U.S. Supreme Court

Is the health-care law doomed by new SCOTUS cert grant?

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The Obama administration’s health-care law is back before the U.S. Supreme Court in a statutory interpretation case challenging the way subsidies are paid to low-income families. The speculation is that Chief Justice John G. Roberts—deemed the swing voter on the issue—could doom the law with a ruling that subsidies aren’t available in states without their own insurance exchanges.

A Slate article takes the opposite tack, arguing that the health-care law could survive even if Roberts reads the statute to prevent subsidies in states where residents have to purchase insurance on the federal exchange. The authors are legal journalist Dahlia Lithwick and New York University law professor Barry Friedman.

At issue is the interpretation of Section 36B of the Internal Revenue Code, which authorizes tax subsidies for low-income people participating in insurance exchanges “established by the state.” The Internal Revenue Service had interpreted Section 36B broadly to allow tax credits for those who buy insurance through federal as well as state insurance exchanges, meaning low-income residents of all 50 states are eligible.

The U.S. Supreme Court granted cert in King v. Burwell, which had upheld the IRS interpretation. Another appeals court has issued a contrary ruling, but an en banc review was pending. Some suggested the Supreme Court’s decision to wade into the dispute was an indication that the four justices needed to grant cert were eager to strike down the IRS interpretation, and this time Roberts would join them.

“Not so fast,” Lithwick and Friedman write at Slate. “First, it is simply wrong to assert that the justices never take a case like this absent a split in the lower courts, unless—like the Big Bad Wolf in Little Red Riding Hood—they are licking their chops to kill something. To the contrary, as some have already argued, it makes perfect sense for the justices to take a case of this importance the first chance they get. If the subsidies ultimately are unlawful, there will be a lot of disruption; people need to know as early as possible what is going to happen, and states need to figure out how to react. …

“Second, it is possible everyone has their political calculus wrong with regards to the chief justice, just as we did the first time the Supreme Court looked at the [Affordable Care Act]. Roberts, according to all accounts, did a last-minute 180 on Obamacare in 2012. We may never know why, but it seems likely it had something to do with preventing a backlash against the court.”

The article goes on to conclude that even if the court decides the subsidy system is invalid, “that might actually help Obamacare, not hurt it.” The authors argue that a decision striking down the subsidies in states without exchanges could put pressure on those states to make sure their residents aren’t excluded. “In the end, striking the federal subsidies may push more states into the Obamacare fold,” the article says.

More debate on the cert grant and the possible outcomes is taking place at SCOTUSblog in a “symposium” on the issue.

Hat tip to How Appealing.

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