The what and why of King v. Burwell — and what’s at stake for health-care access

REUTERS/Gary Cameron
In all likelihood, the Affordable Care Act will remain in effect, although it could be weakened and complicated.

Before the end of the week, the U.S. Supreme Court will issue a ruling in King v. Burwell, a case about the meaning of one provision in the Affordable Care Act (ACA), which is often called Obamacare. A few things to get settled in your mind as we await the ruling.

The King ruling may have little to do with the Constitution because this is not a case about the constitutionality of the ACA, and the court will almost certainly not strike down the whole law. The Supreme Court already ruled, 5-4, that the law was constitutional.

Rather it is a case of statutory construction (or interpretation) focused on one phrase that appears several times in the more than 2,000-page law. So in all likelihood, the law will remain in effect, although it could be weakened and complicated.

If the Supreme Court rules for the plaintiffs, millions of Americans who qualify for federal subsidies under the current understanding of the law and who live in the 36 states that have not set up their own state-run health insurance “exchanges” could lose those subsidies and lose their ability to afford health insurance.

Since the problem is not a constitutional one, it would also be well within the power of Congress to fix the whole problem for the whole country by fixing the language that created the problem. That won’t happen – at least not permanently – in a Republican-controlled Congress. But Republican leaders have talked about fixing it temporarily – so that the subsidies could continue to flow — until 2017, when Pres. Obama will be gone from the White House. In 2017, Repubs hope, a Republican will be in the Oval Office so they could repeal and replace the law with a Republican program, the details of which are unknown.

Secretary of Health and Human Services Sylvia Burwell (technically the defendant in the case) has told Congress that if the court rules for the plaintiffs there’s little the Obama administration can do by itself to mitigate the disruption of the program and it will be Congress’ job to repair the damage.

It’s also true that Obamacare will continue to function, pretty much as before, in the 14 states – predominantly those controlled by Democrats (including Minnesota) – that have set up their own health care exchanges. Even if the plaintiffs win the case, residents of those states will remain eligible for federal subsidies to afford health insurance.

The other 36 states – mostly those at least partially controlled by Republicans – could solve the subsidy problem for their residents by setting up their own exchanges even if Congress does nothing.

I don’t know if many – or any – of them will do so. Hatred for Obamacare is so high in some Republican circles that many probably will not. But it could start to look pretty deranged to allow millions of currently insured people to become uninsured by refusing the exercise an option that the law clearly provides. Through their own federal taxes, residents of those states would be subsidizing those in other states to get the subsidies that needy people in their own states could not get.

Perhaps at this point a refresher would useful on the statutory language at the heart of the case.

The ACA provides for Americans (who are not members of large pools like those with jobs that provide insurance) to shop for health insurance in state-based “exchanges.” An exchange is an online computerized market that is designed to make it easy for customers to compare costs and coverage of the health care policies available within their state. Access to the federal subsidies to help many of those folks afford their insurance also flow through the exchanges.

Some states, including Minnesota, have set up their own state-run exchanges. But for the 36 states that declined to set up their own exchanges, the law allowed the feds to operate one for them. (This is the famous, or infamous, healthcare.gov.)  

It’s the text

Anti-Obamacare activists, looking for ways to weaken or challenge the law, found a recurring phrase that says the subsidies (technically tax credits) are given to citizens who enrolled in insurance policies “through an Exchange established by the State under … the Patient Protection and Affordable Care Act.”

The case basically comes down to the question of whether that language means that those buying insurance from exchanges established by the federal government in states that did not set up their own exchanges are eligible for the subsidies.

If not, millions of Americans (I see estimates floating around the 5 to 8 million range) would be unable to afford their insurance. The ACA also mandates that people obtain health insurance (or pay a fee), but the mandate would be thrown into question if it applies to millions who can’t afford insurance because they can’t get subsidies that they could get if their states would set up the exchanges.

No one who was involved in writing the law says that this was their intent. But the plaintiffs did find at least one statement from one MIT economist named Jonathan Gruber, who worked as a consultant on the ACA, that seems to support the plaintiffs’ case. On a panel, before the ACA passed, Gruber said:

In the law, it says if the states don’t provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. I think what’s important to remember politically about this, is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. 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.

Here’s a piece that provides the full text,  in context, of what Gruber said that day.

In the same piece Gruber said that what he said was “a mistake.” He says the same about how the language came to appear in the bill. Congress made “a mistake.”

Gruber is not a member of Congress. If it’s the “intent of Congress” you’re after, something that one man, not a member of Congress, said one day on a panel is not exactly proof positive of what Congress “intended.” If you think hard about it, you’ll probably conclude that very few, if any, members of Congress were aware of this issue or this language. But if you were on the plaintiffs’ side of this case and were looking for a way to undermine the functioning of Obamacare, you can imagine how excited you would have been when this Gruber transcript emerged.

Justice Antonin Scalia is the leader of the court’s “textualist” wing, which refers to a belief that the text of the statute is the best way to understand what the law means as opposed to other considerations such as what the authors of the language may have “intended.” For a textualist, the several references in the law to “an Exchange established by the State” is a pretty fat pitch down the middle of the plate. I will be shocked if Scalia does not vote for the plaintiffs.

No commandeering

There’s one more possible outcome that has received some notice. Justice Anthony Kennedy, who is often the swing vote in closely divided cases, said during oral arguments in this case that even if the plaintiffs are correct in their interpretation of the “exchanges established by the state” language, it may be constitutionally impossible to rule in their favor.

In the original case testing the constitutionality of the overall Patient Protection Act, Kennedy voted to strike down the law on what you might call states rights grounds.

Under our state/federal system, there are limits to what the feds can coerce the states to do. Previous Supreme Court cases have established that the feds must not “commandeer” a state government to enforce a federal law. In voting to strike down the entire Obamacare law, Kennedy relied on the belief that the law violated their principle in various ways.

But the law was ruled constitutional in the original case. And Kennedy is not attempting to revisit that decision. To Kennedy, if the whole law is constitutional, then it must not and therefore does not “commandeer” the states. If it’s true (as Gruber suggested when he made his “mistake”) that the central phrase at issue in the new case is designed to coerce states to set up their own exchanges, then that would be unconstitutional.

At the oral arguments in King v. Burwell, Justice Kennedy said to the plaintiffs’ attorney that, according to the plaintiffs’ theory: “the States are being told either create your own Exchange, or we’ll send your insurance market into a death spiral.” To Kennedy, if the plaintiffs are correct in the meaning and intent of the language, then the law involves unconstitutional commandeering. So to rule in favor of the plaintiffs, he would have to endorse leaving in place an unconstitutional provision.

In this piece from Salon, written at the time of the oral arguments, Andrew Koppelman wrote that:

“[Kennedy] was firm about the implications of that – and here is the most significant thing that anyone said in this week’s argument:  ‘It seems to me that under your argument, perhaps you will prevail in the plain words of the statute. [But] there’s a serious constitutional problem if we adopt your argument.’

 Justice Sonya Sotomayor made the same point: ‘Tell me how this is not coercive in an unconstitutional way?’” 

This is a tad circuitous. The King v Burwell plaintiffs would presumably love to have the law struck down as unconstitutional. But the law has already been declared constitutional, so their lawsuit seeks only to change the meaning or function of the law. So, according to the questioning of Kennedy and Sotomayor, they cannot advocate for a meaning/function that would itself make the constitutional law unconstitutional.

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Comments (20)

  1. Submitted by John Borger on 06/24/2015 - 12:10 pm.

    Congressional “fix” if SCOTUS sides with plaintiffs?

    Here are a couple of tea leaves about the justices’ view of congressional fixes and how the likelihood/possibility of congressional action might affect their positions in King or lead to inconsistent pronouncements.

    “Passing legislation is no easy task. A federal statute must withstand the ‘finely wrought’ procedure of bicameralism and presentment. INS v. Chadha, 462 U. S. 919, 951 (1983); Clinton v. City of New York, 524 U. S. 417, 440 (1998); see U. S. Const., Art. I, §7. Within that onerous process, there are additional practical hurdles. A law must be taken up for discussion and not passed over in favor of more pressing matters, and Senate rules require 60 votes to end debate on most legislation. And even if the House and Senate agree on a general policy, the details of the measure usually must be hammered out in a conference committee and repassed by both Houses.” – from the dissenting opinion of Justice Alito (jointed by Justice Thomas and Chief Justice Roberts) in Kimble v. Marvel Entertainment LLC (June 22, 2015).

    From the oral argument in King:

    JUSTICE SCALIA: What about — what about Congress? You really think Congress is just going to sit there while — while all of these disastrous consequences ensue. I mean, how often have we come out with a decision such as the — you know, the bankruptcy court decision? Congress adjusts, enacts a statute that — that takes care of the problem. It happens all the time. Why is that not going to happen here?
    SOLICITOR GENERAL VERRILLI: Well, this Congress, Your Honor, I — I – (Laughter.) You know, I mean, of course, theoretically — of course, theoretically they could.
    JUSTICE SCALIA: I — I don’t care what Congress you’re talking about. If the consequences are as disastrous as you say, so many million people without — without insurance and whatnot, yes, I think this Congress would act.

  2. Submitted by John Appelen on 06/24/2015 - 12:10 pm.

    News or Opinion Piece

    I am always curious if Eric’s columns are supposed to be news stories or opinion pieces. Typically they seem more like opinion pieces.

    “Hatred for Obamacare is so high in some Republican circles that many probably will not. But it could start to look pretty deranged to allow millions of currently insured people to become uninsured by refusing the exercise an option that the law clearly provides.”

    The subsidies are very similar to welfare payments, food stamps, etc. Money is taken from one citizen and arbitrarily given to another for better or worse. I am not sure which is more deranged, discontinuing or continuing this freebie, people are harmed either way.

    • Submitted by Neal Rovick on 06/24/2015 - 02:56 pm.

      You are sadly uninformed if you think that the charges to the uninsured for medical care magically disappear under a system of no insurance.

      They are paid, through convoluted cost-shifting practices of a patchwork of public and private insurance, by everyone else.

      Not much difference, in the end, except a rationalization of patient charges and payments has occurred through universal coverage which should relieve some of the paperwork shuffling that occurs.

      There is no freebie generated by this system–the costs are always there and they, as always, are paid for others than the indigent uninsured.

      Have you ever heard the fact that a very large portion of health-care dollars is eaten up in the paper-work shuffle?

      Obamacare is a step toward relieving at least part of the shuffle.

      Of course, universal-coverage, single-payer is the ultimate solution.

      But that would be too rational. Why would we ever want to decrease the cost of our medical care?

      • Submitted by John Appelen on 06/24/2015 - 06:22 pm.

        Value and Cost

        I don’t want to decrease our medical care.

        I want the costs and value both as close to the consumer as possible. It is hard enough with traditional insurance, and worse with ACA subsidies.

        • Submitted by Neal Rovick on 06/25/2015 - 07:44 am.

          …I want the costs and value both as close to the consumer as possible. It is hard enough with traditional insurance, and worse with ACA subsidies….

          I’m totally confused by those two sentences, perhaps you could elaborate on the first sentence and then explain how ACA makes it “worse”.

          • Submitted by John Appelen on 06/25/2015 - 12:59 pm.

            Clarification

            I as an employee am aware that healthcare choices and higher healthcare costs can have a negative impact on my benefits, costs and the company I work for (ie employment). People who buy insurance with their own money realize this even more clearly. And people who pay they their medical bills directly understand this best of all.

            I think people who are buying insurance with the money from other citizens are more distant to the impact of their choices. And people on medicaid / medicare are most distant.

  3. Submitted by Ray Schoch on 06/24/2015 - 02:43 pm.

    I believe

    …Mr. Appelen’s 3rd paragraph sufficiently reinforces the point in Eric’s post, quoted in Mr. Appelen’s 2nd paragraph. This seems particularly true with Mr. Apelen’s use of the words “…which is more deranged…” in his 3rd paragraph.

    My own bias tends toward a belief that one of the appealing things about MinnPost is that many “pieces” posted on the site do not fall conveniently into the “either-or” boxes that those at both left and right extremes like to use to categorize so many things. I’m fine with news stories that include opinions, and I’m also fine with opinion pieces that contain a litany of facts.

    My own irony meter has nearly self-destructed after many weeks of watching diehard people who like to call themselves “conservative” deriving particular glee from a potential blow to the ACA from the SCOTUS. Since the ACA was largely written by Republicans, and is based on a Massachusetts program which is itself a product of the Heritage Foundation, a reliably right-wing think-tank, this giddy anticipation on the part of faux-conservatives makes even less sense than many another idea that has drifted onto the beach from the right. It should be noted, in addition, that no credible alternative to the ACA has been proposed by the people who seem most adamantly opposed to it. With any luck at all, the political cost to faux-conservatives of shooting down the ACA will be immense.

    • Submitted by John Appelen on 06/24/2015 - 06:16 pm.

      Pros and Cons

      I see both the good and bad in ACA, so I am rather indifferent.

      Bad: Money is taken from one group of citizens and given to another group of citizens with no consideration regarding personal choices, efforts, etc. People have to buy from a pre-defined basket of goods.

      Good: More citizens have “official insurance”, people with pre-existing conditions can get reasonable coverage, kids are covered until 26, etc. People have to buy from a pre-defined basket of goods.

      I am always amazed that the defenders and opponents have a hard time seeing the other side.

  4. Submitted by Dennis Tester on 06/24/2015 - 02:52 pm.

    Kennedy’s argument re-visited

    The law was only deemed constitutional because the Chief Justice took it upon himself to create its payment method out of whole cloth and hand the democrats a remedy for their scheme that otherwise was missing from their law.

    If Thomas could do that, what’s the problem of simply revisiting Kennedy’s brilliant observation that the federal government cannot force the states to enforce federal law? That was the reason why most of us believed that Obamacare would never pass constitutional muster.

    Regardless, all that is necessary for republicans to be happy, contrary to the views on the left who believe we just want people to die in the streets, is to make the program voluntary. No republican I know wants to deny poor people health insurance. It’s making the system mandatory for everybody that’s the deal breaker for us. Remove that and I’ll bet you’ve got a deal.

    • Submitted by Dennis Tester on 06/24/2015 - 04:37 pm.

      I meant Justice Roberts

      of course, not Justice Thomas.

    • Submitted by Kurt Nelson on 06/24/2015 - 05:04 pm.

      Actually

      The ACA was deemed constitutional after it was introduced in the House, confirmed by the full Congress, signed into law by the President, and then 5 Justices ruled it so. That’s how a bill becomes a law – it’s on Sesame Street if you want to check it out in plain English.

    • Submitted by Ray Schoch on 06/24/2015 - 08:29 pm.

      Voluntary?

      “…contrary to the views on the left who believe we just want people to die in the streets, is to make the program voluntary. No republican I know wants to deny poor people health insurance.”

      Of *course* Republicans don’t want people dying on the streets because they lack health care. Not very much thought is required to imagine the political repercussions to the GOP should that, in fact, turn out to be the case. And with that in mind, I’ve still seen no credible alternative to the ACA from figures of any stature in the Republican party, whether elected or party functionaries.

      No one on the GOP side that I’ve read, at least in recent months, has adopted your “just make it voluntary” position as a way to reach consensus. Everyone I’ve come across on the Republican side who’s willing to be quoted publicly has adopted some variation on the phrase “…the federal government should not be involved in health insurance,” and/ or “…we should rely on the market to provide health insurance and coverage for all.” Many of those same people would not only do away with the ACA, they’d also like to kill Medicare and Medicaid as well.

      Even if we leave those latter two programs in place, making the ACA “voluntary” is a step backward. We had “voluntary” health insurance for the poor long before the ACA. The result was millions of people with no health insurance, and in many cases, without medical care. In a society as productive and wealthy as this one, that’s simply unconscionable – there’s no excuse for it. If I’m making $11 an hour at a big-box store, especially if I have a family of any size, I simply cannot afford *any* health insurance unless my employer provides it as part of my compensation, or heavily subsidizes the cost. That makes me dependent on my employer not only for my livelihood, but for my health care. There’s no excuse for that, either.

      This is the health insurance system we had *before* the ACA. Many doctors and other practitioners, whose incomes rely on charging a fee for service like(d) our old “system,” such as it was, just fine. Too bad about those millions who couldn’t afford to see a doctor, or pay the Emergency Room bill (often for thousands of dollars) when it arrived in the mail. The old “system” works fine if you’re affluent, much less well if you’re merely comfortable, and not at all if you’re in the bottom 20% of income earners. Only in the U.S. can a modestly comfortable family find itself losing everything due to bankruptcy because of medical bills. Everywhere else in the developed world, taxes on the general population provide medical care to everyone, free, or at very nominal and modest cost, with the exception of purely optional and cosmetic procedures. In come cases, the insurance is private, in some cases, it’s provided by the government, but *everyone* who’s a citizen (and usually travelers who aren’t citizens) is covered.

  5. Submitted by James Hamilton on 06/24/2015 - 05:08 pm.

    The issue in a nutshell

    ” ‘If the statute is clear and unambiguous “that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” . . . In ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.’ ” K mart Corp. v. Cartier, Inc., 486 U.S. 281, 291-292, 108 S.Ct. 1811, 1818, 100 L.Ed.2d 313 (1988) (internal citations omitted).

    There is room for the court to go either way under this standard. I expect it to fall out along now familiar lines. The question is, “Who will be the swing vote?” Roberts could be again.

  6. Submitted by Margaret Houlehan on 06/24/2015 - 09:40 pm.

    The bottom line

    is that we need Single Payer Health Care. If any of you think you are not vulnerable, you are sadly mistaken. It makes me sick that some in this country still see health care as a privilege or commodity. Obamacare is far from perfect, but it reigns in some of the atrocities of the insurance industry. Unless you are enamored of lifetime caps, pre-existing conditions, and CEOS making multi millions while denying you care.

  7. Submitted by Gerald Abrahamson on 06/25/2015 - 08:53 am.

    State exchanges were mandatory, not optional.

    The latest silly claim is various states did not authorize or permit state exchanges to be created/established. This is a nonsensical claim on its face.

    The federal govt required each individual state to create/establish an insurance exchange to implement Obamacare. This was legally necessary in order to comply with the US Constitution and maintain “States’ rights”. Insurance sold within each state is regulated by that state. This is why “selling insurance across state borders” is unconstitutional. Selling insurance across state lines violates “States’ rights”.

    U.S. Constitution, Article IV, Section 1:

    “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.”

    States have different publicly known rules and regulations (“…public Acts, Records…”), and each state can choose to change them as they choose–independent of any other state. One state would not be able to pass laws that would apply in another state. That includes insurance regulation.

    As each state is required to create an exchange by federal law, there is no choice as to *if* there will be a state exchange. The only question is: Who will the state authorize to create the state exchange?

    States had a choice to make:

    1. Do it themselves (with federal financial help), or
    2. Authorize the federal govt to establish the state exchange. The state paid to create the state exchange. The federal financial assistance that was to be used for the state to create their own exchange was used to fund the state exchange created by the federal govt. The federal govt was the contractor hired by the state.

    Failure to choose #1 meant automatic authorization by the state for the federal govt to establish a state exchange for the residents of that state (#2 = default).

    Note the key point: There is no option to NOT have a state exchange.

    Because of that key fact (no option to NOT have a state exchange), the argument the state did not “establish/create/authorize” the “state exchange” is fatally flawed. By definition, states are required to comply with federal law. Claiming states *failed to comply with federal law* contradicts the obligations of the states.

    The states had the choice to “do it themselves” with federal financial help OR “contract it out”. Many chose to “contract it out” to the federal govt. Each state was fully aware of this fact, it is in the law, and each state made a choice based on what they wanted. What they can not do is whine about their choices after the fact.

    The cases claiming states did not comply with federal law should have been thrown out by the courts almost immediately after they were filed for precisely that reason.

    • Submitted by Hiram Foster on 06/25/2015 - 04:05 pm.

      The constitution

      I don’t see the application of the full faith and credit clause here. And the meaning of the clause is somewhat different from what you suggest. It says that states are obligated to recognize the acts of other state which tends to mean that one state’s law can apply in other states. I have always thought that presented an interesting argument or at least problem with marriage equality. If someone enters into a valid marriage in one state, must another state, in which that marriage would be illegal, be required to recognize the foreign marriage? Good argument I have thought, but it wasn’t made in Loving v. Virginia a case pertaining to inter racial marriage.

      As for the authorization argument, individual states could have authorized the federal exchange to serve as the state exchange. I have little doubt that would have solved the King v. Burwell problem, but the states didn’t do that. People seem to like to argue that there are implied contracts, but really they are pretty scarce. What there are a lot of is contracts which are unwritten but very real and not implied at all. When I fill up at a self service gas station, there are no lawyers around, no documents to be signed, but the contract to pay for the gas is real and clear. Nothing implied about it.

      Another problematic issue is this notion that the federal government can order the states to do things. I suppose it’s possible but really there are a huge numbers of cases a lot of them recently holding that the federal government can’t order states to do thing, a violation of state sovereignty or something like that. Putting that in a law would amount to constitutional malpractice.

  8. Submitted by Paul Brandon on 06/25/2015 - 09:41 am.

    Sanity reigns

    It’s over.
    A 6-3 unambiguous vote.
    Only Congress can screw it up now.

    • Submitted by RB Holbrook on 06/25/2015 - 10:58 am.

      “Only Congress can screw it up now.”

      I do not find any reassurance in those words.

      • Submitted by Paul Brandon on 06/25/2015 - 12:58 pm.

        Sixty percent

        The legislation is in place and has been upheld by the Supreme Court.
        To overturn it would require passing new legislation, requiring a 60% majority under most circumstances.
        The only remaining avenue of Republican resistance might be funding.

        • Submitted by RB Holbrook on 06/26/2015 - 12:15 pm.

          The only remaining avenue

          I first read your last sentence as “The only remaining avenue of Republican resistance might be fuming.”

          That one they have down to an art.

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