Supreme Court Appears Closely Divided Over Legality of Obamacare Tax Subsidies

Sharp questions for both sides. Kennedy and Roberts likely hold the deciding votes.


Washington, D.C.—For the second time in three years, the U.S. Supreme Court is weighing an existential threat to the Patient Protection and Affordable Care Act. In 2012 that threat arose from the text of the Constitution. Did Congress actually possess the lawful constitutional power to force every American to buy health insurance? By a margin of 5-4, with the deciding vote cast by Chief Justice John Roberts, the Court held that it did, thereby saving the law from destruction. This time around, in a twist of irony, the threat to Obamacare arises from the text of Obamacare itself.

Credit: C-SPAN

The question before the Supreme Court today in the oral arguments over King v. Burwell was whether the Obama administration illegally implemented the federal health care law by allowing certain persons who bought health insurance on federally established exchanges to qualify for tax credits. According to the text of the Patient Protection and Affordable Care Act (ACA), those tax credits are limited only to purchases made via an "Exchange established by the State," not via exchanges established by the federal government. If the Supreme Court decides to affirm that textual command and reject the broader interpretation favored by the White House, the future of the ACA would be thrown into grave doubt.

Up first at the lectern this morning was Michael Carvin, the veteran Washington lawyer representing the four individuals challenging the legality of the Obama administration's actions. To say that Carvin faced sharp questioning from the Court's liberal justices would the understatement of the year. From my seat in the overcrowded press section, I watched Carvin spar repeatedly with Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan, none of whom looked upon the conservative litigator with what we might call a friendly disposition.

"We look at the whole text," Kagan told Carvin. "We don't look at four words." Breyer agreed. "How does context support you?" he asked Carvin, a sharp tone in his voice. In fact, Breyer said, when you look at the entire context and structure of the ACA, your legal challenge falls apart.

But before those verbal fireworks went off, Justice Ruth Bader Ginsburg interrupted Carvin's opening statement to raise the wild card issue of standing. According to some recent reports that are not part of the record of this case, she noted, it seems possible that none of Carvin's clients actually possess the requisite legal standing to pursue this litigation. Perhaps the Supreme Court should not be hearing this case at all, she implied.

But Carvin waved away those concerns and, more importantly, no other justice echoed Ginsburg's worries. It appeared that the rest of the bench was ready and willing to reach the merits of this case.

Representing the Obama administration today was Solicitor General Donald Verrilli, the wonderfully mustachioed architect of the administration's narrow 2012 victory. Once again, it fell to Verrilli to save the White House from a judicial rebuke.

He had his work cut out for him. "How can the federal federal government establish a state exchange?" asked Justice Antonin Scalia. "That's gobbledygook."

Justice Samuel Alito made a similar point, albeit in a less colorful manner. Why did Congress specifically write "Established by the State"? he asked Verrilli. "Why didn't [Congress] write 'in the state'" or some other phrase more consistent with the government's interpretation of the law's purpose?

But it was Justice Anthony Kennedy who left the biggest impression of the day. At one point, Kennedy signaled strong hostility towards the federal government's position, telling Verrilli that the text of the ACA "goes in the wrong direction for your case."

Yet Kennedy also said that the case raised strong federalism concerns that might ultimately work in the federal government's favor. How so?

According to Kennedy, if the legal challengers have the correct textual interpretation, then this contested provision of the ACA may itself be "unconstitutionally coercive" since it forces the states to choose between establishing state exchanges or watching their insurance markets go into a "death spiral" absent federal tax credits. In other words, it is a gun to the head, not a real choice. And if that is indeed the case, Kennedy added, it raises the specter of "constitutional avoidance," which is the legal doctrine which says that if the Court faces two possible interpretations of a statute, and one of them would render the statute unconstitutional, then the Court should adopt the interpretation that avoids bringing down such a constitutional judgment. In other words, Kennedy's questioning suggests that he could reject the government's reading of the text, but then still effectively vote for the government in order to avoid interpreting the ACA as imposing unconstitutional coercion on the states. This view could prove decisive to the outcome of the case.

Finally, a few words about the chief justice. In 2012 Roberts famously voted to uphold the ACA as an act of conservative judicial restraint. Not surprisingly, all eyes were trained in Roberts' direction this morning. Yet Roberts revealed nothing. Indeed, he played a supreme game of poker, asking only one truly substantive question (of the solicitor general) during the entire proceedings. Needless to say, we're going to have to wait a little longer to find out what sort of vote Roberts is holding.

A decision in King v. Burwell is expected by June.