Supreme Court justices split along ideological lines Wednesday in a dramatic but collegial showdown in the latest legal battle over the Affordable Care Act, with the outcome difficult to predict.
If President Obama could draw hope from the 1 hour and 25 minutes of debate about his signature domestic achievement, it would be because of Justice Anthony M. Kennedy. Three years ago, Kennedy was among the four dissenters who would have found the entire act unconstitutional. But Wednesday, with his comments and questions seeming to cut both ways, he appeared to be back in play.
The outcome could also hang on Chief Justice John G. Roberts Jr. He wrote the opinion saving Obamacare from a constitutional challenge in 2012, but he was inscrutable this go-round, asking no questions that would provide a clear reading of his inclinations.
At issue in the current case is whether millions of Americans who receive tax subsidies to buy health insurance are doing so illegally. The challengers say a straightforward reading of the law means the credits are available only for those who buy insurance on marketplaces, called exchanges, that are “established by the State,” rather than on a federal marketplace.
The subsidies are a linchpin in the program to require Americans to buy health insurance. A ruling against the administration would have adverse consequences for an estimated 7.5 million Americans who now receive subsidies in the 34 states where authorities have declined to establish their own exchanges.
Questions about dire consequences for the states seemed to most concern Kennedy, the court’s leading advocate of federalism.
He told Washington lawyer Michael A. Carvin that the challengers’ reading of the law — which he characterized as telling the states to “create your own exchange, or we’ll send your insurance market into a death spiral” — is the kind of coercive pressure the federal government is not allowed to apply.
“Perhaps you will prevail in the plain words of the statute, [but] there’s a serious constitutional problem if we adopt your argument,” Kennedy said.
Carvin said that plain reading must be what guides the justices.
“The only provision in the act which either authorizes or limits subsidies says, in plain English, that the subsidies are only available through an exchange established by the state,” Carvin said.
But the law also requires federal authorities to step in when states have not developed their own exchanges, and the court’s four liberals seemed to have no doubts that meant the subsidies follow.
To read the law as literally as he does, Justice Elena Kagan told Carvin, would mean Congress authorized the establishment of federal exchanges “in which there will be no customers and, in fact, there will be no products.”
She added: “We are interpreting a statute generally to make it make sense as a whole, right? We look at the whole text. We don’t look at four words. We . . . try to make everything harmonious with everything else.”
Solicitor General Donald B. Verrilli Jr., representing the Obama administration, made a similar point. He said the law meant to provide states with flexibility and avoid “death spirals” in insurance markets, which could occur if not enough healthy individuals are enrolled to make the system financially viable. The challengers’ reading of the law, he said, would put coverage beyond the reach of many.
“It revokes the promise of affordable care for millions of Americans,” Verrilli said. “That cannot be the statute that Congress intended.”
“Of course it could be,” responded Justice Antonin Scalia. “I mean it may not be the statute they intended. The question is whether it’s the statute that they wrote.”
Scalia and fellow conservative Justice Samuel A. Alito Jr. were the most challenging of Verrilli. Scalia said it was not up to the court to “twist the words” of a law to make it fit what the administration said Congress intended.
Alito asked Verrilli the question he had the most trouble answering: “If Congress did not want the phrase ‘established by the State’ to mean what that would normally be taken to mean, why did they use that language? Why didn’t they use other formulations that appear elsewhere in the act? Why didn’t they say ‘established under the act’? Why didn’t they say, ‘established within the State’?”
Scalia and Alito also played down the dramatic consequences that the administration said would follow from an adverse ruling. Alito said the court could stay its ruling to avoid immediately cutting the subsidies.
Scalia said lawmakers could fix the problem if they thought the court had misinterpreted their intent.
“You really think Congress is just going to sit there while — while all of these disastrous consequences ensue?” Scalia asked.
“Well, this Congress, Your Honor?” Verrilli replied, as laughter filled the packed chamber. Even House Minority Leader Nancy Pelosi (D-Calif.), sitting in a front row filled with other congressional leaders, smiled.
There were light moments as Verrilli and Carvin, who also argued the constitutional case three years ago, reunited in battle.
Verrilli, tall and calm, had a better outing than in that earlier case, when his performance was panned by some critics. (He was vindicated when Roberts upheld the act by seizing on a secondary argument Verrilli had made.)
White House press secretary Josh Earnest said Wednesday afternoon that White House counsel Neil Eggleston briefed President Obama about the court arguments on the Affordable Care Act. The “administration is quite pleased with the performance of the solicitor general,” Earnest said.
Earnest resisted questions about what the administration would do if it loses. “There is no contingency plan that could be implemented to prevent the catastrophic damage that would be done,” he said. “We would see millions of people lose their health insurance, prices would likely go through the roof, and there’s likely not a whole lot the government could do about it.”
Carvin was fast-talking and blustery, with elaborate gesturing and a determination to keep talking even when justices made it clear they wanted to ask more questions. “Wow. You’ve been talking a long time,” Kagan said at one point.
“Take a breath,” Justice Sonia Sotomayor counseled.
After the argument, it was the comments from Kennedy that received the most scrutiny. He is the court’s most outspoken advocate of states’ rights, and he said Carvin’s argument must be seen as Congress telling the states “either create your own exchange, or we’ll send your insurance market into a death spiral.”
Kennedy brought up the “standard of constitutional avoidance.” That means that if there are two possible interpretations of a statute, judges should choose the one that is plainly constitutional instead of the one that raises constitutional questions.
Verrilli said that would be a “very powerful reason to read the statutory text our way.”
But Kennedy said later that may not be an option if the justices are convinced that the plain language of the statute should prevail.
Kennedy was also concerned that the law might be ambiguous, as a panel of the U.S. Court of Appeals for the 4th Circuit ruled. In such cases, the Richmond-based panel ruled, courts should defer to the agency responsible for implementing the law. The judges found the Internal Revenue Service permissibly “crafted a rule ensuring the credits’ broad availability and furthering the goals of the law.”
That, too, worried Kennedy. “It seems to me a drastic step for us to say that the department of internal revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here?” he asked.
More than the other justices, Kennedy is the one most likely to think out loud during oral arguments, trying out various theories and posing quandaries for the lawyers.
Verrilli tried to direct Kennedy to the view that the law is not ambiguous and is in line with his view of respect for the states.
“That’s what the canon of reading a statute as a whole to make it work harmoniously directs you to do,” the solicitor general said. “It’s what the very important principles of federalism that we’ve been describing here direct you to do. If you think there’s a constitutional problem with the statute, it’s what the doctrine of constitutional avoidance directs you to do.”
Roberts was even more opaque. The chief justice was blasted by fellow conservatives in 2012 when he came up with the compromise that found the law constitutional, and there were media reports that the justices on the right felt he had changed his vote late in the game.
On Wednesday, he seemed determined not to tip his hand. Normally an active questioner, Roberts instead played the role of impartial umpire, playing traffic cop when the other justices were vying to be heard and allocating more time to Carvin and Verrilli when the questioning cut into their responses.
His only comment of substance came during the discussion of whether, when a law is ambiguous, courts should defer to an executive agency.
“If you’re right,” Roberts said to Verrilli, “that would indicate that a subsequent administration could change that interpretation?”
That’s right, Verrilli said, although he added a new administration would need to make a strong case “that that was a reasonable judgment in view of the disruptive consequences.”
The case is King v. Burwell. If the court follows its normal pattern, it will vote on the outcome at the justices’ private conference on Friday, although it is unlikely the opinion will be ready much before the court completes its term at the end of June.