Obama Administration Uses Scalia’s 2012 Obamacare Dissent Against Him

It’s undisputed that virtually everyone had — for years — construed the Affordable Care Act to allow subsidies for Americans even if their state didn’t set up an insurance exchange. But the Justice Department wants it to be clear that “everyone” includes the four conservative justices on the Supreme Court who voted to wipe out Obamacare in 2012 and will now hear a new challenge to the law.

In the government’s brief defending the ACA, filed with the Supreme Court on Wednesday, DOJ returns on three occasions to the language of the joint dissent of the conservative justices in NFIB v. Sebelius. Justice Antonin Scalia was the de facto leader of the conservatives in that case, who nearly derailed Obamacare until Chief Justice John Roberts, much to the ire of his fellow legal conservatives, joined with the Court’s liberal justices to mostly save President Barack Obama’s signature legislative achievement.

With Obamacare under the legal gun yet again, the government is using the words of the dissenting justices to suggest they themselves interpreted the statute then as the White House does now when it comes to the core question in the new case, King v. Burwell: Does the ACA allow subsidies on the federal exchange?

In one section the brief quotes the conservative justices acknowledging that the Democratic-led Congress “thought that some States might decline … to participate in the operation of an exchange.” The aim is to rebut the challengers’ contention that Congress expected every state to set up an exchange and was blindsided when some three dozen declined to do so.

First, it was well understood when the Act was passed that some States would not establish Exchanges for themselves. The very fact that the Act provides for federally-facilitated Exchanges demonstrates that “Congress thought that some States might decline * * * to participate in the operation of an exchange.” NFIB v. Sebelius, 132 S. Ct. 2566, 2665 (2012) (Scalia, Kennedy, Thomas, & Alito, JJ., dissenting).

In a second section of the brief, DOJ quotes the conservatives in NFIB v. Sebelius saying Congress created a “backup scheme” by setting up a federal exchange.

The linchpin of petitioners’ account is their assertion (Br. 5, 40-41, 43) that Congress assumed every State would establish an Exchange for itself. But the very fact that the Act includes a “backup scheme” in the form of federally-facilitated Exchanges demonstrates that “Congress thought that some States might decline * * * to participate in the operation of an exchange.” NFIB, 132 S. Ct. at 2665 (Scalia, Kennedy, Thomas, & Alito, JJ., dissenting).

In a third section of the brief, DOJ quotes a chunk of the 2012 dissent which suggests that restrictions on the subsidies would reduce the incentives of insurers to sell plans, and individuals to buy plans. As a result, “the exchanges would not operate as Congress intended and may not operate at all.”

Critically, moreover, the Exchanges that Congress directed HHS to set up for States that declined or were unable to do so for themselves would be a futile gesture absent tax credits. “Without the federal subsidies, individuals would lose the main incentive to purchase insurance inside the exchanges,” and insurers would likely “be unwilling to offer insurance inside of exchanges” if they were no longer the exclusive means of reaching subsidized customers. NFIB, 132 S. Ct. at 2674 (Scalia, Kennedy, Thomas, & Alito, JJ., dissenting). “With fewer buyers and even fewer sellers, the exchanges would not operate as Congress intended and may not operate at all.” Ibid.

The government’s brief argues that if the challengers are right that Congress purposefully withheld subsidies as a threat to encourage states to set up exchanges, it would make little sense to create a federal exchange that would be “doomed to fail.”

Yale law professor Abbe Gluck, who flagged the 2012 dissent in August, said it’s important because it validates a core argument of the Obamacare administration.

“The reason the quotes are powerful is that it shows that in 2012, everybody in the nation focusing on the Affordable Care Act read the statute the way the government does,” she said. “The goal is not to say ‘gotcha.’ It’s to say ‘look, they’re saying the statute is crystal clear.’ … The NFIB dissenters understood the statute very well. And they understood the statute to allow [those subsidies].”

Jonathan Adler, an architect of the legal challenge in King, doubted that the administration’s citation of the 2012 dissent would impact the case.

“It’s more of a cute debater’s point than a substantive legal point,” he said in an email. “It tells you something about the strength of their case.”

Adler pointed to his observation that Scalia tends to takes a “textualist” approach to interpreting laws — one that gives minimal weight to legislative history. For instance, he wrote in UARG v. EPA: “We reaffirm the core administrative-law principle that an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate.”

Legal experts widely expect Republican-appointed Justices Scalia, Samuel Alito and Clarence Thomas to rule against the government, and the four Democratic-appointed justices to validate the IRS rule allowing subsidies on the federal exchange. The question-marks are Chief Justice John Roberts and Justice Anthony Kennedy, whom Supreme Court scholars say have less clear-cut views of statutory construction.

Gluck said that as a litigation strategy, the Obama administration’s move is “not that unusual.” When trying to appeal to a particular justice, she said, lawyers “often cite cases and language that that particular justices wrote.”

Oral arguments are set for March 4, and a decision is expected by the end of June.

Obama Administration SCOTUS Brief in King v Burwell