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The losing end in Obamacare 2.0

As the Supreme Court began to take up the question of whether the Affordable Care Act properly allowed subsidies to go to those purchasing insurance on the federal health exchange, as opposed to state-run exchanges, two lines of argument began to emerge. One focused on the plain language of the phrase “Exchange established by the State,” which, according to the petitioners, clearly meant that only purchasers at state exchanges could receive subsidies. This interpretation required a studied disregard for the ACA’s broader purpose of expanding health care access, as well as other textual provisions that appear not to distinguish between purchasers at state exchanges and purchasers at healthcare.gov. But it allowed ACA opponents to blame Congress for sloppy drafting and to hold Congress responsible for fixing it.

A second line of argument claimed that the the disputed language was not a bug, but a feature of the ACA. By this account, Congress deliberately limited subsidies to states with their own exchanges, as a way of strong-arming recalcitrant states into participating. This claim had little support from the historical record, as no one involved with the ACA negotiations thought that subsidies were being withheld as a means of commandeering states to create exchanges. (Indeed, the dissenting opinion in the first ACA Supreme Court case worked on the assumption that eligibility for subsidies did not hinge on your home state’s decision to create its own exchange.) It also lacked any logical foundation: Why would Congress, on the cusp of achieving the century-old dream of national health insurance, include a feature that, if triggered, would sabotage the ACA altogether? Whether it could convince five justices, however, remained an open question that provoked no small amount of agonizing from ACA supporters.

Justice Antonin Scalia’s dissent, while not as dyspeptic as what followed the next day, is caustic in presenting its application of textualism to the ACA’s subsidy language. The bulk of the opinion focuses on what he sees as the absurdity in holding that “Exchange established by the State” can encompass the federal exchange. While paying lip service to the need to interpret contextually, he considers the relevant text so clear in its meaning that no consideration of context can compel a contrary result. After all, why bother including “by the State” if you intend to make subsidies available to all, irrespective of who created the exchange? If you wish to consider this phrase a drafting error–and Scalia’s not convinced that it is–then Congress, and not five justices, should be the actor to fix it.

As for the alternative history of the ACA presented by the petitioners, Scalia does not rely much on it. He does refer to the theory as “plausible,” but that’s about as far as he goes. The bulk of the opinion pits Scalia’s textualism against the purposive approach favored by the majority. It is noteworthy that in a case holding such policy and political (if not legal) significance, Scalia was unable to convince two fellow conservatives on the Court to join a textualist opinion against the Obama administration’s interpretation of the ACA’s subsidy language.


ACA survives at the Supreme Court again

All the hand-wringing over incipient chaos in American health care can now cease (at least until the next election), thanks to the Supreme Court’s 6-3 ruling today in King v. Burwell. Chief Justice John Roberts, who wrote the majority opinion, and Justice Anthony Kennedy joined the four-justice liberal wing in rejecting the claim that the text of the Affordable Care Act (ACA) limited health insurance subsidies to individuals living in states with their own health exchanges. As a result, the approximately 6.4 million people who receive their subsidies through participation in the federal exchange will not be at risk of having their insurance yanked out from under them.

Some highlights from the majority opinion (thoughts about the dissent to come in a later post):

* Not only did defenders of the ACA get the policy outcome they sought, they got the legal justification on their preferred terms as well. That is, Roberts, while critical of the “inartful drafting” appearing in several parts of the ACA, insisted on understanding the crucial phrase “established by the State” within the broader context of the statute, and in particular the purposes Congress sought to achieve through the law. The potent quotable: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

* What makes the Roberts opinion particularly satisfying is its use of the dissenters’ own words to undermine the petitioners’ position. Petitioners claimed that Congress had deliberately sought to limit subsidies to states with their own exchanges, as a way of strong-arming recalcitrant states into participating. Without the subsidies, however, insurance would cease to be affordable for many recipients, and the resulting adverse selection would produce a “death spiral” damaging the health insurance markets at large and leaving millions of Americans without coverage. The idea that Congress would build this complicated regulatory machine and then include a prominent self-destruct button that could sabotage it seems laughable, but the fact that litigation hinging on this claim had made it to the Supreme Court at all meant that it had to be addressed. Roberts disposes of it by quoting Justice Antonin Scalia’s dissent from the first ACA litigation: “Without the federal subsidies . . . the exchanges would not operate as Congress intended and may not operate at all.” Scalia’s words came in the context of trying to explain why the entire ACA had to fall if any part were to be found unconstitutional, but while he might regret their use in the King majority opinion, even the most powerful jurists in the country don’t get to call backsies.

As for how the statute’s text should be interpreted, Roberts quotes a 2014 opinion from Scalia to argue against the kind of rigid literalism that Scalia has insisted is not how true textualists should go about interpreting statutes. Rather than take four words, in a 900-page statute, out of context, the justices, in Roberts’ words, “must do our best, bearing in mind the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.”

* The majority declined to pursue an alternative approach rooted in the principle, enunciated in the 1984 Chevron v. NRDC decision and used by the Fourth Circuit in King, that when statutory text is ambiguous, courts should defer to the interpretive judgment of the agency responsible for administering the statute, unless the agency’s construction is unreasonable. For some ACA supporters, the Chevron claim offered an escape hatch, in that the act’s defenders wouldn’t have to argue that the Internal Revenue Service’s construction of the statute was the only correct one; they would simply have to show that it was a permissible one. This option was decidedly Plan B for ACA supporters, however, as it would have left the subsidies vulnerable to a Republican administration’s reinterpretation of the statutory provision. The majority took the question off the table by claiming primary responsibility for determining the contested phrase’s meaning, in light of the unlikelihood that Congress would have delegated to the IRS the authority to make policy judgments–especially concerning something as central as eligibility for health insurance subsidies–outside the agency’s competency.

* Another road not taken involved a federalism claim that had appeared in the Court’s earlier invalidation of the ACA’s Medicaid expansion. Giving states the choice between expanding Medicaid and forfeiting all federal Medicaid funding, said the Court in 2012, wasn’t really a choice at all. Rather, it unconstitutionally coerced the states into adopting the federal government’s preferred policy. A parallel federalism-based argument emerged from Justice Anthony Kennedy during oral argument in King, this time centered around giving states a choice between creating health exchanges and cratering their health insurance market. Like the Chevron deference argument, the federalism-based justification came with some unpleasant side effects for liberals, namely a protection of state prerogatives that could be extended to hamstring future federal regulatory efforts. In the end, though, Kennedy’s earlier musings about federalism did not find their way into the majority opinion.

King v. Burwell‘s ultimate impact, aside from the blow to Roberts’ standing among conservatives, will be more political than legal. After all, no new legal ground was broken, no soaring principle reaffirmed. What we have here is a run-of-the-mill case of statutory interpretation that is noteworthy only because the policy and political stakes were so high. The last Supreme Court ruling to feature such a high ratio of political significance to legal significance, Bush v. Gore, played a central role in the selection of a president. Will King v. Burwell help to select the next president? Stay tuned….

One ???-one vote

As the Supreme Court gratuitously grabs at the question of whether states, when drawing their own legislative districts, may count residents who are ineligible to vote, I’m trying very hard to find some basis to disagree with Josh Marshall’s assessment:

It is increasingly difficult to find any unifying theory or rationale behind the Supreme Court’s election and election financing decisions other than the goal of securing the electoral interests of the Republican party. That sounds harsh. But a simple process of elimination leaves little other conclusion. States rights, originalism, deference to legislatures, various constructions of democratic theory and a lot else are controlling except when they’re not controlling. Most of the decisions line up with the conservative jurisprudence espoused by the Court’s conservative semi-majority. Except when they don’t. Cases are plucked out of the lower courts long before the high court has any obligation or need to intervene. The new case which will review the ‘one person, one vote’ rule which has been reining [sic] law for half a century would likely diminish the voting power of cities vs rural areas, minorities vs whites and Democrats vs Republicans, if decided on behalf of the plaintiffs. In other words, why not?

The short version of the dispute: In 1964, the Supreme Court held, in Reynolds v. Sims, that state legislative districts have to be drawn in compliance with the principle of “one man one vote.” The ruling capped a series of Warren Court decisions designed to address the problem of rural over-representation in legislatures resulting from a decades-long unwillingness to redraw district lines to account for population shifts caused by urbanization. What the Supreme Court never settled conclusively was the matter of who counts as a person when apportioning according to one person-one vote.

The plaintiffs in Evenwel v. Abbott, two rural Texans represented by Project on Fair Representation (the conservative legal group known for its attacks on affirmative action and its takedown of key portions of the Voting Rights Act), are claiming that reliance on total population results in districts that are roughly equal in population, but unequal in eligible-voter population.The resulting “vote dilution,” in their view, constitutes a violation of the Fourteenth Amendment’s Equal Protection Clause, akin to the injury claimed by urban dwellers pre-Reynolds.

Other observers have pointed out how a victory for the petitioners would result in decreased representation for communities featuring disproportionate numbers of individuals who are ineligible to vote, such as children, prisoners, or non-citizen immigrants. But there are two other insidious, yet under-appreciated, dimensions:

  1. A victory for the petitioners would create perverse incentives to enact the modern equivalent of the notorious three-fifths compromise, in which each slave counted as 3/5 of a person for purposes of apportioning House seats and, by extension, votes in the Electoral College. Article 1, Section 2 of the Constitution states that House seats are to be apportioned according to “their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.” The Fourteenth Amendment removed the three-fifths language but left the remainder intact. At first blush, then, the references to persons, as opposed to voting-age persons or even citizens, would appear to present a substantial barrier to the petitioners’ claim. But the issue at hand in Evenwel isn’t about apportioning representation to states, the subject of the quoted text above; it’s about apportioning electoral power within states. If the petitioners’ claim is upheld, Texas could gain national-level political clout by virtue of its sizable population of non-citizen residents, while at the same time denying those individuals any voice in government at the state level, and perhaps later at the federal level if the logic of Evenwel were to be extended to congressional districting.
  2. A win for the petitioners creates a specific perverse incentive when it comes to restoring voting rights to ex-felons. While states have generally moved since the mid-1990s toward making it easier for felons to have their voting rights restored, a few have moved in the opposite direction.  For example, in 2011 Florida reversed a four-year-old liberalization and now requires ex-felons to wait between five and seven years before they may apply for reinstatement. Iowa similarly imposed a requirement to apply for reinstatement, while South Carolina and Tennessee expanded the category of ex-felons ineligible for reinstatement. These restrictions are hardly neutral in their effects, given the demographics of America’s prison population and persistent racially polarized politics. As a result, any effort at liberalization would have to overcome opposition motivated at least in part by concerns that restoring voting rights would boost Democrats’ electoral chances.

If you favor the status quo, you can take comfort in the unwillingness of any federal court to agree with the petitioners’ position. But you should also be concerned that the Supreme Court was so eager to tackle an issue on which lower courts have been unanimous to date. And you better hope that Josh Marshall is wrong on this one.