There is one concern about the JALSA brief that I have not yet addressed because I don’t think it’s relevant: If the Court invalidates the IRS Rule and then decides the constitutional merits and holds that the condition on subsidies is unconstitutionally coercive (as I argue it might be), what will the remedy be? Will the Court invalidate the whole statute? I haven’t addressed this question because I think there is no chance that the Court will decide the constitutional merits in this case. But Randy Barnett raised the question a few days ago, and now Josh Blackman has piled on with an argument that a constitutional holding would and should nullify the whole statute. As a predictive matter, I just don’t think that’s right. Even if the Court reached the constitutional merits at some point (which I don’t think they ever will), I think they’d sever the condition.
Josh’s analysis on this point arises from one thing and one thing only: Four justices joined an opinion in NFIB (without telling us who wrote it) in which they argued against severability of the Medicaid condition. Those four justices would have invalidated the whole statute on its first trip to the Supreme Court.
Okay, sure. But what does that tell us? First, we always knew that Justices Scalia, Thomas, and Alito were opposed to severance. They think Congress should be in charge of fixing unconstitutional statutes, not the Court. So it’s only Justice Kennedy’s willingness to join them that contains any information at all. But Kennedy was already on board with the portion of the opinion that argued the individual mandate was unconstitutional, and it would have been hard to sever the individual mandate from Obamacare’s market reforms. By the time they got to the Medicaid question, those four justices had already argued, on completely different grounds, that the whole statute should disappear. Is it really that shocking, then, that Kennedy joined an opinion arguing that the Medicaid portion could not be severed? That argument was basically cheap talk at that point. Furthermore, the four justices who joined that opinion made a conscious and very unusual decision not to attribute authorship—to present a united and indivisible front. If there were any disagreements among them as to the finer points of the opinion’s analysis, we wouldn’t know about them because none of the justices wanted to write a separate dissent. So, even if all four justices cared about the Medicaid severability analysis despite having already declared the whole statute invalid, we don’t really know what Kennedy himself thought about it.
But, of course, there’s an even more important point: That opinion only got four votes. To kill Obamacare, you need five, and you know you’ve lost the four liberal appointees before you start. So for Josh to be right, he needs all five of the conservatives to vote against severance. And Chief Justice Roberts agreed to sever. Here, Josh argues that Roberts agreed to sever because billions of dollars of preexisting federal funds were at stake. But that’s nonsense. Invalidating Obamacare in its entirety would have preserved those preexisting funds, too. A non-severance holding would have eliminated the possibility of new funds for the Medicaid expansion; it would have left preexisting Medicaid entirely intact.
Here’s what Roberts said in NFIB about the rules governing severability:
The question remains whether today’s holding affects other provisions of the Affordable Care Act. In considering that question, “[w]e seek to determine what Congress would have intended in light of the Court’s constitutional holding.” United States v. Booker, 543 U.S. 220, 246, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) (internal quotation marks omitted). Our “touchstone for any decision about remedy is legislative intent, for a court cannot use its remedial powers to circumvent the intent of the legislature.” Ayotte v. Planned Parenthood of Northern New Eng., 546 U.S. 320, 330, 126 S.Ct. 961, 163 L.Ed.2d 812 (2006) (internal quotation marks omitted). The question here is whether Congress would have wanted the rest of the Act to stand, had it known that States would have a genuine choice whether to participate in the new Medicaid expansion. Unless it is “evident” that the answer is no, we must leave the rest of the Act intact. Champlin Refining Co. v. Corporation Comm’n of Okla., 286 U.S. 210, 234, 52 S.Ct. 559, 76 L.Ed. 1062 (1932). We are confident that Congress would have wanted to preserve the rest of the Act.
Applying that analysis here, there is simply no way that the Court would invalidate the whole statute if it held that states must, constitutionally, “have a genuine choice whether to participate” in establishing exchanges or not. There is not a straight-faced argument in the world that the 2010 Congress would have preferred to nuke Obamacare if it had known that exchange establishment would be optional for the states. I know that’s true because there is an extremely strong straight-faced argument that the 2010 Congress actually wanted exchange establishment to be optional for the states.
Of course, the fact that there’s a strong statutory argument for holding that subsidies are not in fact conditional on exchange establishment is why I think that this whole question is irrelevant. In a totally different part of NFIB, Roberts argued under the avoidance canon that “every reasonable construction [of a statute] must be resorted to, in order to save [the] statute from unconstitutionality.” And, in fact, he said that a construction must be resorted to even if that construction is not “the most natural interpretation.” Well, the IRS Rule is, at minimum, a reasonable construction, even if not the most natural interpretation, and it completely avoids this constitutional mess, including all of the questions about remedy.
Here’s the bottom line: Given that enjoining the conditionality of the subsidies is at least a plausible constitutional remedy under Roberts’s (winning) severability analysis in NFIB, there seems to me to be very little chance that the Court will invalidate the IRS Rule here and invite constitutional litigation. If it did that, there would be a very strong possibility, as the votes lined up during severability argument, that the Court would end up right back where it started, with the subsidies available nation-wide despite states’ exchange-establishment choices. But the justices would have insisted in dictating that outcome themselves through constitutional analysis rather than letting the political branches decide through statutory and policy analysis. No one on the Court wants that result. Better to avoid the whole mess.