Everything You Need To Know About The SCOTUS Case To Cripple Obamacare

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March 3, 2015 6:00 a.m.

WASHINGTON — President Barack Obama’s signature legislative achievement heads to the Supreme Court for what is arguably its greatest legal threat on Wednesday, when the nine justices will hear oral arguments in the case King v. Burwell.

Here’s what you need to know about the lawsuit against Obamacare.

What do the Obamacare challengers claim?

The case is about whether seven words in one section of the Affordable Care Act, a.k.a. Obamacare, restrict premium tax credits to individuals enrolled “through an Exchange established by the State.” The challengers argue that the plain text of the law prohibits those subsidies on the federal exchange, which serves residents in some three-dozen states that didn’t build their own exchanges and instead turned over the task to the federal government.

The challengers say Congress is free to permit the federal subsidies if it wants to, but they claim that the language of the ACA unambiguously does not. In legal speak it is a “statutory” challenge, not a “constitutional” challenge like the 2012 case which alleged that the law’s individual mandate was unconstitutional.

What is the Obama administration’s defense?

The Obama administration says the statute as a whole makes clear that the subsidies are allowed — and were clearly intended — on the federal exchange as part of the core goal of extending health care coverage to the uninsured. (The federal exchange was designed in the law as a backstop to step in when states opted not to build an exchange.) The administration point out that during the Obamacare debate, Democrats and Republicans overwhelmingly understood the legislation to allow subsidies on all exchanges and acted consistent with that understanding.

The administration argues that longstanding legal precedent (known as the “Chevron” test) holds that if the meaning of a statute is ambiguous, the courts ought to defer to the agency that implements it. In this case that is the I.R.S., which interpreted the law to permit the subsidies on state and federal exchanges.

What are the legal issues?

The legal debate ultimately comes down to the technical and arcane question of how narrowly to interpret a statute. A strict “textualist” might zero in on one section of the law to conclude that it forbid subsidies through the federal exchange. A broader view makes room for reading provisions of a law in context of the overall statute. A “purposivist” would look at the intent and purpose of Congress, which was to expand insurance coverage to millions of Americans.


From left, Chief Justice John G. Roberts and Supreme Court justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer and Sonia Sotomayor stand before President Barack Obama’s State Of The Union address on Tuesday, Jan. 20, 2015. (AP Photo/Mandel Ngan, Pool)

Who has the better argument?

The challengers’ strongest argument is that the wording of a key section of the law says the subsidies are allowed on “through an Exchange established by the State” — without mentioning the federal exchange. But the rest of their arguments are weak. The challengers not only make the textual argument but also claim this is what Congress intended all along. There’s no serious evidence that Congress intended to restrict those subsidies, and overwhelming evidence that it sought to provide them broadly. In fact just about everyone — Democrats, Republicans, the nonpartisan budget referee, outside policy experts and state officials — initially believed they would be allowed on the federal exchange. The core goals and pillars of the law are consistent with the government’s view.

The Obama administration has one big advantage in that it merely has to convince five justices that the statute is ambiguous. The challengers, meanwhile, have to persuade five justices that it’s unambiguous in their favor.

What do congressional Republicans say?

Many top Republicans, led by Senate Majority Whip John Cornyn (R-TX), have endorsed the lawsuit, submitting an amicus brief asking the Supreme Court to invalidate the ACA federal subsidies. They’ve adopted the challengers view that they intended to restrict subsidies to the state exchanges all along. They view it as likely their last chance to cripple a law they detest.

Who brought the lawsuit?

The legal challenge was crafted by Michael Cannon of the Cato Institute and law professor Jonathan Adler of Case Western Reserve University. The libertarian think tank Competitive Enterprise Institute recruited four plaintiffs from Virginia, who argue that the ostensibly illegal Obamacare subsidies subject them to the individual mandate to buy insurance, which they oppose.

What did the lower courts say?

The challengers in King have yet to win at any level, suffering defeat in a federal trial court and by a unanimous three-judge panel at the Fourth Circuit Court of Appeals in Virginia.

A similar challenge, Halbig v. Burwell, lost in federal trial court in the District of Columbia, but won at the D.C. Circuit Court of Appeals, when a divided three-judge panel invalidated the subsidies. The full D.C. Circuit vacated that ruling and was planning to hear the case in December, but that hearing was canceled after the Supreme Court agreed to take the case from the Fourth Circuit in November.


From left, Sen. Orrin Hatch, R-Utah, Sen. Lamar Alexander, R-Tenn., Sen. John Barrasso, R-Wyo. , Sen. John Cornyn, R-Texas, Senate Minority Leader Mitch McConnell of Ky., and Sen. John Thune, R-S.D., take part in a news conference on Capitol Hill, Oct. 12, 2011. (AP Photo/J. Scott Applewhite)

Is “standing” an issue?

Potentially. Recent news reports have called into question whether any of the four plaintiffs are actually subject to the individual mandate. If that is the case then they suffer no injury and therefore the Supreme Court would lack jurisdiction to decide the case, obligating the justices to throw it out. But that’s a big “if.” Just one plaintiff is required to have standing in order for the case to proceed. The Obama administration has explored standing questions but hasn’t argued that it can disqualify all four plaintiffs from bringing the suit.

What role do states rights play?

States rights is a late addition to the legal arguments but the issue could play a significant role. The Obama administration argues that it would violate the right of a state for the federal government to deny subsidies to its residents without a clear warning that the subsidies were contingent on setting up a state-run exchange. Legal experts on both sides believe the argument could have an effect on Chief Justice John Roberts and Justice Anthony Kennedy.

What would happen if Obamacare wins in the Supreme Court?

Practically speaking, nothing. The law would continue to be implemented as is.

What would happen if Obamacare loses in the Supreme Court?

The immediate impact is that subsidies — available to American legal residents with incomes between between 133 percent and 400 percent of the federal poverty level —would be erased in some three-dozen states that use the federal exchange, causing a financial hit to more than 5 million Americans. That would blow a hole in Obamacare and threaten the sustainability of other core components like the protections for preexisting conditions and individual mandate to buy insurance.

Health policy experts warn that it would shock the health care system by forcing many young and healthy people to drop their insurance plans, thereby causing insurers to raise their premiums and imposing a “death spiral” of rising costs that could be very difficult to reverse.

Does the Obama administration have a Plan B?

Apparently not. “We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision,” Health & Human Services Secretary Sylvia Mathews Burwell told Republicans on Feb. 24.

Will Congress fix it?

That’s highly doubtful. The Republicans who run Congress say they want to be ready to act to mitigate the damage of a ruling against Obamacare, but they have failed to rally around any health care plan in the five years since the law was enacted. Even if GOP leaders endorse a “fix” or replacement plan, their chances of passing it through this Congress — amidst internal divisions and fierce competing pressures from constituencies and interest groups — and earning a presidential signature is unlikely, as some conservative policy aides privately acknowledge.

Democrats, meanwhile, would likely demand a simple tweak to make clear the subsidies are available on both state and federal exchanges, as House Minority Whip Steny Hoyer (D-MD) recently suggested to TPM. But top Republicans have ruled this out.


U.S. Supreme Court Chief Justice John Roberts gives the commencement address on Friday, May 24, 2013, at LaLumiere School in LaPorte, Ind. (AP Photo/South Bend Tribune, James Brosher)

How are the justices expected to rule?

The outcome is uncertain, and Obamacare defenders have plenty of reason to worry given that at least four justices — the number required to take a case — did so in the absence of a lower court disagreement.

Early expectations from close court watchers, based on past decisions, are that the outcome will come down to Chief Justice John Roberts and perhaps Justice Anthony Kennedy, both Republican appointees. The four Democratic appointees — Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan — are seen as a safe bet to uphold the subsidies. Republican-appointed Justices Antonin Scalia, Clarence Thomas and Samuel Alito are expected to rule against Obamacare.

Why Is John Roberts considered a swing vote in this case?

Several reasons. His past decisions on statutory interpretation are less than clear-cut, leaving room for him to rule either way in this case. The chief justice — the one conservative who sided with liberals in the 5-4 ruling in 2012 to uphold most of Obamacare — is protective of the Court’s institutional standing as an impartial arbiter of the law. A ruling against the law would not only cause hardship to millions of Americans, it risks being portrayed by Democrats as an activist decision by the Supreme Court to advance Republican political goals.

Who will argue the case?

For the Obama administration, the U.S. Solicitor General Don Verrilli. For the challengers, the conservative lawyer Michael Carvin.

What have they said about the case?

Verrilli has been publicly silent, as SGs typically are about major cases. Carvin has been more vocal, describing the case as a slam-dunk statutory question for the challengers and telling TPM back in September (before the Court decided to take the case) that he believes the five Republican-appointed justices would all rule against Obamacare.

When will the Supreme Court rule?

A decision is expected by the end of June. Stay tuned.

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