Standing, state’s rights, or statutory construction?

Standing, state’s rights, or statutory construction?

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Obamacare subsidies hinge on which analysis the Supreme Court adopts 

The U.S. Supreme Court takes a second look at the Affordable Care Act tomorrow morning, hearing argument in a case out of Virginia which many experts say has the potential to rock the nation’s health care system.

The law’s constitutionality is not threatened; the justices already affirmed that in National Federation of Independent Business v. Sebelius, a decision handed down in late June 2012.

What’s at stake instead are the subsidies that make health insurance affordable for millions of low-income purchasers in the majority of states across the country.

Those subsidies are the lynchpin of a system built to provide universal coverage. Pull them out and the wheels come off.

Here’s a quick primer on what to expect tomorrow in King v. Burwell.

The challenge

Buried in the 900-page Affordable Care Act, and overlooked by lawmakers during weeks of meetings and debates leading up to the law’s passage in 2010, are six words which, according to the challengers in King, limit receipt of subsidies to low income purchasers on “an exchange established by the State.”

Only 16 states established their own exchanges; the remaining 34, mostly controlled by Republicans, let the federal government provide that service for their residents.

By the challenger’s logic, those words mean that only low income health insurance purchasers in 16 states are entitled to financial help for their health insurance premiums.

But nothing in the language in the Act, nor in its legislative history, suggests that purchasers on the federal exchange weren’t likewise entitled to subsidies, and the law’s proponents say that Congress never intended to deprive them of that help.

Nor does the Act necessarily make the state or federal exchanges mutually exclusive. By its terms, in states not setting up their own exchange, the federal government “shall establish and operate such [an] exchange.”

The impact

Since the Act’s inception, income-eligible purchasers on both state and the federal exchanges have been able to afford health insurance with help from subsidies.

By the end of open enrollment in February, nearly 11.5 million people enrolled or re-enrolled in a health insurance plan under the Act – 8.6 million of them in states having only the federal exchange. Of those buying on the federal exchange, more than 85 percent did so with the help of subsidies.

Should the Court rule in favor of the challengers, some 7.45 million people would lose subsidies and face average premium increases of 255 percent, according to consultants at Avalere Health.

In North Carolina, which relies on the federal exchange, 515,000 would be affected and face projected premium increases of 317 percent.

Many health policy experts predict that a “death spiral” will follow. Those directly affected will likely lose their insurance because they can’t afford it, and insurers will raise rates on other insureds, who then will drop out because they too can no longer afford coverage, and so on.

With far fewer people having health insurance, more will forego needed medical care – a trend with its own obvious consequences.

In one friend-of-the-court brief submitted to the court, 19 public health school deans estimated that the ensuing loss of coverage could lead to death for nearly ten thousand Americans.

The arguments

At its core, King v. Burwell is a straightforward case of statutory construction.

The law’s challengers aren’t trying to overturn the law, but rather ask that the law be enforced as written – meaning that, in their view, only eligible purchasers in the 16 states with their own exchanges can get subsidies.

But proponents of the Act say that when that phrase is read in context with the rest of the Act, the availability of subsidies for all eligible purchasers becomes clear.

Such a contextual reading comports with statutory analyses several of the justices have undertaken in other cases – most recently in a case decided just last week that involved the interpretation of a statute as applied to commercial fishermen.

In a 5-4 decision in Yates v. United States, the justices considered the meaning of the phrase “tangible object” in a statute that made disposing of such objects, documents and other potential evidence in the face of an investigation a felony.

Writing for the majority, Justice Ruth Bader Ginsburg said that construing that term had to be done in context with the entire statute.

“Whether a statutory term is unambiguous does not turn solely on dictionary definitions of its component words,” she wrote. “Rather, ‘[t]he plainness or ambiguity of statutory language is determined [not only] by reference to the language itself, [but as well by] the specific context in which that language is used, and the broader context of the statute as a whole.’”

Though not all the justices agreed with her result, most agreed on the analysis to be applied – a step that had several legal experts wondering if the court had just tipped its hand on how it would construe the words at issue in King.

Another tack the justices might take is to consider whether the challengers themselves have been harmed by the challenged language, such that they had “standing” to file suit in the first place.

“Standing,” stripped down, means that those seeking relief from the court must have a dog in the fight.

Recent media reports portray the four named plaintiffs in King as people who, though fiercely opposed to Obamacare, are unharmed by its subsidy provisions.

For example, Mother Jones has reported that two of them might qualify for Veteran’s benefits and the other two would actually wind up better off under the Act.

A lack of standing is not an argument the government is making in the appeal, but it’s certainly a question the justices can raise on their own, before they even reach the underlying merits of the case.

In recent years, several justices have been accused of finding standing issues in cases in which they did not want to reach the merits – in the 2013 California Proposition 8 same-sex marriage case, for example.

And then there is the states’ rights argument offered by many of the 34 federal exchange states – including North Carolina.

The states contend that the federal government must give them clear notice of any action it might take that would impact the state – here, by withholding millions in subsidies from state residents — before enacting any law doing just that, notice which they absolutely did not have before the Act was passed.

As they argue in their brief to the court:

Every State engaged in extensive deliberations to select the Exchange best suited to its needs. None had reason to believe that choosing a federally-facilitated Exchange would alter so fundamental a feature of the ACA as the availability of tax credits. Nothing in the ACA provided clear notice of that risk, and retroactively imposing such a new condition now would upend the bargain the States thought they had struck.

That’s an argument that plays into the hands of conservative justices who, as Abbe Gluck points out in this Politico article , “[have] spent the past four decades developing a set of legal rules to protect states from federal imposition. Those rules require Congress to provide unmistakably clear notice in the text of a statute before the Court will read a statute to intrude on the states.”

Gluck adds:

The challengers’ interpretation turns Congress’s entire philosophy of states’ rights in the ACA upside down. Congress designed the exchanges to be state-deferential—to give the states a choice. But under the state-penalizing reading that challengers urge, the ACA—a statute that uses the phrase “state flexibility” five times—would be the most draconian modern statute ever enacted by the U.S. Congress that included a role for the states.