The reaction to the Supreme Court’s decision on Friday to
take the King v. Burwell case
initially elicited cheers from opponents to the Affordable Care Act (“ACA”),
mostly Republicans, and fear among supporters of the law, mainly Democrats. The
ACA opponents apparently hope that, if they won this case, it would strike a
near fatal blow to the ACA; the ACA supporters fear that the ACA opponents may
be right.
On reflection, it became clear that this rather simplistic
analysis was not correct. For example, Brad
DeLong argued in a post on Friday that political realities if the
petitioners prevailed would cause some Republican governors and legislators to
fix the problem and cause problems for Republican politicians in states that
have not agreed to the Medicaid expansion. The reason is that middle class
people who have been benefitting from federal subsidies for the health
insurance they bought on the federally-run exchange will be mighty upset if
those subsidies were taken away. The backlash against the Republican Party
could be severe.
By way of background, the King v. Burwell is one of two cases for which decisions at the
appellate level were issued this past summer raising the issue of whether
people residing in states which opted not to set up their own exchange and who
purchase health insurance on the federal exchange are eligible for federal
subsidies. In the other case, Halibig v.
Burwell, a three-judge panel of the D.C. Circuit agreed with the plaintiffs
that the ACA limited subsidies to those who bought health insurance on an
exchange run by a state. A little afterwards on the same day as the Halibig decision was announced (July 22,
2014), a Fourth Circuit panel released their decision in King, which reached the opposite conclusion. Subsequently, the
Administration asked the entire D.C. Circuit to rehear the Halibig case. Most often requests for en banc hearings are denied, but this one was accepted, thus
vacating the initial Halibig decision.
In consequence, as it stands, there is currently no split among the circuit
courts. At the time that the D.C. Circuit accepted to rehear Halibig, it was widely expected that the
panel’s decision would be reversed. Since now the same legal issue as in Halibig is now before the Supreme Court
in King, the D.C. Circuit may wait
for a decision in the King case
before issuing one of its own.
These cases are now being litigated because some lawyers on
the right some time ago thought they had found a major flaw in the ACA which
they could use to bring it down. They were able to bring the King case because they found Virginia
residents who objected to being forced to buy subsidized comprehensive health
insurance or pay a penalty. The Fourth Circuit agreed that these individuals
had standing to bring the suit. The
Fourth Circuit decision explains:
“…Virginia has declined to establish a state-run Exchange and
is therefore served by the prominent federally-facilitated Exchange known as HealthCare.gov.
Without the premium tax credits, the plaintiffs would be exempt from the
individual mandate under the unaffordability exemption. With the credits,
however, the reduced costs of the policies available to the plaintiffs subject
them to the minimum coverage penalty. According to the plaintiffs, then, as a
result of the IRS Rule, they will incur some financial cost because they will
be forced either to purchase insurance or pay the individual mandate penalty.”
The plaintiffs’ argue that the plain language of the statute
limits subsidies to people who bought insurance on a state exchange. (As an
aside, no one disputes that “state” in this context includes the District of
Columbia, which has set up an insurance exchange.) Others argue that the specific
language in contention is ambiguous when examined in the context of the statute
as a whole, and, moreover, it is not what Congress intended. According
to Yale law professor Abbe R. Gluck, one does not need to divine Congress’s
intent or examine the legislative history of the ACA to come to the conclusion
that ACA does not permit federal subsidies on insurance bought on the federal
exchange. He argues that interpreting the language of the ACA according to the
interpretive methods of the most prominent advocate of “textualism,” Supreme
Court Justice Antonin Scalia, leads to the conclusion that the plaintiffs’
arguments are wrong.
If the Supreme Court found in favor of the plaintiffs, there
would be severe disruption and confusion in the healthcare insurance market in
the 36 states that use the federal health insurance exchange. Given the number
of people affected, as well as the insurance industry, the healthcare industry,
and employers who do not provide health insurance to all or some of their
employees, it seems likely that many state governments would quickly remedy the
situation if the U.S. Congress did not do so first. The holdout states would be
under immense pressure on the issue, as would Congress.
In
a Q and A article in The New York Times,
Robert Pear writes that “a legal
victory for opponents of the law could be a political gift to Democrats.
Republicans would have to explain why they wanted to deprive people of health
insurance, and Democrats would have a powerful issue to mobilize support for
the law and for their party.” I think this is correct. It does not appear that
Republicans who are excited about this case have thought through the political
implications if their side should win in the Supreme Court. My guess is that
they will luck out and lose the case, but you never know.
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