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Obamacare 2.0 litigation: time to panic?

In September, I presented the D.C. Circuit’s decision to rehear the most recent challenge to the Affordable Care Act (ACA) as an example of how hyperventilating over lower court rulings often proves unnecessary. On Friday, however, the Supreme Court opted not to wait for the D.C. Circuit en banc hearing, instead choosing to grant review of the Fourth Circuit’s ruling upholding the ACA’s subsidies to insurance purchasers in states whose exchanges are run by the federal government. Is it time for ACA supporters to break out the paper bags?

Reasons for panic:

* The fact that the Supreme Court took the case at all, given the absence of a lower-court split on the issue. With the D.C. Circuit’s rehearing scheduled for December, the justices could have waited to see if the issue resolved itself. Instead, they decided to review the Fourth Circuit’s ruling now, and given the fact that the Court is more likely to grant review to reverse a lower court’s decision than to affirm it, ACA supporters have reason for concern. It is true that only four justices’ votes are needed to review a case, and as such, a vote to review is not necessarily a vote on the merits of the case. But if the four dissenters in the 2012 ACA case were uncertain that they had a fifth vote, why rush to take the Fourth Circuit case?

* The persistence of a dubious legal claim. The short version is that the reference in the ACA to “an Exchange established by the State” precludes the provision of federal subsidies (the part making the Act’s care affordable) to purchasers in states that chose not to create their own health exchanges, instead relying on the federal government to do it. In this rendition, the reference to “the State” reflects not an isolated instance of sloppy drafting at odds with the statute’s other references to the exchanges. Instead, it reflects a deliberate policy choice to compel states to set up their own exchanges by denying subsidies to residents of states declining to do so.

The fact that this alleged purpose was unknown to the people who actually drafted the ACA, voted on it, and contemporaneously commented on the debate surrounding it, or that this interpretation would eviscerate the statute’s overall purpose of expanding access to health care, matters not at all. If several million people have to lose health coverage–and some of them will die as a direct result–well, that’s the fault of the legislators who drafted the statute this way, not of judges looking for an excuse to wipe out an opposing party’s president’s signature legislative accomplishment. It is tempting to laugh off a legal claim of the sort being offered here, but the Commerce Clause argument raised in the Obamacare 1.0 litigation wasn’t taken seriously either until it came up one vote shy of voiding the ACA entirely.

Reasons not to panic:

* The ACA survived the first round of litigation, despite concerns that the Court might use a restrictive reading of the Commerce Clause to void the act. Chief Justice Roberts had a kill shot lined up in 2012 and chose not to pull the trigger, at a time when striking down the law would have had minimal practical (though significant electoral) consequences. Why would he be more likely to use a less solidly grounded legal claim to do in 2015 what he was unwilling to do in 2012?

* The status quo makes ACA repeal less politically palatable. In 2012, the status quo was the prospect of affordable health insurance for millions of people. Today, the status quo is the reality of affordable health insurance for millions of people. A ruling against the government’s position would strip the subsidies that make the mandatory health insurance affordable, and then subject them to penalties when they can no longer afford insurance. Will the Court inflict tangible misery on millions of people in the service of a ruling that would have minimal precedential value and would serve no other purpose than kneecapping the president’s legacy? A politically tone-deaf Court that chose to rule as it saw fit, and let the political chips fall where they may, might be willing to undertake such action. But

* Chief Justice Roberts has shown enough of an instinct for strategic behavior that he might hesitate to unleash the political chaos that would accompany a ruling against the subsidies.The 2012 ruling on the Affordable Care Act demonstrated these instincts vividly. The majority ruled in ways that undercut the ACA’s effectiveness (making the Medicaid expansion optional) and that lay the groundwork for future restrictions on Congress’ authority to legislate under the Commerce Clause. At the same time, though, Roberts provided the fifth vote to leave the act standing, despite his hints at misgivings about the act’s policy soundness.

In the pending litigation, however, he won’t have any compromise position. Either the statute’s overarching purpose and context, coupled with the Court’s longstanding position of judicial deference to agency interpretations, will prevail, or a literalist reading of one clause taken in isolation will. The latter will compel state officials in 34 states to decide whether to strip their citizens of subsidies. It is true that Republican governors and legislatures had no problem denying the Medicaid expansion to their neediest citizens, despite the fact that funding for the first three years would have been supplied entirely by the federal government. But stripping ACA subsidies would harm middle-class households, which have much more political clout than the least affluent. It would also throw the private health insurance market into disarray. Maybe conservatives on the Court don’t care about any of these things. But the ACA will survive as long as one conservative justice does.

What happens at oral argument will tell us more about what to make of the Court’s action. But the fact that we’re having this conversation at all says something profound about the Roberts Court.


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