Both sides are playing an expectations game for the Court's benefit. The White House insists that no administrative action could patch the law's reforms back together if the Court sides against it. Republicans, meanwhile, are trying to reassure the Court that they'll have a plan ready—but have released few details of what that plan might look like.
The challengers—a group of individuals pulled together by conservative legal activists—argue that the Affordable Care Act only made subsidies available in states that set up their own insurance exchanges, and they say the IRS is acting illegally by making those subsidies available in the 34 states that deferred to the federal government to run their exchanges.
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Roughly 7 million people would lose their financial assistance if the Court accepts that argument, and experts expect that most of them would drop their coverage altogether. That would not only erode the gains Obamacare has made in covering the uninsured, but also would weaken the law's individual and employer mandates. It could cause severe premium increases even for people who did not get their coverage through Obamacare.
All eyes Wednesday will be on Chief Justice John Roberts, who cast the deciding vote in Obamacare's favor in 2012; and Justice Anthony Kennedy, the Court's traditional swing vote.
The challengers' argument has two parts: First, 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, they say.
Furthermore, they argue that Congress intentionally limited subsidies to state-run exchanges to set up an especially dramatic incentive for states to do the job themselves, rather than falling back on a federally run marketplace.
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The Justice Department says that the text of the statute, read in its entirety, clearly treats state- and federally run exchanges the same. Congress intended for each state to have an exchange, with the same basic characteristics—including subsidies—irrespective of whether the state itself or the federal government set up that exchange.
If Congress had intended to create a "hammer," all but forcing states to build their own marketplaces, the government says, it wouldn't have authorized a federal fallback in the first place—and it wouldn't have buried its threat in a subsection of the law that spells out the formula for calculating subsidies, where the "established by the State" language appears.
Michael Carvin, the lawyer arguing for the challengers Wednesday, will be hoping to appeal to Roberts's knack for textualism, persuading him that "established by the State" means what it says and that the rest of the statute doesn't conflict with their interpretation.