Supreme Court agrees about what nixing Obamacare subsidies would do

Screen Shot 2013-12-19 at 9.57.41 PMYesterday’s oral arguments at the Supreme Court uncovered some rare unity about the Affordable Care Act.

No, it’s not about the key question, whether the law allows subsidies to be available for insurance policies purchased through the federal exchange.

Instead, it’s about what nixing Obamacare subsidies for millions of Americans would do.

Those who spoke about consequences, whether conservative or liberal jurists, all agreed the impact would be truly awful.

As Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale University wrote:

[I]t was crucial in the oral argument in King v. Burwell to discover whether any of the Justices actually doubted that denying subsidies in federal exchanges would have disastrous consequences. As far as we can tell, all of the Justices accepted this proposition. (Obviously, we don’t know what Justice Thomas thinks, because he doesn’t talk at oral arguments.) Justices Scalia, Alito, and especially Justice Kennedy, however, spoke as if they accepted that dire consequences would flow from accepting the challengers’ position. Although the Chief Justice said little, it would be very surprising if his views about reality were different. [source]

What are these dire consequences? Not just a “death spiral” of quickly rising premiums and a federal exchange market of sick people in each state but also an undermining of the states’ private insurance markets for everyone, regardless of whether one bought insurance through the federal exchange.

This warning was delivered in numerous briefs, including the one from the trade association representing U.S. health insurers.

Thus it’s cheering that this reality was recognized in the Supreme Court.

In Justice Kennedy’s case, this acknowledgement of terrible consequences that would follow from nixing the subsidies was tied to states’ rights concerns.

Argument about states were raised by a group of states that includes Maine and four law professors.

They put out briefs arguing that, if one believed that subsidies were not available for policies bought on federal exchanges, states did not receive the typically required “clear notice” that subsidies wouldn’t be available unless they formed state exchanges.

As Scotusblog describes it, Justice Anthony Kennedy spoke out about this during the time devoted to questioning the lawyer who brought the case.

Justice Sonia Sotomayor. . .expressed concern about the consequences of a ruling for the challengers.  If a state’s residents don’t receive subsidies, she told Carvin, it will lead to a “death spiral”:  because a large group of people in those states will no longer be required to buy health insurance, but insurers will still be required to offer insurance to everyone, only sick people will buy health insurance.  And that will cause everyone’s insurance costs to rise, leading more people to drop out of the insurance market.  States will then feel like they have no choice other than to establish their own exchanges to ward off the “death spiral” – a scenario that is so coercive that it violates the Constitution.

Perhaps critically for the government, Justice Anthony Kennedy – who is often regarded as a strong supporter of states’ rights – also expressed concern about the possibly coercive effect of a ruling for Carvin’s clients.  There is, he told Carvin, “something very powerful to the point” that if the challengers prevail, the states have to choose between the death spiral and creating an exchange.  “There’s a serious constitutional problem,” he concluded. 

Now, this doesn’t mean that Kennedy would vote to keep the subsidies, and it certainly doesn’t mean that for Justices Scalia and Alito.

In fact, Justice Scalia said to the government’s attorney arguing the case:

You really think Congress is just going to sit there while while all of these disastrous consequences ensue?

Solicitor General Verelli’s response, “Well, this Congress, Your Honor, I-  I-” and the laughter in the courtroom, along with the fifty plus votes in the House to repeal the ACA, suggest that this Congress won’t act to make sure millions retain those subsidies.

Whether the ACA survives very well could depend on whether enough of the Supreme Court agrees that this Congress is likely to act to avert the consequences arising from nixing the subsidies.

At least we know there’s widespread agreement on the Court that those consequences would be terrible.

Comments

Powered by Facebook Comments

Amy Fried

About Amy Fried

Amy Fried loves Maine's sense of community and the wonderful mix of culture and outdoor recreation. She loves politics in three ways: as an analytical political scientist, a devoted political junkie and a citizen who believes politics matters for people's lives. Fried is Professor of Political Science at the University of Maine. Her views do not reflect those of her employer or any group to which she belongs.