Unlike the landmark 2012 case over the law's individual mandate, the latest challenge—the lawsuit over the way the IRS is providing Obamacare's premium subsidies—isn't a constitutional issue. It's a matter of statutory interpretation—asking the Court to decide what the law says and whether the administration has implemented it accordingly.
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Such cases involve a lot of parsing and hair-splitting, by definition. But in King v. Burwell, the stakes are enormous: Millions of people would likely lose their health insurance if the Court rules against the administration, and insurance markets in 34 states could spin out of control as premiums increase for everyone. Obamacare would not be struck down entirely—that might be simpler, actually—but it could become unworkable in most states, while humming along fine in others.
There's a lot more at play in this case than semantics. Arguments about the purpose of the law, and the legislative history, will weigh on the Court's deliberations. But the justices, particularly conservatives like Chief Justice John Roberts, will start with the text.
And to understand how the Court will reach its ultimate decision, you have to get way down in the weeds. You have to think hard about "such," and "established," and the specific ways the statute uses them.
Step 1: The Law Directs States To Set Up Exchanges
Congress wanted each state to set up and run its own exchange—the new marketplaces where consumers can shop for health insurance.
So, in section 1311 of the Affordable Care Act, Congress wrote that "each State shall ... establish an American Health Benefit Exchange ... for the State." The same section spells out what the exchange has to do to be certified as an exchange—sell insurance, have a website, run a program to help people compare their options, etc. And, it says, "an Exchange shall be a governmental agency or nonprofit entity that is established by a State."
Step 2: The Law Authorizes Backup Exchanges
Although the law said states "shall" establish exchanges, it also set up a backup plan: If a state did not "elect" to establish its own exchange, the statute says, the Health and Human Services Department "shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State."
There it is: such Exchange.
To the Justice Department and other Obamacare supporters, "such Exchange" is a critical phrase. It shows, they argue, that Congress saw the federally run exchanges as essentially identical, in their purpose and their responsibilities, to state-run exchanges.
"'Such' is an important clue—perhaps the most important clue in the statutory text—about what Congress meant the backup exchanges to do. And the statutory text is quite clear that the federal government was stepping into the states' shoes," said Nicholas Bagley, a University of Michigan law professor and an expert on the subsidies case.