The challengers’ argument may also offend the principle that Congress may not coerce the states. In 2012, the Supreme Court struck down the ACA’s mandatory Medicaid expansion. The court determined that Congress had threatened states with losing all Medicaid funding if they refused to expand the program, and that this threat unconstitutionally pointed a “gun to the head” of the states.
The challengers’ reading of the law may leave the states in a similarly coercive environment. States would face both a massive loss of federal subsidies and the imminent destruction of their insurance markets if they defy the will of Congress. They would have little meaningful freedom to choose given the magnitude of these threats.
So the challengers’ version of the ACA raises stark constitutional problems — and this is a major strike against the validity of their argument. Under the principle of constitutional avoidance, courts are cautioned to disfavor interpretations of laws that raise constitutional problems. As Chief Justice John Roberts told us in 2012, “Every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.”
This means that the court should read the ACA as the Obama administration does: to treat all states equally without hinging insurance subsidies on the establishment of health exchanges. This avoids any problems of coercion or disparate treatment. And it would preserve insurance subsidies for millions of Americans, regardless of what state they live in.
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