Supreme Court Sides with Administration in King v. Burwell

The Supreme Court ruled today the president’s health care law allows premium subsidies for people buying health insurance through exchanges established by the federal government. The petitioners’ claimed that the statute limited subsidies to state-established exchanges. Two federal appeals courts previously split on the legality of the IRS rule that authorized the subsidies in states using the exchange established by the federal government. 

How the case arrived at the Supreme Court

The question in this case was one of statutory interpretation: whether the law should be interpreted as written, or whether the provisions at issue should be understood in the full context of the law’s explicit restriction of subsidies to exchanges established by states could be interpreted to include exchanges established by the federal government. The U.S. Court of Appeals for the District of Columbia had found that the plain meaning of the statute was unambiguous and that the statute should be interpreted according to its natural reading. The U.S. Court of Appeals for the Fourth Circuit found that the statute was ambiguous, and the IRS was entitled to deference in interpreting and implementing it. 

The ruling

Today, the court found that the text of the law was ambiguous and that the IRS was not delegated authority by Congress to make a determination on how the law should be interpreted.

“The tax credits are among the Act’s key reforms and whether they are available on Federal Exchanges is a question of deep economic and political significance; had Congress wished to assign that question to an agency, it surely would have done so expressly. And it is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort.” King v. Burwell

Instead of relying on the IRS interpretation, the court determined that it alone had the task of determining the correct reading of the provision at issue. “In this instance,” the court reasoned, “the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” According to the majority, “when read in context” of the overall statutory scheme, the court found the phrase “an Exchange established by the State” to be “ambiguous.” Given that ambiguity, the court looked to “the broader structure of the Act to determine the meaning of” the subsidy provision at issue.

“Petitioners’ plain-meaning arguments are strong, but the Act’s context and structure compel the conclusion that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid.” King v. Burwell 

The majority found that if the Court accepted King’s interpretation, the law’s other provisions such as guaranteed issue and community rating requirements “would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid.” In reaching its decision, the court adopted a reading of the statute that was consistent with what it saw as Congress’ intent. 

The dissent

Justice Scalia, joined by Justices Thomas and Alito, authored a dissenting opinion that would have relied up on the plain meaning of words as written in the statute.

“The Court holds that when the Patient Protection and Affordable Care Act says ‘Exchange established by the State’ it means ‘Exchange established by the State or the Federal Government.’ That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.” King v. Burwell

According to the dissenting justices, “our only evidence of what Congress meant comes from the terms of the law, and those terms show beyond all question that tax credits are available only on state Exchanges.” The dissenting justices believe that a careful review of the statute does not support the Court’s “contextual case necessary to justify departing from the ordinary meaning of the terms of the law.” They concluded that the majority rewrote the law and replaced it with what it thinks Congress intended.

“The Court forgets that ours is a government of laws and not of men. That means we are governed by the terms of our laws, not by the unenacted will of our lawmakers.” King v. Burwell

Of particular note was their view that the court should not have supplanted Congress’s failure to properly write a law with its own preferred outcome.

“Much less is it our place to make everything come out right when Congress does not do its job properly. It is up to Congress to design its laws with care, and it is up to the people to hold them to account if they fail to carry out that responsibility. Rather than rewriting the law under the pretense of interpreting it, the Court should have left it to Congress to decide what to do about the Act’s limitation of tax credits to state Exchanges.” King v. Burwell 

Obamacare still needs to be replaced

There are couple of main points to consider in light of today’s decision.

First, today’s decision reminds Americans that this law – and all the harm that it has left in its wake – is the consequence of having President Obama and huge Democratic majorities in Congress in 2009 and 2010.

Second, Senate Republicans remain committed to stopping this unworkable and unaffordable law from hurting more Americans.

Today’s ruling was a matter of statutory interpretation and does not change the fact that Obamacare has largely been a disaster for the country, has broken numerous presidential promises, and needs to be replaced. The law’s many mandates and rules have reduced the freedom of Americans to buy health insurance plans that best fit their needs and have significantly increased premiums.

In the first year those mandates were in effect, individual market premiums increased an average of 49 percent. Early evidence suggests Obamacare plan premiums are set to increase significantly again even with the extremely high deductibles and narrow provider networks that accompany those plans. In 2015, the average deductible for an Obamacare silver plan – with an actuarial value of 70 percent – is $2,927 for single coverage and $6,010 for family coverage. Deductibles for bronze plans are nearly twice as high. The law’s expansion of coverage has mostly been through the failing Medicaid program, and 35 million people in the country remain without health insurance.

For the most part, people in the middle class receive few benefits from the law even though they have to pay higher taxes and premiums to finance it. The law raised taxes by more than one trillion dollars over the next decade. The law empowered the IRS to become more involved with Americans’ health care decisions. The law’s employer mandate and complicated subsidy scheme have led companies to hire less. According to the Congressional Budget Office it will lead to two million fewer full-time jobs by 2017, as well as lower wages and economic growth. In order to improve the nation’s economy and health care system, Obamacare needs to be replaced, and Republicans are committed to doing that.