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Why the New Health Law Challenge Should Be Taken Seriously

Why the New Health Law Challenge Should Be Taken Seriously

By Sean Trende - November 10, 2014

A few days after the Republican Party’s surprisingly strong performance in the midterm elections, analysts were further shocked when the Supreme Court granted a petition for a writ of certiorari and agreed to hear a case that challenges the validity of many of Obamacare’s subsidies.

I’ve written about this before, but basically, when Congress passed the Affordable Care Act, it made subsidies available to people who “were enrolled through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act.” The problem is that very few states opted to create their own exchanges.  The question, then, is whether people enrolled through the federal exchange, which is established under a different section of the act and not by a state, are entitled to subsidies under the act.

Here are six basic things you need to know about the case.

1. It really shouldn’t have been a shock that the court agreed to hear this case.  A three-judge panel of the United States Court of Appeals for the Fourth Circuit had ruled for the government, but a panel of the United States Court of Appeals for the District of Columbia Circuit had ruled for the plaintiffs (a district court in Oklahoma also sided with the plaintiffs).  This created what is known as a circuit split.  When two different courts of appeals rule in different ways on an issue, it increases the chances that the Supreme Court will hear the case, in order to promote uniformity.

But the D.C. Circuit opted to take the case en banc, meaning that the entire court would review the panel decision.  This is a relatively uncommon move. But given that the court now has a fairly liberal majority, it was pretty much assumed that it would reverse the panel decision.  This caused many supporters of the law to breathe a sigh of relief, as it seemed certain that the circuit split would be resolved -- but that won’t take place because the Supreme Court granted certiorari to the plaintiffs in the Fourth Circuit.

What many analysts missed is that a circuit split is not necessary for the Supreme Court to grant certiorari in a case.  It’s the most well-known way to get there, but the court will also take a case if it touches upon an issue of national importance. It’s telling that the D.C. Circuit used the same test when determining whether or not to take a case en banc.  This isn’t to say that we should have expected the Supreme Court to take the case, but the fact that the D.C. Circuit thought it was a matter of national importance should have been a tell that the Supreme Court might view the issues presented in a similar matter.

2. This isn’t a case about a typo.  I’ve talked about this before, but it bears repeating.  There is a specific legal doctrine that deals with typos -- the scrivener’s error doctrine.  But as far as I can tell, the government has not asserted the scrivener’s error doctrine in this case. It isn’t that someone mis-copied the bill upon publication. At best, it is that the bill was not carefully edited enough before being debated and voted upon.

3. The Supreme Court isn’t going to “gut” Obamacare. Finding for the plaintiffs would certainly make it difficult for Obamacare to be implemented as its supporters envisioned. But the references to “gutting” Obamacare already assume that Obamacare makes subsidies available. However, if you're claiming the court will "gut" Obamacare, you're implicitly assuming that Obamacare makes these subsidies available on a federal exchange. But, in fact, whether or not Obamacare does makes them available is the exact question at the heart of the dispute.  After all, the essence of the question itself is “What exactly is Obamacare in the first place?”

Put differently, if the Supreme Court had struck down the individual mandate and Medicaid expansions in 2012, it could have been accused of gutting the law.  If it struck down the subsidies as unconstitutional, you could also make the same claim. But if the court holds for the plaintiffs, its conclusion here would be that the subsidies never really existed in the first place.

4. The debate over the intent of Congress is largely superfluous. Opponents of the lawsuit emphasize that absolutely no one intended for the law to function this way.  There’s some debate over whether this is actually the case, but I’m personally skeptical that the law enacts the intent of those who were voting on it.

But the crucial fact in understanding this lawsuit is that, while a more liberal judge might be inclined to accept this, this is not how conservative judges tend to approach statutory interpretation. For them, the question isn’t “What did Congress want to pass?” It is “What did Congress pass?” As Justice Antonin Scalia put it: “Congress can enact foolish statutes as well as wise ones, and it is not for the courts to decide which is which and rewrite the former.”

For the conservatives on the high court, the sole question is likely to be “Is there any way we can construe the provision of the law that makes subsidies available to individuals enrolled in an exchange established by the state as also making subsidies available to individuals enrolled in an exchange established by the federal government?”  I think opponents of these lawsuits have a tougher road here than they thought.

5. The chief justice’s vote here is unpredictable. I don’t think Chief Justice John Roberts is a likely vote for the government here.  In 2012, he had a way to get everything he wanted doctrinally while still protecting the court’s legitimacy.

He doesn’t have that here. If he finds for the government, he creates a precedent that authorizes a much broader mode of interpretation than he likely supports today.  I think if the subsidies are going to survive, they will probably survive with the vote of Justice Anthony Kennedy, not Roberts.

6.  A ruling for the plaintiffs wouldn’t be the end of the road for Obamacare. To be sure, the law would have a very difficult time functioning if subsidies weren’t available in 36 states. But remember, the law will still be on the books. Everything else will still be enforceable.

In other words, we’ll just get a new set of political struggles. Republicans will push for full repeal, or major modifications to the scope of the law. But Democrats will push for full authorization of the subsidies and expansions of exchanges in the states. In the meantime, insurance rates will begin to skyrocket.  Who wins that political battle? I honestly don’t think we can answer that with certainty.

In closing, I’ll simply note this: When I heard the theories behind the constitutional challenges to Obamacare, I thought they were borderline frivolous.  And yet, the challenge to the individual mandate under the Commerce Clause received five votes (observers were surprised when the individual mandate survived under the taxing power), while the challenge to the Medicaid expansion received seven votes.

I have always thought that if this case got to the Supreme Court before the law fully took root, that it would be a very strong challenge.  I don’t think this is a slam dunk by any means, and there are enough nuances, even within textualism, to approve of the federal subsidies. But this threat is real.

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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