. According to Carvin, “there’s not a scintilla of legislative history suggesting that without subsidies, there will be a death spiral.”
But Carvin himself sang a very different tune three years ago. Indeed, Wednesday was not the first time he’s stood in the well of the Supreme Courtroom and asked the justices to gut the Affordable Care Act. Carvin was also one of the lead attorneys in NFIB v. Sebelius, the first Supreme Court case attacking the law.
In a brief filed in NFIB, Carvin explained that “[w]ithout the subsidies driving demand within the exchanges, insurance companies would have absolutely no reason to offer their products through exchanges, where they are subject to far greater restrictions.” And, contrary to his more recent suggestion that Congress never envisioned any danger if the tax credits are cut off, Carvin wrote in 2012 that “the insurance exchanges cannot operate as intended by Congress absent those provisions.”
In a subsequent brief, Carvin elaborated that “the federal subsidies are the incentive to participate in the exchanges, and without those subsidies, there will be no mechanism to sustain the exchanges.” He also seemed to contradict his central claim that different states are treated differently depending on whether their exchange is operated by a state or the federal government. The Affordable Care Act, according to the Michael Carvin of 2012, “enables uniform and acceptable federal premium subsidies” (emphasis added).
Carvin’s inconsistencies did not go unnoticed by the justices. After Carvin denied the importance of the tax credits, Justice Sonia Sotomayor pointed out that he said otherwise “in the prior case.” Chief Justice John Roberts, in an exchange that was more comic than pointed, asked Carvin whether he’d won that previous case. After the audience’s laughter died down — much of the room knew that Carvin did not — Roberts quipped “[s]o maybe it makes sense that you have a different story today?”
Roberts was probably willing to excuse Carvin’s inconsistencies because Carvin is an advocate, and in that role he makes arguments that serve his client’s interest even if those arguments may contradict the views of a previous client. But Carvin is far from alone in his willingness to change his story in order to advance whatever may be the current legal argument against Obamacare.
After Carvin argued in 2012 that the tax credits are essential to making the Affordable Care Act work, four of the Court’s conservative members believed him. A dissenting opinion signed by Justices Antonin Scalia, Kennedy, Clarence Thomas and Samuel Alito embraced Carvin’s 2012 argument:
In the absence of federal subsidies to purchasers, insurance companies will have little incentive to sell insurance on the exchanges. Under the ACA’s scheme, few, if any, individuals would want to buy individual insurance policies outside of an exchange, because federal subsidies would be unavailable outside of an exchange. Difficulty in attracting individuals outside of the exchange would in turn motivate insurers to enter exchanges, despite the exchanges’ onerous regulations. That system of incentives collapses if the federal subsidies are invalidated. Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges, and some insurers may be unwilling to offer insurance inside of exchanges. With fewer buyers and even fewer sellers, the exchanges would not operate as Congress intended and may not operate at all.
Justice Kennedy, to his credit, appears to be willing to accept the implications of the opinion he signed in 2012 for this latest challenge to Obamacare, even though those implications could lead him to uphold the tax credits in King. Kennedy understood that tax credits were essential to the Affordable Care Act’s framework in 2012 and he appears to understand that removing them would trigger a death spiral in 2015.
Justices Scalia and Alito, by contrast, spent much of the oral argument on Wednesday trying to rip apart Solicitor General Donald Verrilli’s arguments in defense of the tax credits. Like Carvin, they said one thing in 2012 when it was useful to opponents of the Affordable Care Act, but they are now willing to claim that the Affordable Care Act should be read to ensure that many of its exchanges will “not operate as Congress intended and may not operate at all.”
Carvin, as Roberts alluded to, is an advocate who is paid to advance the views of his client. Scalia and Alito do not have the same excuse.