Breaking: SCOTUS upholds ObamaCare subsidies in King, 6-3

The King v Burwell argument was a bit of a longshot, but still a last stand based on the principle of textual respect for statute. It was also a timebomb for ObamaCare, one that would have blown up in the faces of both Democrats and Republicans, but would have delighted opponents of the poorly constructed Affordable Care Act. The Supreme Court rendered all of that moot today by ruling in favor of HHS, allowing subsidies to flow through the federal as well as state exchanges:

The Supreme Court has upheld the nationwide tax subsidies under President Barack Obama’s health care overhaul, in a ruling that preserves health insurance for millions of Americans.

The justices said in a 6-3 ruling Thursday that the subsidies that 8.7 million people currently receive to make insurance affordable do not depend on where they live, under the 2010 health care law.

In this case, Justice John Roberts once again voted in support of ObamaCare, a move that will further darken his reputation among conservatives. Even without Roberts, the case would have gone to HHS, as Anthony Kennedy also voted along with the majority. Roberts’ majority opinion acknowledges that the ACA “contains more than a few examples of inartful drafting,” but that the overall intent of Congress in passing the bill is clear on this point:

Here, the statutory scheme compels the Court to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very “death spirals” that Congress designed the Act to avoid. Under petitioners’ reading, the Act would not work in a State with a Federal Exchange. As they see it, one of the Act’s three major reforms—the tax credits—would not apply. And a second major reform—the coverage requirement—would not apply in a meaningful way, because so many individuals would be exempt from the requirement without the tax credits. If petitioners are right, therefore, only one of the Act’s three major reforms would apply in States with a Federal Exchange.

The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits. It thus stands to reason that Congress meant for those provisions to apply in every State as well. Pp. 15–19.

Justice Antonin Scalia rejects the “outlandishness” of Roberts’ reasoning:

The Court has not come close to presenting the compelling contextual case necessary to justify departing from the ordinary meaning of the terms of the law. Quite the contrary, context only underscores the outlandishness of the Court’s interpretation. Reading the Act as a whole leaves no doubt about the matter: “Exchange established by the State” means what it looks like it means. …

Statutory design and purpose matter only to the extent they help clarify an otherwise ambiguous provision. Could anyone maintain with a straight face that §36B is unclear? To mention just the highlights, the Court’s interpretation clashes with a statutory definition, renders words inoperative in at least seven separate provisions of the Act, overlooks the contrast between provisions that say “Exchange” and those that say “Exchange established by the State,” gives the same phrase one meaning for purposes of tax credits but an entirely different meaning for other purposes, and (let us not forget) contradicts the ordinary meaning of the words Congress used. On the other side of the ledger, the Court has come up with nothing more than a general provision that turns out to be controlled by a specific one, a handful of clauses that are consistent with either understanding of establishment by the State, and a resemblance between the tax-credit provision and the rest of the Tax Code. If that is all it takes to make something ambiguous, everything is ambiguous. …

The Court protests that without the tax credits, the number of people covered by the individual mandate shrinks, and without a broadly applicable individual mandate the guaranteed-issue and community-rating requirements “would destabilize the individual insurance market.” Ante, at 15. If true, these projections would show only that the statutory scheme contains a flaw; they would not show that the statute means the opposite of what it says. Moreover, it is a flaw that appeared as well in other parts of the Act. A different title established a long-term-care insurance program with guaranteed-issue and community-rating requirements, but without an individual mandate or subsidies. §§8001–8002, 124 Stat. 828–847 (2010). This program never came into effect “only because Congress, in response to actuarial analyses predicting that the [program] would be fiscally unsustainable, repealed the provision in 2013.” Halbig, 758 F. 3d, at 410. How could the Court say that Congress would never dream of combining guaranteed-issue and community rating requirements with a narrow individual mandate, when it combined those requirements with no individual mandate in the context of long-term-care insurance?

Scalia also responds to the court’s reasoning on “inartful drafting”:

Perhaps sensing the dismal failure of its efforts to show that “established by the State” means “established by the State or the Federal Government,” the Court tries to palm off the pertinent statutory phrase as “inartful drafting.” Ante, at 14. This Court, however, has no free-floating power “to rescue Congress from its drafting errors.” Lamie v. United States Trustee, 540 U. S. 526, 542 (2004) (internal quotation marks omitted). Only when it is patently obvious to a reasonable reader that a drafting mistake has occurred may a court correct the mistake. The occurrence of a misprint may be apparent from the face of the law, as it is where the Affordable Care Act “creates three separate Section 1563s.” Ante, at 14. But the Court does not pretend that there is any such indication of a drafting error on the face of §36B. The occurrence of a misprint may also be apparent because a provision decrees an absurd result—a consequence “so monstrous, that all mankind would, without hesitation, unite in rejecting the application.” Sturges, 4 Wheat., at 203. But §36B does not come remotely close to satisfying that demanding standard. It is entirely plausible that tax credits were restricted to state Exchanges deliberately—for example, in order to encourage States to establish their own Exchanges. We therefore have no authority to dismiss the terms of the law as a drafting fumble.

Let us not forget that the term “Exchange established by the State” appears twice in §36B and five more times in other parts of the Act that mention tax credits. What are the odds, do you think, that the same slip of the pen occurred in seven separate places? No provision of the Act— none at all—contradicts the limitation of tax credits to state Exchanges.

Finally, Scalia finishes with this zinger, noting that the Court keeps rewriting the text of the law to rescue Congress from bad policy rather than focus on the law it passed:

Having transformed two major parts of the law, the Court today has turned its attention to a third. The Act that Congress passed makes tax credits available only on an “Exchange established by the State.” This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare.

Roberts’ conclusion appears intended to rebut this argument:

In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined—“to say what the law is.” Marbury v. Madison, 1 Cranch 137, 177 (1803). That is easier in some cases than in others. But in every case we must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan.

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. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.

In the glass-half-full take, this does let Republicans in Congress off the hook for fixing the subsidies temporarily in order to stave off the necessity of dealing with ACA while Obama’s in the White House. It makes undoing ObamaCare a little more difficult in the long run, but in the short term it doesn’t require Republicans to cast votes shoring it up. The premium spirals and deductible issues will come to the fore instead, and that only benefits the GOP. They can argue for full repeal followed by a market-based reform that will actually lower prices by encouraging providers to enter the markets and the use of insurance for hospitalizations and catastrophic events.

For now, though, the King decision will be a bitter pill to swallow. It’s yet another reason why Republican Presidents need to be careful with their Supreme Court appointments. While these decisions rankle conservatives just as much as they rankle Scalia, it’s also a reminder that presidential elections matter for this very reason — because otherwise, the next openings will get filled with the Kagans and Sotomayors rather than the Scalias and the Thomases.