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How the Court Case Against Obamacare Subsidies Stacks Up

By Sean Trende - October 29, 2013

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If this were any other law, I’d actually be fairly confident that the court would rule for the plaintiffs and leave it to Congress to fix the language if it wanted to. At bottom, the government is asking the courts to take the language “established by the State” and interpret it to mean “or by the federal government.” That’s significant, especially in the context of an appropriation.

But this isn’t just any law, as we saw in 2012. In the wake of the National Federation of Independent Business case upholding the ACA, lower courts may be wary of weakening the law. At the same time, though, this case is in a different posture than NFIB. In that one, plaintiffs were asking the court to invalidate as unconstitutional the most significant piece of social legislation in two generations on something of a technicality. Chief Justice Roberts took the long-standing proposition that the court should avoid striking down legislation as unconstitutional, examined the individual mandate, said that it looked like a tax, and called it a tax.

Here, plaintiffs may get some more wiggle room because they aren’t challenging the constitutionality of the law, nor are they asking a court to be “activist” in its rulemaking. They are asking for a reasonably straightforward application of canons of statutory construction. Perhaps more importantly, the court would leave the door open for Congress to implement a fix, if it wants.

Here’s where the proponents of the suit may be too clever by half. It’s assumed that, if the courts block the subsidies for people on the federal exchange, Republicans will dig in, the government will have to declare hardship exemptions from the mandate for those who can’t afford insurance without subsidies, and that the framework will collapse.

But a different approach is at least as plausible: This is an election year, and Democrats will likely mount a full-bore assault on state legislators, governors, and congressmen in states without exchanges. The arguments would almost write themselves: Why won’t you let people in our state have the same benefits that people get in New York? Why won’t you set up a marketplace where our citizens could get insurance for one-tenth the price? I’m not sure such a campaign would be as unsuccessful as a lot of Republicans imagine.

In the end, the Supreme Court is not going to be eager to wade into another ACA case. It will probably have to be forced in. For that to happen, one of the courts of appeals is probably going to have to rule in the plaintiffs’ favor. Three of the four cases are actually in reasonably good circuits for such a ruling to occur: Only three of 10 judges on the 7th Circuit is a Democratic appointee; only five of 10 on the 10th Circuit is a Democratic appointee; and only four of eight on the D.C. Circuit is a Democratic appointee (and one of those clerked for Republican-appointed Justice Sandra Day O’Connor).

If the case does get to the Supreme Court, I’d actually give it better chances of succeeding than I would have given the original ACA challenge. The law really did present novel questions, and operated in the hinterlands of Commerce Clause and cooperative federalism jurisprudence. I could have seen, to widely varying degrees, any of the justices (with the exception of Clarence Thomas) voting to uphold it. On the other hand, this case deals with some well-established canons of statutory construction; there are almost certainly four liberal votes in favor of the government’s position, and three conservative votes opposed to it. Anthony Kennedy was willing to strike down the whole law wholesale to begin with, and Roberts voted to uphold it only reluctantly. Faced with creating a national precedent and the language of this statute, I would not be surprised if this time they rejected the government’s position -- though I wouldn’t be surprised if they accepted it, either. If the former happens, the current fights over the ACA website will likely seem like child’s play compared to what follows. 

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Sean Trende is senior elections analyst for RealClearPolitics. He is a co-author of the 2014 Almanac of American Politics and author of The Lost Majority. He can be reached at strende@realclearpolitics.com. Follow him on Twitter @SeanTrende.

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