In upholding ACA subsidies, Supreme Court majority decided that context matters

REUTERS/Joshua Roberts
Supporters of the Affordable Care Act celebrating outside the Supreme Court Building after the court upheld the law in a 6-3 vote on Thursday.

The Supreme Court today preserved the Affordable Care Act by a 6-3 ruling written by Chief Justice John Roberts. The three dissenters were Justices Antonin Scalia (who wrote the dissent) and Justices Clarence Thomas and Samuel Alito.

The full decision and dissent are available here.

The case turned on the question of whether the federal tax credits, which are necessary to enable millions of Americans to afford health insurance, are limited to those buying health insurance from states that have set up their own online health care marketplaces (called “exchanges”) or whether the language that implies such limits was merely sloppy drafting.

Thirty-six states have declined to set up their own exchanges. If the plaintiffs had won this case, the federal subsidies would have been unavailable in those states, and the mandate requiring everyone to get insured or pay a fine would have been essentially removed. It is hard to believe that this was what Congress intended, but the Act says in several places that the subsidies are available to a person who buys insurance through “an exchange established by the State.”

Writing for the majority, Chief Justice Roberts wrote that:

When read in context, the phrase “an Exchange established by the State” is properly viewed as ambiguous. … The Affordable Care Act … contains more than a few examples of inartful drafting …

[A] fundamental canon of statutory construction [is] that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.”

Given that the text is ambiguous, the Court must look to the broader structure of the Act to determine whether one of Section 36B’s “permissible meanings” produces a substantive effect that is compatible with the rest of the law.

The combination of no tax credits [the subsidies to help millions of people afford insurance are in the form of tax credits] and an ineffective coverage requirement [this is a reference to the likelihood that the mandate requiring people to get insurance would also disappear if the plaintiffs prevailed] could well push a State’s individual insurance market into a death spiral. [“Death spiral” refers to how an insurance market becomes so imbalanced that it collapses.] It is implausible that Congress meant the Act to operate in this manner …

Petitioners’ plain-meaning arguments are strong, but the Act’s context and structure compel the conclusion that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.

Writing for the minority, Justice Scalia went sarcastic. Thus:

The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so…

This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary [meaning the secretary of Health and Human Services, meaning exchanges created by the feds in states that declined to establish their own] gets tax credits.

You would think the answer would be obvious — so obvious there would hardly be a need for the Supreme Court to hear a case about it.

Words no longer have meaning if an Exchange that is not established by a State is “established by the State.” It is hard to come up with a clearer way to limit tax credits to state Exchanges than to use the words “established by the State.” And it is hard to come up with a reason to include the words “by the State” other than the purpose of limiting credits to state Exchanges.

 “[T]he plain, obvious, and rational meaning of a statute is always to be preferred to any curious, narrow, hidden sense that nothing but the exigency of a hard case and the ingenuity and study of an acute and powerful intellect would discover.” [This is a quote from a 1925 Supreme Court ruling in Lynch v. Alworth-Stephens Co.]

Under all the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved.

Comments (37)

  1. Submitted by Neal Rovick on 06/25/2015 - 11:19 am.

    It is interesting how modern conservatism rely on very narrow readings of their urtexts. There are so many blind alleys and logical conumdrums that result. It’s almost as though it’s a philosophy on the autism spectrum where complete upheaval and destruction is preferable to adjusting to the realities of the time.

    • Submitted by Paul Brandon on 06/25/2015 - 12:54 pm.

      Chicken

      They count on the rationality of liberals to turn aside when necessary to avoid a catastrophe.

    • Submitted by Tom Christensen on 06/25/2015 - 03:14 pm.

      Narrow reading rational

      I believe the GOP has to rely on narrow readings and play the semantic game because they have NOTHING. Nearly 7 years now and they have voted to repeal the ACA 50+ times. They have promised a replacement, but what they really have is NOTHING. I believe the GOP plays the game of creating doubt based on contrived rational. Polls have shown if a question is asked about Obamacare they get one answer. If they ask the same question about the Affordable Care Act they get a different answer. No doubt the Republican noise machine is effect, but not necessarily good for the country. Nearly every red herring the GOP has put out there has been proven WRONG. The GOP is a leaderless party. Sadly semantics is the only game they can play. On the flip side President Obama is a horrible salesman.

  2. Submitted by Jon Kingstad on 06/25/2015 - 12:03 pm.

    Phase 1

    I’m glad the Supreme upheld the law. But when flawed laws like the ACA become symbols, they also can become obstacles to progress. The ACA should be viewed as it was sold to many of us who are social democrats as “Phase 1” on the road to single payer heath care system.

    The insurance industry has conned all of us into thinking that premiums for health insurance are somehow different from taxes because the government is “public” and insurance companies are “private business.” The Supreme Court’s decisions are helpful to some extent in demolishing this simplistic thinking even though we are still stuck in thinking that “tax credits” are “subsidies”. They are, but that doesn’t make health insurance premiums charged by the hugely wasteful and unnecessary system of “private” health insurance any less of a form of taxation by other means.

    I’m hopeful that some day, the public will get this, as they do in the European social democracies, where health care and treatment is paid for directly out of taxes. There, the wasteful and inefficient insurance company middlemen have been largely eliminated.

  3. Submitted by Jim Camery on 06/25/2015 - 12:17 pm.

    Scalia’s new respect for narrow readings

    Wonder how he (& others) continue to insist on literal meaning but still ignore “well regulated militia”?

  4. Submitted by Hiram Foster on 06/25/2015 - 12:28 pm.

    Obamacare

    The reasons why the court made the decision it did today won’t really be found in either the majority decision or the dissent. The fact is, CJ Roberts, like many chief justices before him is concerned about the impact of too much legislation from the bench. We see in the political atmosphere of today, more and more rejectionist sentiment where the Supreme Court is concerned. It must always be borne in mind, that the Supreme Court’s power is moral, not physical. It has no troop, it has no marshalls. It has a few clerks which probably wouldn’t be much good even in a DC area bar fight. The only thing it has is credibility, something that it has stretched almost beyond recognition in recent years. Obviously, today at least, Roberts was unwilling to stretch it further.

  5. Submitted by Mike Davidson on 06/25/2015 - 12:35 pm.

    Sort of a win for Republicans too …

    Destruction of the ACA would have been akin to rolling out the red carpet for Democrats and us liberals in next year’s elections. Republicans would scramble to come up with something, with zero support from Democrats (who could rightfully sit back and cross their arms and say “We already fixed this; this is now your mess.” Keeping control of the Senate (already tenuous at best for the Republicans, because like Dems in the last mid-term they simply have too many seats to defend) would be impossible. The large House majority would drastically shrink. Governor’s mansions across the 36 states without exchanges (at least, those who are up for re-election next year) would turn from red to blue. Then there’s the vast parade of GOP presidential candidates – ALL of them have publicly supported gutting or getting rid of the ACA. None of them have a plan to replace it.

    So while the conservative masses are publicly trashing John Roberts today on social media, I imagine most Republicans in Congress are privately and quietly thanking him.

    • Submitted by Carolyn Jones on 06/25/2015 - 04:29 pm.

      I would agree, which proves that everything in Washington is done to protect the people in Washington – Democrats, Republicans & Supreme Ct Justices — at the expense of the Constitution and the People of the United States. Today was a bad day for the people

  6. Submitted by Bill Gleason on 06/25/2015 - 01:25 pm.

    Long time readers of MinnPost

    will know that we have had plenty of suggestions from the right that Obamacare would be declared unconstitutional for one reason or the other.

    Clearly context is important in trying to decipher the intent of the drafters of this legislation. And it is not too hard to come up with a justification for this decision.

    That the decision was 6-3 and that the dissenters were Thomas, Alito, and Scalia is gratifying. It should put the “if only” arguments of the right to bed on this one.

    Lets get to work and try to make other improvements in American life, rather than the “just say no” policies of the right.

    Today was a historic day for healthcare in the US.

  7. Submitted by Pat Berg on 06/25/2015 - 12:56 pm.

    At least this time . . . . .

    At least this time common sense prevailed.

  8. Submitted by Greg Kapphahn on 06/25/2015 - 01:31 pm.

    I’m Very Happy with this Ruling

    But I suspect Chief Justice Roberts decided it the way he often decides cases,…

    based on what’s best for big business,…

    in this case the insurance and pharmaceutical companies,…

    a reality which just so happens to coincide with the needs of many of our nation’s least advantaged citizens.

  9. Submitted by joe smith on 06/25/2015 - 01:34 pm.

    I’m not a fan of Obamacare but am happy the court voted the way they did. We will get a chance to see if it works or not. Early returns are not favorable but if it lowers costs (without outrageous 4-5-6-7 thousand deductibles) and you can have access to multiple providers, good for us all.
    I see where emergency visits have increased since the law was passed, 1 of the promises was less emergency visits. I also read where hospitals were experiencing a high percentage of patients with Obamacare not being able to afford the deductible and therefore not paying the bill, same problem as before law was passed. Time will tell and the liberals own it for better or worse.

  10. Submitted by Ron Gotzman on 06/25/2015 - 01:42 pm.

    Jonathan Gruber said….

    “[I]f you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. … I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it.”

    • Submitted by Pat Berg on 06/25/2015 - 04:42 pm.

      Jonathan Gruber . . . . .

      is not a member of Congress.

      • Submitted by joe smith on 06/25/2015 - 04:55 pm.

        He had more to do with the crafting of the healthcare bill than any member of congress. Remember Nancy P told us we have to pass the law to see all the “goodies” in it. He clearly knew more than former Speaker of the House.

      • Submitted by Ron Gotzman on 06/25/2015 - 04:57 pm.

        We already know that Pat…..

        Please explain who Jonathan Gruber is. That is – if you are concerned about context.

        • Submitted by Paul Brandon on 06/25/2015 - 06:51 pm.

          A consultant

          speaking as a private citizen voicing his personal opinion.

          • Submitted by joe smith on 06/25/2015 - 10:44 pm.

            An architect of the bill that was paid hundreds of thousands to help write it is not quite a private citizen just voicing his personal opinion. He was paid speaking fees to talk about the bill and its crafting, that is where he told the audience that the stupidity of the American voters help get the bill passed.

            • Submitted by Neal Rovick on 06/26/2015 - 07:43 am.

              Not quite an architect…

              Rather, Gruber is an economist who analyzed the changes in money flow under different scenarios

              (quote)

              Most people, however, say Gruber usually isn’t insulting. He’s just blunt—to a fault. Jon Kingsdale, who served as the first executive director of the Massachusetts health insurance exchange while Gruber served on the board, puts it more diplomatically: “He’s not a Washington person who carefully crafts what he says before an audience the way you would polish it if you thought it was being recorded and distributed broadly.”

              That’s a huge problem for the Obama administration, though, because Gruber has now become known as an “architect” of Obamacare—a phrase that has been used by many news organizations, including Politico, and implies that he was in the room drafting the legislation. It’s not, though, precise enough. His real contribution, according to most former congressional staffers who actually drafted the legislation, was to provide the economic models to figure out what the impact of different choices would be—like what different levels of subsidies would cost, and especially what would happen to the mix of healthy and sick people if there was no individual mandate. That’s not nothing, though. Top Democrats are running away from Gruber now—Nancy Pelosi tried to pretend she had never heard of him, and former Health and Human Services Secretary Kathleen Sebelius says she never met with him. But of course they all knew him; just because he wasn’t an “architect” doesn’t mean his work wasn’t important.

              http://www.politico.com/magazine/story/2014/12/will-jonathan-gruber-topple-obamacare-113369.html#ixzz3eAh0Gu5B

              (end quote)

              • Submitted by joe smith on 06/26/2015 - 08:28 am.

                If he wasn’t heavily involved in crafting the bill Democrats would not be running away from him. They would stick to their basic game plan of deny, deny,deny. Nancy Pelosi was caught lying about her knowing him. Doesn’t matter if he is blunt or insulting he said deceiving the public was key to getting the bill passed. That appears to be true with costs going up, choice going down and all the carve outs for special groups.

  11. Submitted by Carolyn Jones on 06/25/2015 - 02:25 pm.

    SCOTUS got it wrong

    It is not the Supreme Court’s job to fix the legislature’s mistakes or determine what the context should have been. It is the Supreme Court’s job to interpret the plain meaning of the law and to offer checks and balances to the Executive and Legislative branches. If Congress forgot a few words, then let Congress go back and add a few words to clarify what they meant. This could have been done years ago. It is not that hard. It is called legislating. There is no doomsday scenario, just fix it. Instead we set precedent for the Supreme Court to interpret the law and to allow the Executive branch to change the meaning of the law at their wimp. Everyone is saying it is a political win for everyone — everyone but the American people who just got a bit of their Constitutional protections stripped away from them so the Washington political elite from all parties can save face.

    • Submitted by Neal Rovick on 06/25/2015 - 03:08 pm.

      Now where have I heard “original intent” ….

    • Submitted by Sean Huntley on 06/25/2015 - 03:10 pm.

      They didn’t SET precedent. As clearly laid out in Robert’s opinion, they FOLLOWED precedent. Even Scalia accepted the intent of the law in his dissent the LAST time the ACA was before the SCOTUS when he said “Without the federal subsidies . . . the exchanges would not operate as Congress intended and may not operate at all.”

      Scalia completely changed his tune to accomplish his POLITICAL goals.

      • Submitted by Carolyn Jones on 06/25/2015 - 04:26 pm.

        Every time the SCOTUS makes a ruling it sets a precedent for future rulings to use similar logic — even if that logic is flawed. Show me in the Constitution where the SCOTUS is given powers to correct the mistakes of Congress and rewrite their laws for them.

  12. Submitted by Connie Sullivan on 06/25/2015 - 04:18 pm.

    As someone who has read a lot of marxist and socialist discourse, I immediately recognized the meaning of “the State”–with a capital “S”–in the ACA law and the section that was challenged in this case. “The State,” with capital “S,” is the government, at any level, versus the private or personal. Political science discussions are full of reference to “the State” with that meaning.

    If the Congress had meant only the states, the law would have stated here, “by the state[s],” with a plural and no capital letter.

    I am pleased that six justices recognized the meaning of the phrasing, as well as Congressional intent. I have lost all respect for Scalia, who somehow can’t get beyond a kind of eighth-grade obsession with a narrow definition of one word, which he twirls around and around, going nowhere. How sad.

    The Congress that passed the ACA was clear about its intent–most of those legislators are still alive, and protesting a Scalia-type misinterpretation of their intent.Today’s GOP-dominated Congress couldn’t agree on how to boil an egg.

    • Submitted by Ron Gotzman on 06/25/2015 - 05:01 pm.

      amazing! – so much for context

      So you disagree with Mr. Roberts and everyone else?

    • Submitted by Eric Paul Jacobsen on 06/26/2015 - 12:15 pm.

      The Constitution agrees with you, Connie Sullivan.

      I must gratefully acknowledge an astute reader of MOTHER JONES, Andrew Case, for supplying evidence for your view that we can all look up ourselves … in the US Consitution.

      The Second Amendment begins: “A well regulated militia, being necessary to the security of a free State…” In this participial phrase, the word “State” is capitalized and refers to our whole country, not to any one of the original 13 States.

      The Eleventh Amendment states: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” Clearly, the term “Foreign State” means “foreign country.”

      Our Secretary of State is a diplomat who represents not any one of our fifty States, but all of them together.

      So Chief Justice John Roberts is correct that the word “State,” taken out of context, is ambiguous. You are therefore in agreement with him, but also in agreement with our Constitution.

      I’m not sure what Ron Gotzman is confused about.

      • Submitted by Ron Gotzman on 06/26/2015 - 05:43 pm.

        please read….

        No one is saying that the word “state” as mentioned in the law means the federal gov. (accept you)

        Please read the article and the law.

  13. Submitted by Frank Phelan on 06/25/2015 - 09:41 pm.

    Robert’s Rules of Order

    There was no doubt which way Roberts would rule. There was not one major corporation or corporate lobby, including the health care industry, that filed a brief in favor of the plaintiffs. That made it easy for the Chief Justice. Good conservative politicians like Roberts know it’s never about the social issues, it’s all about enriching the 1%. Social issues only matter on election day, and never after inauguration day.

  14. Submitted by Hiram Foster on 06/26/2015 - 06:13 am.

    There was no doubt which way Roberts would rule.

    I can’t say that I had no doubt, but I wasn’t all that surprised. The arguments of the Obamacare opponents in King were ridiculously frivolous. That being the case, under any circumstances it would have been hard to find a majority in the Supreme Court to support them .We were always pretty much headed for a 5-4 decision. That being the case, CJ Roberts printed himself up a golden ticket, added an extra vote for the majority which allowed him both to assign the opinion to himself, and help re-establish his reputation as the reasonable Republican on the court.

    • Submitted by Paul Brandon on 06/26/2015 - 09:23 am.

      Right

      If there had been a real legal issue, it would have been raised when the legislation was enacted, not several years later when someone with questionable standing dug up some anomalous wording.

      • Submitted by Hiram Foster on 06/27/2015 - 06:33 am.

        Right

        What I think is that if the interpretation offered by Obamacare opponents in King v. Burwell were intended, basically that the language was there in order to coerce states into creating health care exchanges, we would have heard a great deal more about it when the legislation was discussed and passed. But that would have been a silly policy, because I don’t know that the federal government has a strong interest in moving the states to form their own exchanges. Quite frankly, when Republican Rep. Tara Mack issued a press release immediately following the decision arguing that Minnesota should repeal MnSure and go with the national exchange, I was without an immediate response. I happen to be a Democrat, and don’t necessarily have an issue with a national approach to national problems. It’s Republicans who are usually going on about localism. The other issue is that many recent Supreme Court decisions have declared unconstitutional acts of Congress which it has found to be to coercive on state governments and their legislatures. Simply as a matter of sound legal draftsmanship, it would have been way over the line of malpractice, to pass a law as baldly coercive on the states, as the opponents interpretation of Obamacare language would have been.

  15. Submitted by Jay Willemssen on 06/28/2015 - 08:00 pm.

    The State

    Are there really people unfamiliar with calling a nation “the State”? That’s Poli Sci 101 stuff, people.

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