King v. Burwell And The ACA’s Means And Ends

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The Supreme Court heard oral arguments in King v. Burwell, a landmark ACA case, in March. A decision will be issued before the end of the month, and both supporters and opponents have spilled considerable ink in the hope of influencing the outcome. King hinges upon the question of whether residents of states that were either unwilling or unable to establish a health care exchange are eligible for federal subsidies. In the states without exchanges the federal government, as directed by the Act, established exchanges through which residents could enroll.

While the Act provides for the establishment of federal exchanges where the states did not establish one, it makes no mention of the availability of subsidies for residents enrolling through the federal exchanges. Subsidies, according to the plain language of the statute, are available through exchanges “established by the State”. Supporters of the Act claim that this language was merely an oversight on the part of the drafters, and should not be taken literally as it would frustrate the Act’s intent.

While there has been much debate about the practical and political ramifications of King, which on its face appears to simply be a case of statutory interpretation, there has been considerably less discussion of the potential impact of the Court’s decision on the delicate balance of power between the branches of government.

This is not the first time that the ACA has impacted traditional principles of government, with the first being an attempted expansion of Commerce Clause power to justify the individual mandate, and the second being the Democrats’ implementation of the “nuclear option” to limit the filibuster for certain judicial nominees. The former claimed  the power to compel activity in order to regulate it, and was smacked down by the Court in NFIB v. Sebellius, but Chief Justice Roberts saved the administration by finding the power under the taxing authority. The latter was implemented largely in order to ensure a Democrat majority on the DC Circuit Court of Appeals in the hopes that it would spare the ACA SCOTUS review, and is still in place. In short, the Democrats are so committed to saving this president’s signature legislation that they are willing to make the ends justify the means.

There are three possible paths to victory for the administration. First, the Court could find that Section 1311, which contains the language at issue, doesn’t really mean what it plainly says. This is a high burden, since the rules of statutory interpretation dictate that where a statute is unambiguous, than the legal analysis is complete. To arrive at this conclusion they would have to determine that the coercive nature of withholding subsidies to ensure cooperation is contrary to the intent of the Act, and therefore could not have been the intent of the drafters.

The problem with this conclusion is that the Act is clearly coercive, and was intended to be so. The individual mandate is intended to coerce individuals into buying healthcare. The provision, subsequently struck down by the Supreme Court, withholding Medicaid funding to states that refused to expand their Medicaid programs was intended to coerce the states. Thus, it makes sense that the withholding of subsidies to uncooperative states was also intended to coerce, and is in line with the prior two examples. The implications of such a decision for the separation of powers doctrine would be to empower the Supreme Court to rewrite legislation, a congressional prerogative, simply because the Executive doesn’t like the way it was written.

Second, the Court could find that the language of Section 1311 is ambiguous, which would trigger Chevron analysis. This precedent, one of the most frequently cited cases, directs courts to defer to the relevant Executive agency’s interpretation, so long as it is “reasonable” or “permissible.” The problem with this outcome, as Chief Justice Roberts observed during oral arguments, is that there would be nothing to stop a future Republican Administration from simply arriving at the opposite interpretation of Section 1311. The longer term implication for the Separation of Powers doctrine would be that the standard for what constitutes “ambiguity” would be dramatically lowered. If Section 1311, as plainly written as it is, can be construed to be ambiguous, what would stop a future president from challenging “ambiguous” statutory language with which she disagreed? The power of the Executive to reinterpret statutory language would be dramatically increased at the expense of the Legislative Branch.

The third possibility would be that the Court agrees with the plaintiffs that Section 1311 limits subsidies to the state exchanges, but finds such coercion to be in violation of the Tenth Amendment. Under the doctrine of constitutional avoidance, courts will interpret an unconstitutional statute in a way that makes it constitutional. The Supreme Court already applied this principle in NFIB v. Sebelius, where it found that the Act’s withholding of Medicaid funds from states that refused to expand their Medicaid programs to be a proverbial “gun to the head,” and therefore unconstitutional. The Medicaid example, however, is distinguishable in that it would have constituted a “taking” from the States who failed to comply, as opposed to merely a denial of future funds.

Moreover, the subsidies in King are being denied to the individual residents, and not the states themselves. The administration clearly doesn’t want to prevail on these grounds because the withholding of funds from the states is a well-established means by which the federal government coerces cooperation on issues as varied as compliance with EPA standards and the drinking age. In fact, Laurence Tribe, Obama’s old Law School Professor, is employing exactly this line of reasoning in challenging the EPA on behalf of a coal company. If the administration prevails on this basis, the outcome would greatly diminish the power of the federal government over the states.

I think that this case could go either way, and I’m not going to venture a prediction about the outcome. I do, however, think that if the administration wins, it will be largely because of political as opposed to legal reasons. The opponents quite simply have the stronger legal argument, and calling them names, questioning their motives, and writing rebuttals that don’t even address the merits of their arguments is not persuasive. The argument that nobody involved in the Act’s drafting ever envisioned subsidies being denied to uncooperative states ignores the widely circulated comments by Obamacare consultant/architect (depending on who you ask, and when you asked them) Jonathan Gruber.

The argument that federal and state exchanges are interchangeable fails to explain away the plain language of section 1311. Why would it not have simply said “exchanges,” as opposed to making the “state exchange” distinction? Also, considering the significant logistical, political, and financial expense associated with creating and maintaining an exchange, why would any state opt to create its own exchange if the Federal Government was willing to do it for them? As it stands now, only twelve states and the District of Columbia operate their own exchanges, with the Hawaiian exchange recently failing, and half of these are currently in financial trouble. Why not let the Feds handle all the burdens of creating and operating the exchange, and still get all of the benefit without any of the expense or risk. The answer, of course, is the subsidy incentive. Finally, if the Act was never intended to be coercive, than how do its supporters explain the Medicaid provision? Not only was it coercive, it was so coercive that it ran afoul of the Constitution.

The Executive branch is strong enough already, and it is not the province of either the Executive or Judicial branches to make laws. The lower the standard for ambiguity the stronger the Executive becomes, since Chevron deference essentially guarantees that the Executive will prevail, even when “it is not the best interpretation of the statute or the interpretation that the court would have devised.” In fact, the Supreme Court has always upheld Executive agency interpretation when applying Chevron analysis.

Lawmaking is a Legislative prerogative, and if the Court undermines this power it risks making the Legislative branch a subordinate as opposed to coequal branch of government. While the ACA’s supporters are deeply invested in its success, it would be unfortunate if they scapegoat the Court for an administration loss. The Court, after all, should deal with the law and not politics. They should direct their ire instead at the drafters, and focus their energies on either a bipartisan legislative fix, or encouraging more states to establish exchanges as the Act intended.