Chief Justice of the US Supreme Court John Roberts (L) and others wait for the State of the Union address on Capitol Hill January 20, 2015 in Washington, DC. AFP PHOTO/BRENDAN SMIALOWSKINational Journal

This article is from the archive of our partner National Journal

Chief Justice John Roberts barely said a word Wednesday as the Supreme Court weighed a potentially devastating challenge to Obamacare.

Roberts gave no real clues about how he's likely to rule in the lawsuit, which aims to invalidate Obamacare's insurance subsidies in most of the country — whether he's inclined to reprise his 2012 role as the law's savior, or to help its critics score the body blow he denied them three years ago.

All told, the White House appeared to come away from Wednesday's arguments in a slightly better position than it went in, thanks to signs that Justice Anthony Kennedy might be amenable to part of its case. Kennedy questioned whether a ruling against the law's subsidies would unleash a new, more serious legal crisis.

"It seems to me that "¦ there's a serious constitutional problem if we adopt your argument," Kennedy said to Michael Carvin, the attorney who argued against the subsidies Wednesday.

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But Kennedy was by no means fully sold on the government's position. Between his uncertainty and Roberts' near-total silence, there was no clear winner Wednesday.

The rest of the court divided sharply along partisan lines in its third high-profile case over Obamacare — what Justice Elena Kagan referred to as "this never-ending saga."

At issue this time are the law's insurance subsidies, which help the vast majority of Obamacare enrollees pay their premiums.

The challengers in King v. Burwell argue that Obamacare only provides its subsidies to people who live in states that set up their own insurance exchanges. The IRS is acting illegally by making subsidies available to residents of the 34 states that punted their exchanges to the federal government, the challengers argue.

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They point to a section of the law that refers to subsidies flowing through "an Exchange established by the State." That text alone should clearly limit the subsidies to state-based exchanges, Carvin argued.

Kagan and the court's other Democratic appointees came out swinging against the challengers, arguing that they're interpreting the Affordable Care Act too narrowly and focusing on one small section at the expense of the law's broader intent.

"If you look at the entire text, it's pretty clear that you oughtn't treat those five words in the way you are," Kagan said to Carvin.

The liberal justices also said the text in question could not have given states a clear enough warning that they could risk the stability of their entire insurance markets by letting the federal government set up their exchanges.

A version of that argument is what captured Kennedy's interest. He questioned whether the challengers' interpretation, in which subsidies function as an especially draconian incentive for states to set up their own exchanges, would raise constitutional issues.

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In that setup, Congress might have been presenting the states with a proposal so imbalanced—set up your own exchange or send your insurance market into a "death spiral" that it would have be coercive. The court used similar reasoning in 2012 to rule that states had to be able to opt out of Obamacare's Medicaid expansion.

"It does seem to me that if the petitioners' argument is correct, this is just not a rational choice for the state to make and it's coercive," Kennedy said.

Coercion could raise new questions about whether the scheme was constitutional, and the court generally tries to avoid constitutional questions where it can.

But Justice Samuel Alito pushed back on that possibility, noting that states can still set up their own exchanges — "it's not too late" to avoid the severe disruption that would come from implementing the rest of the law without its subsidies.

With Roberts and Justice Clarence Thomas on the sidelines, Alito and Justice Antonin Scalia took up the conservative cause Wednesday, focusing primarily on the "established by the State" language. If that phrase doesn't exist to draw a distinction between state and federally established exchanges, Alito asked, why is it there?

(RELATED: Antonin Scalia: Won't Congress Fix Obamacare?)

An exchange established by the Health and Human Services Department and an exchange established by a state government cannot be the same thing, Scalia argued, even if that distinction would undermine the law's functioning.

"If it can only reasonably mean one thing, it will continue to mean the one thing, even if it has untoward consequences for the rest of the statute," Scalia said.

This article is from the archive of our partner National Journal.

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