High court’s health op­tions

Jus­tices are likely to rule one of three ways on the Af­ford­able Care Act

Los Angeles Times - - NEWS - By David G. Sav­age and Noam N. Levey david.sav­age@latimes.com Twit­ter: @DavidGSav­agenoam.levey@latimes.com Twit­ter: @noam­levey

WASHINGTON— The Supreme Court will de­cide a seem­ingly sim­ple ques­tion this month in the latest chal­lenge to the Af­ford­able Care Act: Does the law limit sub­si­dies for low- and mod­er­ate-in­come-con­sumers to in­sur­ance pur­chased through an ex­change “es­tab­lished by the state”?

The phrase at is­sue is found in a sec­tion of the law that out­lines how sub­si­dies should be cal­cu­lated. It has taken on enor­mous im­por­tance be­cause only13 states and the Dis­trict of Columbia op­er­ate their own ex­changes, or mar­ket­places. Three more states es­tab­lished mar­ket­places, but rely on the fed­eral HealthCare.gov mar­ket.

The re­main­ing 34 states de­clined to es­tab­lish mar­ket­places, leav­ing the job to the fed­eral gov­ern­ment, an op­tion pro­vided by the law. The chal­lengers ar­gue that the four words mean that no one in these 34 states should get as­sis­tance.

The Obama ad­min­is­tra­tion, which points to other parts of the lawthat make clear sub­si­dies are meant to be avail­able ev­ery­where, has been pro­vid­ing aid in all 50 states for the last two years.

Anes­ti­mated 6.3 mil­lion peo­ple have sub­si­dized health in­sur­ance in states that did not es­tab­lish their own mar­ket­places.

Here are three­ways the jus­tices may an­swer the ques­tion posed in King vs. Bur­well and the po­ten­tial im­pact of what they de­cide:

Plain text

Lawyers are fond of claim­ing the­words of a com­plex law can have only one mean­ing. In this case, both the con­ser­va­tive chal­lengers and the ad­min­is­tra­tion lawyers in­sist the plain text of the law sup­ports their view.

Michael Carvin, the lawyer for the chal­lengers, re­lies on the­words “es­tab­lished by the state.” This is “ex­traor­di­nar­ily straight­for­ward,” he said. “Any English speaker would im­me­di­ately un­der­stand” that no sub­si­dies are al­lowed in states with­out their own mar­ket­places.

Such an ar­gu­ment may res­onate with the court’s con­ser­va­tives. “Our job is to fol­lowthe text even if do­ing so will sup­pos­edly un­der­cut a ba­sic ob­jec­tive of the statute,” Jus­tice Clarence Thomas wrote Mon­day in a bank­ruptcy de­ci­sion. Jus­tice An­tonin Scalia said dur­ing the oral ar­gu­ment the court would not “twist the­words as nec­es­sary” for the law to make sense.

But in de­fend­ing the law, U.S. So­lic­i­tor Gen. Don­ald Ver­rilli Jr. pointed to other pas­sages that say sub­si­dies “shall be al­lowed” for any “ap­pli­ca­ble tax­payer” who qual­i­fies based on his or her in­come.

The lawalso gives states “flex­i­bil­ity” to es­tab­lish a mar­ket­place, or “ex­change.” If a state chose not to, fed­eral of­fi­cials shall “es­tab­lish and op­er­ate such ex­change within the state,” the law states.

Ver­rilli ar­gued this text plainly means a fed­er­ally run mar­ket­place serves as a state mar­ket­place, so all el­i­gi­ble taxpayers may re­ceive sub­si­dies.

De­fer to gov­ern­ment

The high court has of­ten de­cided that a com­plex reg­u­la­tory law can be read in more than oneway.

In such cases, the jus­tices have of­ten de­ferred to the fed­eral agency that ad­min­is­ters the law, so long as its in­ter­pre­ta­tion fits rea­son­ably with the­words of the law. This rea­son­ing is know­nas “Chevron def­er­ence,” in ref­er­ence to a1984 case in which the court backed fed­eral reg­u­la­tors’ in­ter­pre­ta­tion of the Clean Air Act.

This is a fall­back ar­gu­ment for the Obama ad­min­is­tra­tion lawyers. In 2012, the Trea­sury Depart­ment de­cided that while the law was not en­tirely clear, the tax sub­si­dies for health in­sur­ance should be avail­able through any mar­ket­place.

Last year, the 4th Cir­cuit Court of Ap­peals used this rea­son­ing to sup­port the gov­ern­ment in the cur­rent le­gal chal­lenge. Be­cause the law it­self was “am­bigu­ous,” the gov­ern­ment’s rea­son­able in­ter­pre­ta­tion should pre­vail, the judges said.

States’ rights

Jus­tice An­thony M. Kennedy and Chief Jus­tice John G. Roberts Jr. maybe swayed to the gov­ern­ment’s side be­cause of the po­ten­tially dis­as­trous im­pact on the states.

In the past, the high court has said states must be given “clear no­tice” when Congress im­poses newlaws and re­quire­ments.

The law widely called Oba­macare did not clearly tell state of­fi­cials that their fail­ure to es­tab­lish their own mar­ket­place would de­prive their res­i­dents of in­sur­ance sub­si­dies. Lawyers for 22 states raised this con­tention in a friend-of-the-court brief and ar­gued it­would be un­fair and un­con­sti­tu­tional to pun­ish their res­i­dents.

Kennedy took note of that claim. “There’s a se­ri­ous con­sti­tu­tional prob­lem ifwe adopt your ar­gu­ment,” he warned the lawyer for the chal­lengers dur­ing the oral ar­gu­ment in March.


The im­pact of the court’s de­ci­sion will vary depend­ing on which ar­gu­ment the jus­tices em­brace.

A plain-text rul­ing that in­val­i­dates the sub­si­dies in 34 states would have the most dra­matic im­pact, strip­ping aid from more than 6 mil­lion peo­ple and prob­a­bly throw­ing in­sur­ance mar­kets in these states into chaos.

In­sur­ance com­pa­nies warn they will raise premi­ums dra­mat­i­cally, as only sick con­sumers are likely to main­tain cov­er­age with­out gov­ern­ment as­sis­tance.

And with a bulging pop­u­la­tion of unin­sured peo­ple, hos­pi­tals and other med­i­cal providers are ex­pected to be swamped with pa­tients who can­not pay their bills.

Another pos­si­bil­ity, raised by Jus­tice Sa­muel A. Al­ito Jr. dur­ing the oral ar­gu­ment, would be to de­clare the sub­si­dies illegal in states with­out an ex­change, but de­lay the ef­fec­tive­ness of the de­ci­sion un­til the end of the year.

But few peo­ple be­lieve con­gres­sional Repub­li­cans, who still de­mand re­peal of the law, and the pres­i­dent could reach an agree­ment to re­store the sub­si­dies in states that don’t op­er­ate their own mar­ket­places.

And while some states may­move to es­tab­lish their own mar­ket places tomain­tain aid, many Repub­li­can state lead­ers re­main deeply hos­tile to the health lawand are un­likely to act.

If the Supreme Court rules for the ad­min­is­tra­tion, con­sumers would see lit­tle change, and the health law is un­likely to be sub­stan­tially changed, at least un­til 2017 af­ter a new­pres­i­dent takes of­fice.

Don Ryan As­so­ci­ated Press

ABOUT 6.3 mil­lion peo­ple have sub­si­dized in­sur­ance in states that did not es­tab­lish their own­mar­ket­places, but chose to rely on the fed­eral HealthCare.gov.

Saul Loeb AFP/Getty Im­ages

PRES­I­DENT OBAMA’S sig­na­ture law faces a court chal­lenge based on one phrase.

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