Will the Court Kill Obamacare This Week?

The Supreme Court will hear oral arguments in the latest challenge to Obamacare this week. Here’s why the case should be open and shut.

This week, the Supreme Court hears oral arguments in King vs. Burwell. According to many court-watchers, at stake is not just whether more than 6 million Americans will lose their current health care coverage, but the legitimacy of the Court itself.

Is this just hype? Could a ruling against Obamacare really delegitimize the Supreme Court? I wouldn’t put it that way myself, but what seems clear is that if King v. Burwell is decided purely on its legal merits, as it should be, then the case should be a slam-dunk.

Remember that, underneath all the hubbub, this case is about an obscure provision in the Affordable Care Act. At its heart, King v. Burwell is ultimately a case of minutely detailed statutory interpretation.

Now, statutory interpretation is often a tricky business. The words of a statute are frequently ambiguous. Indeed, sometimes a statute is ambiguous even when its words are clear. In a famous case almost 150 years ago, the Supreme Court offered classic examples. Suppose a law declares it a crime for any person “to draw blood in the streets.” Does this mean that a surgeon who saves an accident victim’s life on a public street is guilty of an offense?

Or suppose a law provides that any “prisoner who breaks out of prison is guilty of a felony.” Does this mean that a prisoner who breaks out of a prison that is on fire, in order to save his life, has violated the law? A literal interpretation of these laws would seem clearly to go beyond what the legislature could plausibly have intended. What should the court do?

In giving meaning to an ambiguous statute, a court’s ultimate responsibility is to carry out the will of the legislature. But the will of the legislature is often as unclear as the statute itself. Suppose a law imposes a special tax on “vessels.” Does the tax apply to a houseboat that has no engine, is docked permanently at one location, but that can be towed? How should a court answer that question? By looking up the word “vessel” in the dictionary? By reading the legislative history of the law to determine what individual members of the legislature might have said about the question? By invoking presumptions about statutory interpretation? And which ones? Should a court interpret provisions broadly or narrowly, or in conformity with other provisions of the statute, or in accord with the state of the law before the statute was enacted?

These are some of the reasons reasonable people disagree in good faith about how to interpret a given statute. But, in this case, there are little grounds for such disagreement.

The Affordable Care Act provides for the creation of “exchanges” though which individuals could purchase competitively priced health care coverage. The Act provides a federal tax credit to middle- and low-income individuals who purchase their health care coverage on these exchanges. The Act authorized each state to create its own exchange by January 1, 2014, and provided further that if a state chose not to create its own exchange by that date, the Department of Health and Human Services would create and operate such an exchange on its behalf. Thirty-four states fall into this category.

Here’s where the statutory interpretation question enters the picture. The provision of the statute that authorizes the federal tax credit, which is critical to enabling middle- and low-income families to afford health care coverage, states that such credits are available to individuals enrolled in a health care plan “through an exchange established by the state.”

The IRS offered the federal tax credit to all individuals who receive coverage through all exchanges: both those established by states, and those established by the federal government on states’ behalf.

But the plaintiffs in King v. Burwell, supported by Senators Ted Cruz, Orrin Hatch, and Marco Rubio, maintain that this is an erroneous interpretation of the Act. They say that the federal tax credits should be available only to those individuals who enrolled “through an exchange established by the state.”

In other words, they argue that more than 6 million middle- and lower-income Americans should lose their federal tax credits for health care because they obtained those credits through exchanges established on behalf of the states by the federal government, rather than through exchanges established by the states themselves.

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The question, in other words, is whether the statutory phrase “though an exchange established by the state” should be taken to refer only to exchanges “established by the individual states themselves,” or whether it should be understood more broadly to include exchanges “established either by the individual states themselves or on their behalf by the federal government.”

The correct answer, as held unanimously by the United States Court of Appeals for the Fourth Circuit, is clearly the latter.

The Affordable Care Act is a hugely complex piece of legislation that covers some 900 pages of text. To take the three words “by the state” out of context in this manner distorts the meaning of other provisions of the Act, renders other provisions of the Act essentially irrelevant or incoherent, and ignores the fact that “by the state” can readily be understood to include exchanges created by the federal government on behalf of the state. In fact, nothing in the rest of the legislation suggests that Congress intended such a cramped and narrow reading of that clause.

As the Court of Appeals held, it is standard practice in interpreting statutes for a court to defer to the judgment of the administrative agency charged with interpreting and enforcing the legislation when the text is unclear. Following that standard practice, the Supreme Court in this case should defer to the understanding of the IRS, which held that the Act authorizes a federal tax credit for health care coverage obtained through any exchange created under the Act.

And when all is said and done this case is similar to the blood-letting and prison-escape examples discussed above. Just as it would be irrational and absurd to assume that the legislatures in those situations meant the language of the statutes to be taken literally, and thus to render both the surgeon and prisoner guilty of criminal offenses, so too would it be irrational and absurd to assume that the Congress that enacted the Affordable Care Act, given its overarching goal of making affordable health care coverage available to middle- and low-income families, intended to limit the federal tax credits only to those exchanges established by the states.

Such an interpretation would effectively rewrite the legislation in a way that might please its Republican opponents, but it cannot rationally be reconciled with the actual understandings and intentions of those who enacted the legislation. Such an interpretation would be an act of raw judicial usurpation, rather than legitimate statutory interpretation.

That’s why the Supreme Court will, in the end, affirm the judgment of the Court of Appeals and refuse to misconstrue the statute in a manner that would unjustifiably deny millions of Americans the heath care coverage to which they are entitled by law.