Obamacare Court Decision is Serious

On Tuesday, the United States Court of Appeals for the District of Columbia struck down the subsidy provisions of the Affordable Care Act for states that have not implemented their own exchanges. The court found that the plain wording of the statute made clear that Congress authorized subsidies only in exchanges established by a state, and that the federal government is not a state. Thus, subsidies are not authorized in exchanges established by the federal government.

You can find a fuller description of the arguments in the case in this article that I wrote last year. Rather than recap that, I would just like to look briefly at the general reaction to the decision among pundits.  Ezra Klein typifies this:

“The Supreme Court simply isn't going to rip insurance from tens of millions of people in order to teach Congress a lesson about grammar. . . . For Halbig to unwind Obamacare, the Supreme Court would ultimately have to rule in the plaintiff's favor. And they're not going to do that. By the time SCOTUS even could rule on Halbig the law will have been in place for years.”

This sort of reaction is a mistake, at least insofar as a pundit is trying to figure out what the Supreme Court might actually do, if and when the case makes its way to 1 First St.  In the eyes of the conservative justices who comprise a majority of the court, the arguments made by plaintiffs will be taken very seriously.

First, whatever you may think of the merits of the case, this isn’t about “grammar,” nor is it about a typo -- even the judges who have found for the government haven’t done so on the basis of a scrivener’s error. The law is poorly worded, and the issue is to what degree the courts will stick to that poor wording.

Second, if this sounds a lot like the initial reactions to some of the theories surrounding the constitutional challenges to the ACA from 2012, it should, and that should worry supporters of the subsidies. Commentators were certain that the court wouldn’t buy into the distinction between “commerce” and “absence of commerce,” and were positive that the justices wouldn’t rule for plaintiffs on the spending power limitations to the Medicaid expansion. On this, they were incorrect.  The judges here are even breaking down along partisan lines again (Roger Gregory is technically a Bush appointee, but he was first nominated by Bill Clinton, then renominated by George W. Bush as an olive branch to Democrats who were beginning to threaten to derail Bush’s first round of circuit court nominees), much as they were in the ACA challenge.

Third, even the Fourth Circuit, when ruling against the plaintiffs, was not dismissive of their arguments. Consider: “[T]he Court is of the opinion that the defendants have the stronger position, although only slightly.” “Having considered the parties’ competing arguments on both of the above-referenced sections, we remain unpersuaded by either side.” “Both parties offer reasonable arguments and counterarguments that make discerning Congress’s intent difficult.” Obviously, the judges ultimately found the government’s arguments stronger. But they were hardly dismissive of the plaintiff’s arguments.

But most importantly, I think commentators are hanging far too much on the fact that the Supreme Court wouldn’t strike down the subsidies because of its ruling in the 2012 case.  Let’s remember first that the court, before Chief Justice Roberts changed his vote, was apparently poised to strike down the ACA in its entirety -- something that even observers on the right doubted it would do.  Justice Kennedy, whom many expected to be the swing vote, was on board for full repeal to the end.

What about the chief justice? Klein again typifies the rapidly evolving conventional wisdom here:

“All evidence suggests he didn't want to rule the mandate constitutional. But he thought it would harm the Court to do otherwise. Deciding for the plaintiffs in Halbig would do far more damage to the law than striking down the mandate and it would do so when the law is actually providing insurance to people. It's not going to happen.”

This may well prove correct -- indeed, if the law is upheld, I think this is why it will be upheld.  After all, as a purely theoretical matter, the theory behind the Halbig case is much less novel than the ones that animated the constitutional challenge to Obamacare.  Were it any other law and I were advising a client, I would proceed with a pretty high degree of confidence that my client would be victorious using plaintiff’s arguments, especially before conservative judges.  It might seem a bit odd, but as a general matter, while conservative jurists are likely to look to the intent of the framers for constitutional questions, for statutes the basic process is to look at the plain language of the statute first, either ignoring Congress’ intent entirely, or turning to it only in the case of an ambiguity in the statute.  In this case, the law passed by Congress says that subsidies are available in exchanges established by a state. For a conservative justice, the temptation will be for the analysis to begin and to end there.

Analysts don’t have to like this mode of interpretation, and there are all manner of problems with it.  But when analyzing the likelihood that the court will side with plaintiffs, you have to understand that this is how those justices will approach the question.  To draw an analogy, in 2012, far too many analysts dismissed the challenges to limits on the sweep of the Commerce Clause, precisely because these analysts failed to appreciate that conservative jurists really do take the idea of limits on the Commerce Clause quite seriously.

And yet, Roberts did apparently balk at the idea of striking down the Affordable Care Act in the end.  Why wouldn’t he do the same thing here?

First, he might well do so. Because this isn’t just any piece of legislation, I think it is more likely than not the case that this challenge will ultimately fizzle. In fact, unless the court has no choice -- e.g., an en banc court strikes down the subsidies -- I don’t think it will take the case. Even then, the chief justice had a clear shot at the legislation in 2012, and didn’t take it. Why would he take a partial shot now?

I think this line of reasoning overlooks a few important distinctions between this case and the 2012 case.  First -- and this really is important -- that was a constitutional case. If Roberts had stuck with the plaintiffs, there was no going back; the law was dead.  This, on the other hand, is a case of statutory interpretation. The court would effectively say, “Congress, you messed up; go fix this.” Of course, Congress is probably (more on this later) unlikely to fix the legislation. The point, however, is that the court would be throwing this dispute into the political arena, rather than removing it from the political arena (as it does when it strikes down a law as unconstitutional).

Sean Trende is senior elections analyst for RealClearPolitics. He is a co-author of the 2014 Almanac of American Politics and author of The Lost Majority. He can be reached at strende@realclearpolitics.com. Follow him on Twitter @SeanTrende.

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