The prospects don't look good for the health-care law's challengers
By S.M. | NEW YORK
ON MARCH 4th the Supreme Court will hear arguments in a case targeting the Affordable Care Act (ACA), otherwise known as Obamacare. The legal challenge against the law hinges on four words, as I explored in detail last week. Here I discuss the odd but distinct possibility that it doesn't matter whether the challengers or the government have the better interpretation of the provision in question. Ironically, the very fact that this conflict exists at all may end up working in the law’s favour.
King v Burwell asks a deceptively simple question: can Obamacare’s tax credits extend to individuals buying health insurance on 34 federally established exchanges, or may they go only to people buying policies on the 16 exchanges which were, as the law reads, “established by the state”? The challengers (if they have standing in court—a matter that is suddenly uncertain) say the meaning of those four words is self-evident. The government contends this view makes mincemeat out of other provisions of the ACA and contradicts the law’s very purpose of providing affordable health-care to “all”. Both sides insist that their interpretation is the only plausible way to read the ACA. But a Supreme Court case from 1984 that proved decisive in the Fourth Circuit’s ruling in favour of the government, Chevron v Natural Resources Defence Council, makes the interpretive burden much tougher for the ACA’s challengers.
In Chevron, the justices resolved a dispute over the Clean Air Act by deferring to the Environmental Protection Agency’s interpretation of the law. If Congress has not “directly spoken to the precise question at issue” and if the “intent of Congress is [not] clear,” the courts must ask only “whether the agency's answer is based on a permissible construction of the statute." Since Chevron, federal agencies have enjoyed significant leeway when putting ambiguous statutes into effect.
So in order to save the ACA, all the government must show is that its reading of the law is a “permissible” interpretation. It does not have to show that its reading is the only possible interpretation, or even that it is the best interpretation. It is enough if the government can show that the Internal Revenue Service didn’t clearly err when it doled out tax credits to qualified buyers of Obamacare policies on state and federal exchanges alike. This was the basis of the government’s win in the court below. The Fourth Circuit held that while there is “common-sense appeal of the plaintiffs' position”, the government’s argument is “the stronger position, although only slightly.” The government did not score a knock-out, according to the Fourth Circuit panel, but they roughed up the challengers enough to win on points.
In a separate opinion, Judge Andre Davis of the Fourth Circuit further undermined the plaintiffs' literalism. “No case stands for the proposition that literal readings should take place in a vacuum, acontextually, and untethered from other parts of the operative text,” Judge Davis wrote. And he provided this analogy:
If I ask for pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino's, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino's with a ham and pepperoni pizza has still complied with a literal construction of my lunch order. That is this case: Congress specified that Exchanges should be established and run by the states, but the contingency provision permits federal officials to act in place of the state when it fails to establish an Exchange. The premium tax credit calculation subprovision later specifies certain conditions regarding state-run Exchanges, but that does not mean that a literal reading of that provision somehow precludes its applicability to substitute federally-run Exchanges or erases the contingency provision out of the statute.
This is music to the government’s ears; it is a one-paragraph encapsulation of the first 54 pages of its brief. But the Supreme Court need not adopt such a government-friendly position to save the ACA. All it needs to do is decide that the ACA is ambiguous enough on the matter of tax credits to hand the IRS Chevron deference. The government concedes no ground in its brief, claiming that its interpretation is “the only plausible reading of the Act”. But it has a fall-back: “the traditional tools of statutory interpretation confirm that Treasury’s reading is at least a reasonable one warranting deference under Chevron” (my emphasis).
How secure is this safe harbour for the ACA? Pretty secure. None of the petitioners’ three reasons why “deference cannot save the IRS rule” are persuasive. The challengers’ brief contends, without a shred of evidence, that Congress would never have intended to turn over a question of such “enormous political and economic importance” to the IRS. It claims that tax benefits require statutory clarity and that “any ambiguity must be construed against the subsidy”. But, as the government points out, “federal tax laws are ‘to be interpreted so as to give a uniform application to a nationwide scheme of taxation’", a universality that is impossible under the challengers’ view of the law. And finally, the challengers’ insistence that the IRS must focus only on the phrase “established by the state”—and not on other provisions of the law which are undercut by a literal reading of those four words—is bizarre. It also contradicts Justice Antonin Scalia’s statement in a case last June that “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”.
In order to prevail, the ACA's challengers need to persuade five justices not only that their reading of the law is plausible, but that no other interpretation is remotely possible. That is a very tall order.
