Obamacare Could Easily Unravel After Tuesday’s Election: More Supreme Court Drama Ahead

GOP Judges Eyeing Obama Care

GOP Judges Eyeing Obama Care

The U.S. Supreme Court has given itself the opportunity to gut the Affordable Care Act (ACA), wipe out President Obama’s signature policy achievement, thumb its nose at the I.R.S.,  and align itself with last Tuesday’s electoral outcomes……all at the same time, in just one legal case.   And, oh yes, they also get to diss Harry Reid and the new judges appointed by the President to the D.C. Court of Appeals, after Reid exempted judicial appointments from the Senate 60 vote requirement; again, in the same legal case.  What an opportunity!

In a story drowned out by wall to wall coverage of Tuesday’s election, the U.S. Supreme Court announced its intention to hear an appeal to a 4th Circuit Court of  Appeals decision in King vs. Burwell,  concerning subsidies under the Affordable Health Care Act (ACA).  The 4th Circuit’s decision in Burwell rejected claims which would have gutted the ACA. The High Court’s sudden announcement last Friday to hear the case this term should be viewed as an existential threat to Obamacare.  I would not have characterized it that way before Tuesday’s election.

Finley Peter Dunne’s fictional political character, Mr. Dooley, who famously reminded us that “politics ain’t beanbag,” is also known for saying the Supreme Court  “follows th’ iliction returns.”  (These are not typos, but writer Dunne’s way of conveying Mr. Dooley’s Irish accent). If you want to know what’s now likely to happen to Obamacare in the months ahead, listen to Mr. Dooley.

The plaintiffs in Burwell argued that the “plain language” of the ACA bars low income people from receiving subsidies under health care “exchanges”  (ACA administrative bodies) run by the federal government.  Only exchanges run by the states, the plaintiffs said in Burwell, can subsidize insurance premiums.  The 4th Circuit Court disagreed. There are just fourteen states which run their own ACA exchanges. Citizens in the other states, the vast majority of the newly insured, receive coverage and subsidies (if eligible) through federally managed exchanges.

Language in the ACA, which drafters admit was in error, states that subsides are available to citizens buying insurance from state exchanges. However, the law fails to explicitly empower exchanges run by the federal government (on behalf of states that don’t establish them), to offer subsidies. Burwell is a dream for “literalist” jurists who also oppose the ACA.

Looking at the ACA in its totality, at its clear intent, at legislative history, and how its fiscal impact was “scored” by the independent Congressional Budget Office (CBO), it appears (to many) that the ACA intended for eligible low income people to receive subsidies from either state or federally operated exchanges.   Supporters of the ACA say any other interpretation leads to an absurd outcome.

If ACA subsidies are unavailable to federal exchange enrollees,  it would not only make health insurance unaffordable for many (contradicting the intent and title of the Act), but would cause the entire ACA system to unravel.  Why?  Because without millions of newly insured citizens paying premiums with the help of subsidies, insurance companies say they could not afford to cover the rest of their customers, without jacking up premiums for all.  The subsidies are central to the ACA compromise with the private insurance industry,  That’s the basic economics of the ACA, and basic health insurance economics.

Without the federal subsidies, Obamacare is toast, unless the language in the Act is repaired.  Pollyannas in the wake of Tuesday’s election think repairing the ACA might be possible under various, imagined grand bargain compromise scenarios between the President and the new Republican Congress.  But, most of the newly elected legislators ran on platforms to repeal Obamacare “root and branch.”  They, and their companions already in Congress, have warned that any compromise to strengthen or repair Obamacare, would betray voters,

Enter the post election U.S. Supreme Court.  Before Tuesday’s election, most non partisan constitutional lawyers predicted the High Court would not even want to hear the Burwell case this term (or ever).  There is not yet a conflict in the lower courts on the interpretation of the subsidy language,

The High Court, then, is either itching to declare federal subsidies illegal and gut the ACA; or it wants to act preemptively, clearing the way for a rapid accord between warring factions in Washington to repair Obamacare.  Which one do you think it is?

Two lower courts have ruled on the subsidy issue.  As mentioned earlier, in Burwell,  the 4th Circuit held that federal exchanges have the power to issue subsidies.  They left it to the administrative agency, the IRS in this case,  to resolve any ambiguities in the law. It is common for courts to defer to administrative agencies when statutes contain conflicting or fuzzy language.   The IRS has held all along that federal exchanges can provide subsidies.

The 4th Circuit Court also noted that to interpret the language otherwise would contradict  and undermine the basic purpose of the ACA.  Avoiding absurd outcomes is also a widely accepted rule of judicial interpretation.

Earlier, a three judge panel in the Washington D.C. Court of Appeals ruled 2-1 that federal subsidies are prohibited by the Act, but, the decision was vacated almost immediately by a majority of the full D.C. court (which has nine members).  The case will be heard again by the (full) D.C. Court in an “en banc” proceeding, involving all nine judges.  They are widely expected to uphold the federal exchange subsidies.  Members of the U.S. Supreme Court, of course, know that.  (En banc proceedings are not uncommon, especially in important cases).

As if this script isn’t already a ripe for a new, afternoon (dark comedic) soap opera, the full D.C. court of appeals (sitting en banc), includes several new Obama appointees approved by the U.S. Senate (filling vacancies on that court).   The Obama appointments were made possible  after Senate majority leader Harry Reid  (soon to be in the minority), moved to suspend the filibuster and the 60 vote cloture rule on judicial appointments.  Tea Party-ers in Congress, believe the President illegitimately “stacked” the D.C. Court of Appeals, with Reid’s help, by filling the vacancies.  Thus, to many electoral winners on Tuesday, any en banc proceeding upholding federal subsidies under the ACA is illegitimate, along with the President’s appointments to the DC Court.

Before the Tuesday elections, the U.S. Supreme Court had notably avoided the Burwell case. But now, just a few days after the election, and before the full D.C. Court has issued its final ruling, the High Court accepted Burwell for a hearing this term.  Mr. Dooley would observe that with the President and Obamacare both trounced on Tuesday, the High Court is about to follow the election returns.

A majority 5-4 opinion striking down federal exchange subsidies under the ACA, would say that Congress can repair the problem by simply amending the Act to clarify the role of the federal exchanges. That of course would not be simple at all.

The pitch hurled by the Burwell case is right in Mr. Justice Scalia’s wheelhouse. As one of the leading “literalists” (or “textualists”) in the history of the Supreme Court, Scalia rejects the notion that “plain language,” even if resulting in an “absurd” outcome, must nonetheless prevail.  I would expect Chief Justice Roberts to give Scalia the honor of writing the opinion; and Ms. Bader-Ginsburg to issue a blistering dissent.  Yes, I know this scenario assumes Justice Roberts would decline to save the ACA again; and that the so called “swing voter” on the Court, Justice Kennedy, joins Scalia in the literalist approach,

After that happens, the President and Democratic congressional leaders will talk about urgently drafting a bill to repair the ACA.  Tea Party enforcers will immediately threaten to “primary” (or censure) any Republican with finger prints on such a bill. It will be fascinating to see how much the President is willing to give up as part of a grand bargain to reinstate the federal subsidies, and save his signature policy.


2 thoughts on “Obamacare Could Easily Unravel After Tuesday’s Election: More Supreme Court Drama Ahead

  1. haroldnelsonjr

    I’ve been thinking about this one Irv. I might have used a cow instead of an elephant if I were writing about this. I wonder if the ACA now has sacred cow status. Imagine that you’re part of the republican government in a state which decided not to establish an exchange. Here’s a nightmare scenario for you. The court does its worst and prohibits the subsidies. HHS offers you a contract to administer your exchange for you. All you have to do is pass a bill to establish your exchange officially and let the machinery of the federal exchange continue flying a state flag. Can you really refuse? How many people do you piss off? It was one thing to oppose a program which had yet to deliver a benefit. It’s something very different to take away what people now have.


    1. Irv Lefberg

      I understand your argument and perspective, Harold. It could turn out that way. But ACA would have to undergo still more trauma and bumps in road. Also, many governors are not worried about being pissed off. Several Govs who didn’t accept Medicaid expansion or exchanges did well in the elections.



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