Law, Not Policy, Should Guide Supreme Court in Obamacare Subsidies Case



For months now, the Obama administration has been playing a coy game with the latest Supreme Court challenge to Obamacare, refusing to say what kind of plans they are making in the event that the High Court rules against them.

The issue, which the court will hear on Wednesday of this week, is whether the administration's decision, through an Internal Revenue Service rule, to provide subsidies for insurance purchased through the law's federally run exchanges is allowed under the text of the law, which says that subsidies are availably only in exchanges established by a state. If the court decides against the administration, subsidies for several million individuals would quickly be cut off absent any legislative follow-up.

Last week, the administration seemed to go a step further, suggesting that they have no plans at all. "We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our healthcare system that would be caused by an adverse decision," said Health and Human Service Secretary Sylvia Matthews Burwell in a letter to Congress.

The language here is slippery. It's not that the administration has no backup plans whatsoever. It's that the administration claims to have no plans that would fully reverse the result of a court decision for the challengers. Surely the administration has prepared in great detail for an adverse ruling—one Republican legislator suggested at a hearing last week that the White House has put together a 100-page dossier of potential responses—although what, exactly, the White House would do remains unclear.

But the primary point of the letter wasn't to clarify what the administration would or wouldn't do in the event of an adverse ruling. Instead, it was to highlight, again, the disruption that one would cause—and perhaps, in the process, make the court ever so slightly more reluctant to rule against the administration.

The administration, in other words, wants the Court to believe that ruling for the challengers would be maximally painful and disruptive.

Republicans in Congress, in turn, are playing their own version of the same game. GOP leaders have indicated that various groups on the Hill are working on contingency plans and Obamacare alternatives. One plan, an update to an existing proposal by a trio of Republican senators, has already been released. Various other ideas about what to do in the event of a ruling for the challengers have been floated by legislators and influential policy experts on the right. And today, in The Washington Post, three GOP senators—Orrin Hatch, Lamar Alexander, and John Barasso—write that "Republicans have a plan to create a bridge away from Obamacare."

Their plan would "provide financial assistance to help Americans keep the coverage they picked for a transitional period," in order to minimize the disruption, and it would allow for some federalist flexibility, giving "states the freedom and flexibility to create better, more competitive health insurance markets offering more options and different choices."

As outlined in the Post, the plan leaves lots of questions: What sort of financial assistance would be provided, and for how long? What sorts of flexibility would states have, and under what legal authority? And are there enough votes in the House and the Senate to actually pass something—anything—that resembles what the trio of senators describe?

To the last question, the senators write that "we have had many discussions with our Senate and House Republican colleagues on this issue, and there is a great deal of consensus on how to proceed."

It's possible that the House and Senate could unite on a plan relatively quickly. In an interview with Bloomberg News last Friday, Rep. Paul Ryan (R-Wisc.) talked about the need for Republicans to create a "bridge out of Obamacare" if the court sided with the challengers. The use of the same descriptive language suggests that, if nothing else, parts of the House and the Senate are on the same page when it comes to messaging.

But as last Friday's chaotic House vote on Department of Homeland Security funding suggests, it's hard to know whether Republicans could really get anything like what the three senators describe to pass. As Ezra Klein, who also raised some of the same questions about the GOP trio's plan, argues, it's just as likely that Republicans would not be able to agree on any fallback at all. Certainly, the history suggests that it would be very hard for Republicans to unite around any health care plan; years of promises to repeal and replace Obamacare have produced a number of proposals, but little consensus. Mostly they have demonstrated how difficult consensus is to achieve.  

But consensus isn't really the goal here. Instead, the Republicans are playing a strategy that is the reverse of the one employed by the White House: They want to convince the court that the fallout from a ruling for the challengers would not be too great, because the GOP has a mitigation strategy at the ready.

What this messaging tug-of-war leaves us with, then, is an odd dynamic in which the administration insists it has no contingency plan, even though it (likely) does, and Republicans in Congress insist they have a backup, even though they don't.

It is understandable that both sides would take this approach; after all, as Georgetown law professor Randy Barnett has argued, the Supreme Court is more likely to rule against the administration if Republicans have some alternative in place. By the same token, the High Court is more likely to rule for the administration if there is no contingency waiting in the wings. (And to the extent that it matters, I think Republicans have at least a somewhat better argument; they don't yet have a plan, but they are at least working on plans, while the administration is absurdly attempting to imply that it has no playbook should it lose.) 

But even though this approach is understandable, and perhaps even inevitable, it is not ideal.

The question before the court isn't whether a ruling against the administration would be disruptive. It's whether the administration's actions are authorized by the statute. To the extent that a ruling against the administration would be disruptive, it would only be because the Supreme Court decided that the administration exceeded its authority in the first place. The law either authorizes the subsidies or it doesn't—and if it doesn't the subsidies should not have been granted in the first place. Neither the scale of the disruption nor the readiness of some alternative render the administration's actions more or less legal.

Despite the efforts of both sides to influence the court, this isn't really controversial. What matters is what the law says. Indeed, sometimes disruption is required by the law, and when that happens it doesn't mean the law should be tossed aside. It's worth looking back a few weeks to the administration's announcement that it would be cutting off coverage through Obamacare for 200,000 people who failed to verify their legal status in the United States. This was, it seems reasonable to assume, tremendously disruptive for a fairly large number of people. It was also required by law.

Obviously the administration's position is that, in this case, federal exchange subsidies are allowed under the law. But this is the core of the dispute: What is authorized by the law, and what isn't? Policymakers in Congress can and should consider the policy consequences of a ruling against the administration, but the Supreme Court should be concerned with the law and its limits, regardless of the consequences.