President Obama was quick to claim victory after the Supreme Court’s decision today [June 25] allowing tax credits to customers of Obamacare health insurance exchanges nationwide. “This was a good day for America,” Obama declared at a news conference arranged within the hour after the court issued its ruling.
Obama had good reason to feel vindicated and relieved after all the abuse he and his signature domestic policy achievement have taken from political opponents, conservative ideologues, and ill-informed health care consumers. But the official even more entitled to a victory lap was Solicitor General Donald S. Verrilli Jr., who argued and won both of the cases the court decided today.
Verrilli, it will be recalled, was panned after his arguments three years ago in the first Supreme Court challenge to the Affordable Care Act. Yet he emerged victorious in the 5-4 decision, NFIB v. Sebelius (2012), when Roberts crucially bought Verrilli’s fallback argument that the individual mandate could be viewed as a constitutional tax even if beyond Congress’s powers over interstate commerce.
The court’s new decision, King v. Burwell, is a purer victory for the S.G.’s office. Roberts’ 21-page opinion for a 6-3 majority subscribes to the government’s arguments virtually lock, stock, and barrel. (For the dissenters, Justice Antonin Scalia would presumably say that the court bought the government’s argument hook, line, and sinker.)
The issue in the case was whether tax credits are available to customers of the new health insurance marketplaces only for exchanges created by the states, not for those established by the feds under a fallback provision. Despite countless pages of argumentation in legal briefs, the argument came down to the meaning of two phrases in the law: one referring to “an exchange established by the state” (section 1311) and another referring to the federal government’s establishment “of such exchange” (section 1321).
As a main proposition, Verrilli argued that the later reference to “such exchange” unambiguously equated exchanges created by the federal government with those created by the states and thus tax credits were available to customers either way. Roberts disagreed. The text of the law “is ambiguous,” he wrote two-thirds of the way through his opinion. But both before and after that passage, Roberts viewed the law its purpose and structure just as Verrilli had presented it. And, just like Verrilli, Roberts concluded that the law could not possibly work and could not possibly have been intended to work the way depicted by the plaintiffs and the anti-Obamacare forces lined up behind them.
Roberts opened by explaining that the Affordable Care Act’s key provisions are “closely intertwined.” The guaranteed issue and community rating provisions require insurers to cover all comers, without raising premiums based on a person’s health. The individual mandate guarded against the resulting possibility that people would wait until they were sick to buy insurance – and thus drive up rates for those in the insurance pool. And to make the insurance mandate affordable subsidies were provided for those below specified income levels.
Back in oral arguments [March 4], Verrilli argued that the argument offered on behalf of four Virginians recruited by the anti-Obamacare Competitive Enterprise Institute would doom the intricately constructed system. Without subsidies, the Department of Health and Human Services would have to establish “rump exchanges that are doomed to fail.” He continued: “That cannot be the statute that Congress intended.”
Roberts agreed with Justice Anthony M. Kennedy and four liberal justices voting along with him. The plaintiffs had “strong” arguments about the plain meaning of the text, he acknowledged, but their argument would “destabilize” insurance markets in the states 34 in all that have not established their own exchanges. Congress could not have intended the law to work that way, Roberts wrote significantly quoting as authority the four dissenters from the earlier Obamacare ruling.
Despite “inartful drafting” in the law, Roberts said that the court had to interpret the ambiguous passage based on “the broader structure” of the act. He expressly rejected the plaintiffs’ argument that Congress had meant to withhold subsides from the federal exchanges in order to encourage the states to take on the job. Congress would have been more explicit in making that threat if that was its purpose, he said.
Writing for the three dissenters, Scalia railed at the decision in a 21-page opinion summarized from the bench and laced with Scaliaisms: “interpretive jiggery-pokery,” he called Roberts’ opinion. The key term “exchange established by the state” could have only one meaning; any other construction was “quite absurd.” He ended by accusing the majority of distorting statutory interpretation only because they liked the law so much. That would be news to Roberts, no great fan of the law in the earlier case, and to Kennedy, who voted with Scalia, Clarence Thomas, and Samuel A. Alito Jr. to throw out the act in its entirety.
Verrilli’s victory in the important housing discrimination case decided before the Obamacare ruling attracted less attention immediately, but was equally significant and the outcome equally uncertain beforehand. Kennedy wrote for a five-justice majority in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. in ruling that the federal Fair Housing Act encompasses claims that decisions by developers or housing authorities may be illegal if they have a “disparate impact” on racial or ethnic minorities without justification. There is more to be said about that decision, but in a later column.