Chief Justice John Roberts tossed a bucket of cold water on the arguments against tax subsidies under the Affordable Care Act on Thursday, and the deadly threat to Obamacare melted away like the Wicked Witch of the West. Writing for a 6-3 majority, Roberts, like the consummate A student he is, offered an excellent third-year administrative law exam answer to the questions the challengers posed.
There had been speculation that the crucial votes to save the Act would come from Roberts and Justice Anthony Kennedy, and that they would have to be lured across the Court’s liberal-conservative line by soothing words about the prerogatives of the states. But federalism was the dog that didn’t bark Thursday.
Instead, Roberts wrote for himself and five others—Justices Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. The challengers had argued that one clause of the Act limited its tax-benefits to “an exchange established by a state,” and so the subsidies could not be offered to those who purchased their plans on state-level exchanges established by the federal government. Roberts explained in his customary breezy style that this clause, read in context, referred to all American Health Benefit Exchanges established under the act, whether by the states themselves or by the federal government.
This reading means that federal subsidies are available to all eligible Americans who comply with the Act’s individual mandate by buying health insurance through an exchange. The contrary reading would have meant that those who did so in states that had not set up their own exchanges would lose their coverage, and very soon be forced to drop it. “So without the tax credits, the coverage requirement would apply to fewer individuals. And it would be a lot fewer.” Roberts cited figures suggesting that up to 87 percent of exchange customers would lose subsidies.
He made clear as he did so that this reading was the correct one as a matter of law—not an administrative interpretation that could be changed by a hypothetical Republican administration. In other words, for better or worse, the ACA is now part of federal law, to be uprooted, if at all, only by a full congressional vote to repeal and, possibly, to override a presidential veto.
Roberts also refused to duck responsibility for making an interpretive choice, rather than simply following the words of the statute. Both parties before the Court—the right-wing challengers represented by the conservative attorney Michael Carvin, and the federal government, represented by Solicitor General Donald Verrilli, had argued that the statute was clear. But it wasn’t, and Roberts said so. The phrase “established by a State,” he wrote, could mean either “such exchange,” state or federal, or “only a state exchange.”
It takes nothing away from Roberts’s legal and literary skills to say that, once that was established, the result flowed naturally. Because if the phrase is ambiguous, it is hornbook law that courts should interpret ambiguous provisions in their context and in line with the most reasonable view of congressional intent. “[E]stablished by a state” might seem clear “’when viewed in isolation,’” he wrote. But that “most natural reading” was foreclosed by “the context and structure of the Act.”
Roberts read the statute in a broad context indeed, including the history of healthcare policy and the legislative process that produced the ACA. Massachusetts had the first successful state healthcare plan, he noted. The three reforms at the heart of its plan are a ban on insurers refusing coverage or raising rates on individuals on the basis of their heath; an “individual mandate” that all taxpayers secure coverage; and tax credits for those who otherwise could not afford coverage.
Those reforms are at the heart of the ACA as well. If the Court agreed with the challengers, the gap between states operating state exchanges and those without would be huge: “only one of the Act’s major reforms would apply in States with a federal Exchange.” That’s because without the tax credits, lower-income taxpayers would get a “hardship” exemption from the “mandate.” Only the insurance reforms requiring companies to insure the sick as well as the healthy (“guaranteed issue”) would apply—and the experience of the states shows that guaranteed issue in isolation leads to a “death spiral.” Customers wait to get sick before buying insurance; companies, saddled with only the bad risks, must jack up rates; and then the private insurance market contracts or even collapses.
“It is implausible,” he wrote with some understatement, “that Congress meant the Act to operate in this manner.”
Roberts had kind words for the challengers. Their argument, he wrote, is “strong,” and the Court should be wary when relying “on context and structure in statutory interpretation.” The Act itself, he wrote with even more understatement, “contains more than a few examples of inartful drafting.” He likened its passage to an old cartoon once cited in a law review by the late Justice Felix Frankfurter, “in which a senator tells his colleagues, ‘I admit this bill is too complicated to understand. We’ll just have to pass it to find out what it means.” But he concluded: “We must respect the role of the legislature, and take care not to undo what it has done.” The ACA was passed “to improve health insurance markets, not to destroy them.” And with that, the witch was gone.
But not without a heartfelt eulogy from Justice Antonin Scalia, dissenting for himself and Justices Clarence Thomas and Samuel Alito. The words “established by a state,” he wrote, are the only words that count. “The Secretary of Health and Human Services is not a state. So an Exchange established by the Secretary is not an Exchange established by a state—which means people who buy health insurance through such an Exchange get no money” from tax credits.
Scalia’s dissent is striking for two reasons. Though pointed, it is, like his dissent Monday in Los Angeles v. Patel, more restrained than the usual aria of Scalian outrage. Second, I think, it works against itself, leaving the reader more convinced than before that Roberts has read the statute right.
His first argument, as noted above, was that of a fundamentalist preacher with a proof text: “established by a state” cannot mean anything else. Context is irrelevant; dictionaries are all that matter.
His second is that the Chief’s use of other provisions to justify a more inclusive reading are wrong. But this passage is grotesquely unpersuasive. Roberts pointed out that if federal exchanges are read out of the subsidy provision, this renders absurd provisions instructing the federal government to provide federal-exchange consumers with online calculators of their subsidy; to conduct outreach to federal-exchange customers to tell them about their tax credits; and to provide reports on the number of policies sold and the subsidies provided.
Nonsense, Scalia insisted: “What stops a federal Exchange’s electronic calculator from telling a customer that his tax credit is zero? . . . What stops a federal Exchanges outreach program from fairly and impartially telling customers that no tax credits are available? ... What stops a federal Exchange from confirming that no tax credits have been paid out?”
What stops the Court adopting those ridiculous suggestions? The answer, to me, is the simple refusal of six justices to believe that 2+2=0 just because part of the American conservative movement would really, really, really like that to be the case.
That refusal was wise. This result is best for the country, and for the Court. Roberts will endure a fresh torrent of abuse from conservatives who regard him as an apostate; but the evidence so far is that he remains sunny in outlook and determined to read the law as he sees it. This result is best for him as well.
His readings, whatever you may read in the hours and days to come, are overall quite conservative. But the dispute between Roberts and his usual allies reminds me of a statement Scalia himself made in 1997: “I am an originalist. I am a textualist. I am not a nut.”
The far right offered the Roberts Court a chance to do something that would have been, under the eye of history, nutty and dangerous. On Thursday, the majority refused that invitation.