Some Thoughts from a Health Lawyer on King v. Burwell

By Joan H. Krause

[Cross-posted from Hamilton and Griffin on Rights]

The long-awaited and much-debated opinion in King v. Burwell is here. In an opinion written by Chief Justice Roberts – who almost single-handedly saved the ACA with his 2012 opinion in N.F.I.B. v. Sebelius – and newly joined by N.F.I.B. dissenter Justice Kennedy as well as the more liberal Justices, the Court agreed with the Fourth Circuit that the ACA’s tax credits (or “subsidies”) are available to individuals who purchase insurance through both State and Federal health insurance Exchanges. The Petitioners, four Virginia residents who did not wish to purchase health insurance, had argued that Virginia’s Federally-run Exchange did not constitute “an Exchange established by the State” under the ACA tax credit provision; because unsubsidized coverage would cost more than 8% of the Petitioners’ incomes, they would be exempt from the Act’s individual mandate and would not be required to purchase health insurance. While acknowledging that the Petitioners’ arguments regarding the “plain meaning” of the phrase were strong, the majority nonetheless sided with the Government, holding that the context and structure of the overall statute led to the conclusion that the statute permitted tax credits for insurance purchased on “any Exchange created under the Act,” whether State or Federal (slip op. at 21). Justice Scalia penned a scathing yet witty dissent (“We should start calling this law SCOTUScare,” slip op., Scalia, J. dissenting, at 21), arguing that the plain meaning of the language made clear that tax credits were available only on State exchanges, and that any flaws in the Act’s design should be left to Congress to fix.

Despite the attention it received, King was something of a stealth ACA case. Lacking the Constitutional controversies of N.F.I.B., it was in many ways a run-of-the mill statutory interpretation case focusing on four words in a massive document containing, in the words of the Chief Justice, “more than a few examples of inartful drafting” (slip op. at 14).   And yet the potential effects of the decision were perhaps even more far-reaching, in large part because of the timing. N.F.I.B.’s Commerce Clause analysis may have more precedential value in the long-run, but far fewer of the Act’s provisions had gone into effect in June of 2012. With approximately 7 million individuals now receiving insurance through the Federal Exchange, and the majority of them (an estimated 87%) receiving subsidies, the decision in King could have led to the devastating loss of insurance for millions of Americans.

While commentators will no doubt parse every sentence of the opinion (including the Court’s refusal to defer to the IRS’s interpretation of the statute under Chevron), as a health lawyer I found two aspects of the opinion notable. First, the Chief Justice drafted a very nuanced (and mercifully succinct) description of the health insurance market flaws the ACA was designed to address. The Chief Justice understood the ACA’s “three key reforms” – guaranteed issue and community rating of insurance policies, the individual mandate, and tax credits – as well as the ways in which the three were “closely intertwined” (slip op. at 3-4). The first few pages cite multiple horror stories from states where some, but not all, of these reforms were enacted; for data, the opinion cites liberally to the Brief for Bipartisan Economic Scholars as Amici.   In its depth (not to mention brevity), the analysis is completely different from the tortured description of health insurance found just a few years ago in N.F.I.B., evincing a far more sophisticated understanding of both the legal issues and the legislation itself.

Second, in seeking “context” in which to interpret “an Exchange established by the State,” the Court looked not only to the statute as a whole but also to the practical repercussions of the decision on the post-ACA insurance market. Adopting an argument made by the Government and many amici, the Chief Justice noted that “virtually all” individuals receiving subsidized care on the Federal Exchange would lose those subsidies if the provision applied only to State Exchanges. Citing several economic studies, the Court noted that with no subsidies – and thus effectively no mandate for most individuals to buy insurance – a State’s insurance market might be pushed into a “death spiral” of ever-increasing premiums, which in turn would lead fewer individuals to purchase insurance. It was notable, and admittedly a bit surprising, to see the Court so explicitly consider the practical market effects of its decision.

The discussion of the “death spiral” contains perhaps my favorite line of the opinion: “It is implausible that Congress meant the Act to operate in this manner.” The Chief Justice’s support for this proposition? A quote from N.F.I.B.: “Without federal subsidies . . . the exchanges would not operate as Congress intended and may not operate at all” (slip op. at 60). The irony? The quote came from N.F.I.B., all right – but from the joint dissent.

The lesson of King? Words matter – and may come back to haunt you.

One thought to “Some Thoughts from a Health Lawyer on King v. Burwell”

  1. “… holding that the context and structure of the overall statute led to the conclusion …” There is a huge democratic problem with such an argument: Once an act, like the ACA, rivals the Bible for verbosity, it becomes as random to extract meaning from it as it does when it comes to the Bible which spawned maybe as many denominations over the past two millennia as there are letters in it (most of them extinct, but nonetheless). Isn’t it that, like with a jury, a parliament, i.e. Congress, should be constituted (as a rule, at least in theory) from citizens representing the “average citizen”? Once laws become as unwieldy as the ACA which most Congress people admit to never have read in full, any argument based upon its wording and how the law-givers must have thought a certain passage to work in the full context of all passages becomes meaningless. It is probably true that no one ever read the ACA as diligently as the Supreme Court’s justices assistants, all aspiring future judges themseles …

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