The Supreme Court’s 6–3 decision in King v. Burwell is not simply a victory for the Obama administration — and for the millions of Americans who depend upon the Affordable Care Act for their health coverage. It is a sweeping, crushing blow for conservatives who seek to use the courts to undo what President Obama and a Democratic Congress accomplished. “In a democracy,” Chief Justice John Roberts implicitly scolds the activists behind this litigation, “the power to make the law rests with those chosen by the people.” He then offers a broad statement to future judges called upon to interpret the Affordable Care Act: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
The message here is clear: In this and in future litigation, judges should turn aside clever attempts to undermine the law if there is any possible way to read the law otherwise. The attorneys and activists behind this lawsuit came to the Court hoping to gut Obamacare; instead, they placed it on the strongest possible legal footing.
Two other aspects of the decision drive home the breadth of the Obama administration’s victory. The decision concludes that parts of the law are ambiguous, at least when read without attention to the law’s overall purpose. Ordinarily, when a law is ambiguous, the Court defers to federal agency interpretations of the law. Thus, while the Obama administration (specifically, the IRS) interpreted the law to extend tax credits that help millions of people pay for health insurance to residents of all 50 states, under the ordinary rule, a future administration could interpret the law differently to cut off those credits in many states.
Roberts’ opinion forecloses this possibility. Whether tax credits are available in all 50 states is “a question of deep ‘economic and political significance’ that is central to” the law’s “statutory scheme.” Thus, “had Congress wished to assign that question to an agency, it surely would have done so expressly,” and “[i]t is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort.”
The upshot of this holding is that a future president will not be able to turn off tax credits. Agencies do not have discretion over this aspect of Obamacare.
The method Roberts and his five colleagues use to interpret the law is also significant. For the plaintiffs, this case turned exclusively on the meaning of a few words, “an Exchange established by the State under [42 U. S. C. §18031],” which, when read out of context, seem to suggest that tax credits are only available in a handful of states. Though Roberts engages in significant textual analysis to determine that these words are textually ambiguous when read in context with the entire law, he follows that analysis with a more searching examination of the law’s purpose.
As discussed above, Congress based the Affordable Care Act on three major reforms: first, the guaranteed issue and community rating requirements; second, a requirement that individuals maintain health insurance coverage or make a payment to the IRS; and third, the tax credits for individuals with household incomes between 100 percent and 400 percent of the federal poverty line. In a State that establishes its own Exchange, these three reforms work together to expand insurance coverage. The guaranteed issue and community rating requirements ensure that anyone can buy insurance; the coverage requirement creates an incentive for people to do so before they get sick; and the tax credits — it is hoped — make insurance more affordable. Together, those reforms “minimize . . . adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.”
If the plaintiffs’ reading of the law were correct, Roberts explains, “only one of the Act’s three major reforms would apply in States with a Federal Exchange.” Worse, if the Court were to adopt the plaintiffs’ reading, a law intended to expand access to health care would actually destabilize the health insurance markets in many states. “The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral,” Roberts explains. “One study predicts that premiums would increase by 47 percent and enrollment would decrease by 70 percent. Another study predicts that premiums would increase by 35 percent and enrollment would decrease by 69 percent. . . . It is implausible that Congress meant the Act to operate in this manner.”
As King makes clear, statutory interpretation is not a rote process of looking up the meaning of words in a dictionary and rigidly determining what they mean when laid out in sequence. To the contrary, “[a] fair reading of legislation demands a fair understanding of the legislative plan.” In the context of Obamacare, that means that the law must not be read simplistically in a way that undermines its certain purpose of improving insurance markets. More broadly, however, King is a warning to lawyers who seek to tear down laws they disapprove of through clever games.
It is also the most perfect victory that the Obama administration could have achieved in this case. King not only preserves Obamacare today — it also sharply limits the scope of future cases seeking to undermine the law.