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

As we await the ruling, here is a refresher on the statutory language at the heart of the case.

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

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.

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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.

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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.

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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.