Right now, the Supreme Court is hearing oral arguments in the latest challenge to the Affordable Care Act cooked up by radical libertarians. If the challenge wins, the results would be catastrophic: a majority of the state's health care markets would be turned into chaos, with plenty of needless suffering and death as a result. Why is such a horrible result possible? Let me try to explain.
What is the argument?
The Affordable Care Act attempted to address the scandalously high number of Americans without medical insurance in two ways. The first of these was a huge expansion of Medicaid, which became less huge when it was ineptly re-written by the Supreme Court. The second was to set up regulated exchanges that would allow people who aren't eligible for a government program and don't have insurance through their employer to obtain it. Among other things, the law requires insurance companies to issue insurance to all eligible applicants, requires people to pay a tax penalty if they don't have insurance, and provides a subsidy to most buyers to make the insurance more affordable. States were required to set up these exchanges and if they didn't the statute instructed the federal government to do so on their behalf.
In late 2010, a lawyer named Thomas Christina said at an AEI panel that he had discovered language that he believed limited the subsidies to policies purchased on exchanges established by the states themselves. Tellingly, the next speaker, the AEI's own Michael Greve, asserted that the ACA "has to be killed as a matter of political hygiene" and "any which way, any dollar spent on that goal is worth spending, any brief filed toward that end is worth filing, any speech or panel contribution toward that end is of service to the United States."
Christina's remarks were discovered by the libertarian legal scholar Jonathan Adler, who collaborated with a fellow fanatical opponent of the ACA–CATO's Michael Cannon–to develop the legal argument. As we'll see, Adler and Cannon did not just develop an argument about the meaning of the text of the statute but decided to try their hands at some really bad magic realist fiction to explain what Congress was trying to do as well.
Does the argument have any serious merit?
Oh, Good God, no.
What's the problem?
The statutory argument being made by the ACA's political opponents is based on language buried in a subclause of the legislation which makes subsidies available for those who purchase insurance from an "Exchange established by the State":
The premium assistance amount determined under this subsection with respect to any coverage month is the amount equal to the lesser of—
(A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Actor
Reading the text in isolation, the argument that subsidies are therefore only available on the state-established exchanges—and not on the federal exchange, which is not technically "an Exchange established by the State" is superficially plausible. Just like—as Simon Maloy points out at Salon—the argument that Bubble Boy shouldn't be awarded his Trivial Pursuit win because the card says Moops, not Moors, invaded Spain.
While there is substantial disagreement among lawyers and legal scholars about how to best interpret statutes, as Justice Kagan observed in a recent opinion there's no serious disagreement that statutory language has to be interpreted in the context of the structure and purpose of the statute as a whole. When you do this properly, there's no serious question that exchanges established by the federal government on a state's behalf are "Exchange[s] established by the State" for the purposes of the statute. Reading it otherwise results in countless anomalies, something that sound statutory interpretation seeks to avoid. And it would also be flagrantly inconsistent with the purposes of the law.
Reading the law the way the plaintiffs do would eliminate the tax subsidies on the federally established exchanges, and for all intents and purposes would also eliminate the individual mandate in those states. Without these elements, both economic theory and empirical evidence make it clear that the exchanges would fail. As Marty Lederman puts it, an exchange without the subsidies "wouldn't merely be Hamlet without the Prince; it would be Hamlet without the Danish monarchy . . . more like Rosencrantz and Guildenstern Are Dead."
What if the court decides the meaning of the statute is ambiguous?
You know, "we found a mistake, so no insurance for 8 million people neener-neener" doesn't seem like a very appealing argument, does it?
No, it's not. And it's not just bad statutory interpretation, it's inconvenient given that this lawsuit is part of a broader political war against the ACA. Given the potentially disastrous consequences, reading the law in a way that is indifferent or outright hostile to what Congress was trying to accomplish doesn't do a lot for the Republican allies of the people who conceived of the suit. It's not surprising that, although they first thought it was just a "glitch," Adler and Cannon have moved on to a different justification.
Wait–they're not shameless enough to claim that Congress actually wanted the federally established exchanges to fail, are they?
You underestimate 21st century American conservatism, my imaginary friend. They've invented a sort of science-fiction counterfactual history of the ACA that involves Moops sending their military into Iberian Peninsula. Cannon has said he is "100 percent convinced" both the drafters of the legislation and every member of Congress who voted for it intended for the tax credits not to be available on the federal exchanges. And you can see why they've gone there: both legally and politically, it's better to claim that they're just asking the Court to enforce the will of Congress against the usurpations of the Obama administration.
So is there any evidence that the Moops invaded Spain?
And there's the rub: this alternative history is a thimbleful of bullshit buried in a massive avalanche of actual evidence. It was universally assumed by both supporters and opponents of legislation at the time that the subsidies would be available on both kinds of exchanges. This comprehensive analysis by the health care reporter Steven Brill concludes that the Moops-invaded-Spain theory is a "provable fiction," and correctly says that this is backed up by an "unambiguous mountain of facts."
It's not surprising that the there's so little evidence for Adler and Cannon's theory of legislative intent, since it's also utterly nonsensical on its face. Congress wouldn't go through the trouble of creating a federal backstop only to willfully ensure that it couldn't work. And unless you're the Soviet government in a Stanley Kubrick movie, if you're trying to withhold the credits to coerce the states you don't keep it a secret. The "card says Moops!" argument is merely bad statutory interpretation. This argument is just a bald historical fraud.
Are there any other legal issues?
Possibly, yes. First, there's a question of whether any of the plaintiffs in this case actually have the standing to bring the suit. Reporting by Stephanie Mencimer of Mother Jones and Louis Radnofsky and Brent Kendall of the Wall Street Journal has raised serious questions about whether any of the four would actually be subject to the individual mandate, the injury that they're claiming. Only one of the plaintiffs needs to have standing, and the government has not challenged the standing claims, so it's unlikely that the Court will refuse jurisdiction. But Chief Justice Roberts has long believed in narrowing the standing rules, so it's not impossible that he would vote to deny standing and duck the substantive issue for the time being.
Another possibility is that the Court determines that withholding subsidies from states that don't establish their own exchanges would violate the constitutional requirement that states be given clear notice before the federal government can withhold a benefit. Since the Court generally avoids reading statutes as being unconstitutional if it can be avoided, this also strikes me as unlikely. But if Roberts and/or Kennedy independently conclude that the IRS regulations are legal, upholding them in this way would give them the fringe benefits of attacking the actions of the Obama administration and expanding a states' rights doctrine.
Assuming the court rules on the merits, what will it decide?
To oversimplify, the political science literature on judicial behavior suggests that the votes of Supreme Court justices in politically controversial cases tend to be largely determined by the policy views of the justices. When it comes to predicting close cases, however, that "largely" can be confounding, since the justices with the median votes in a given case tend to have the least predictable views. Assuming that all of the Democratic nominees would have voted for the ACA and all of the Republican nominees would have voted against it if they were members of Congress, the "attitudinal model" got 8 of the 9 votes in the last ACA case right–and Pete Carroll was having a great postseason until his last offensive play.
As Ian Millhiser explains, the majority of the Court's votes can be predicted with near-absolute certainty: the four Democratic nominees will vote with the government, and Justice Alito is "more likely to be struck by lightning while committing in-person voter fraud" than to vote to uphold the IRS regulation. I would put Thomas and Scalia in the latter group as well, and given Kennedy's hostility to the ACA he's only marginally more likely to side with the government.
So this case essentially comes down to the Chief Justice. If I was one of those compulsive types who just has to bet, I would say that Roberts is more likely than not to side with the troofers. If you bet that justices will follow their political views, you won't always be right but the odds are in your favor. But that's really just a guess, since his vote will depend on factors – how strongly he substantively he opposes the ACA, how he perceives how a particular decision will affect the legacy of his Court, etc. – that are unknowable to outsiders.
If the court goes the full Moops, what happens?
It will be a disaster, and the only question is how disastrous it will be. Many millions of people will lose their insurance if the Court wrecks the exchanges in a majority of states, and this can be expected to result in the deaths of 9,800 people a year.
But, wait, can't Congress fix this?
They can, but they won't. The subsidies could be restored the day after a Supreme Court decision with a one-paragraph amendment to the ACA. But nobody who's seen the Republican clown car in the House of Representatives repeatedly fail to execute the simplest legislative tasks could possibly think that it would act to save the exchanges created by the ACA, given that seeing the law as a grave threat to freedom itself has become a core belief of the Republican Party. As always, national Republican health care policy is strictly limited to pretending to have a plan; their actual alternative health care proposal is a briefcase full of Styrofoam pellets.
What about the states?
The states could also solve the problem by creating their own exchanges. In the short term, with perhaps a few exceptions above the Mason-Dixon line no state government in which Republicans control a major veto point is going to do so. In the longer term, more states are likely to claim the benefits should the act survive. But that "should" is an important caveat – the chaos created by the Supreme Court wrecking the exchanges would make the ACA more vulnerable to fatal wounding or outright repeal should Republicans get unified control of the federal government. And even if most states eventually get on board, there will be a lot of unnecessary death and suffering in the meantime.
Will the Court want that much blood on their hands?
If you want to allow yourself any optimism about how Roberts will vote, the horrible consequences of the Court siding with the challengers could be a factor. Republicans, certainly, are going out of their way to reassure the Court that denying the subsidies to federally established exchanges is no big deal. The funniest and most pathetic example of this was seen earlier this week, as House Republicans demanded that Health and Human Services Secretary Sylvia Burwell explain her top-secret plan to magically stop all of the bad effects should the latest Republican challenge to the ACA succeed. In related news, House Republicans plan to steal Burwell's car and then demand to know her strategy for getting them off if they crash it into a school bus after a 7-martini lunch.
So the fate of the healthcare of millions of people will come down to the conscience of a chief justice appointed by George W. Bush?
Yeah, come to think of it we're probably screwed.