Thanks to 4 Simple Words, the Supreme Court Could Destroy Obamacare

AP

The Affordable Care Act, President Barack Obama's signature piece of legislation, made its second appearance before the Supreme Court on Tuesday. After pointed questions from the nine justices that demonstrated a sharply split court, the outcome of the case known as King v. Burwell may be even more important than the 2012 case in which the law was narrowly upheld.

At issue are four words that opponents of the law argue prohibit the federal government from establishing health insurance exchanges in states that failed to set up their own. At risk are the 7 million individuals who receive federal subsidies in those roughly three dozen states that chose to forgo establishing their own exchanges.

Opponents argue that the language of the law that enabled individuals enrolled in exchanges "established by the State" to get subsidies limited those subsidies to individuals enrolled in exchanges established by the individual states rather than the federal government.

The government disagrees, arguing that other language in the law enables the federal government to serve the same function where states fail to act. The ACA says that if a state chooses not to establish their own insurance exchange, the federal government "shall establish and operate such exchange." The government's lawyers argue that the use of the word "such" indicates that Congress meant for both the states and the federal government to work in the same space.

So, with all that said, what did Tuesday's oral arguments show us?

Former Health and Human Services Secretary Kathleen Sebelius speaks with reporters outside the Supreme Court in Washington, Wednesday, March 4, 2015. Source: Andrew Harnik/AP
Former Health and Human Services Secretary Kathleen Sebelius speaks with reporters outside the Supreme Court in Washington, Wednesday, March 4, 2015.  Andrew Harnik/AP

If you're wondering how this case got here, you're not alone. At first blush, the fact that the argument hinges on a single, out-of-context word seems almost baffling. During Wednesday's oral arguments, several justices shared that concern, with Justice Ruth Bader Ginsburg asking whether the plaintiffs, who were not at risk of paying any tax penalties under the ACA, had actually suffered any kind of legal harm required to be able to bring a lawsuit. Each "plaintiff has to have a concrete stake in these questions," Ginsburg said. "They can't put them as ideological questions."

Justice Elena Kagan drilled down on the issue of context, arguing that Congress' intent was to allow the federal government to step in and establish health exchanges where individual states failed to do so. "We don't look at four words," Kagan said. "We look at the whole text, the particular context, the more general context, try to make everything harmonious with everything else."

The plaintiffs' attorney, Michael Carvin, remained steadfast in contending that the language relating to the subsidies only related to states and could not be re-imagined to include the federal government. Justice Antonin Scalia agreed: "How can the federal government establish a state exchange? That is gobbledygook."

Ayru Crymef of Washington, and others with the Service Employees International Union, hold signs depicting numbers of people who have lost heath care coverage during a rally outside the Supreme Court in Washington, Wednesday, March 4, 2015Source: Andrew Harnik/AP
Ayru Crymef of Washington, and others with the Service Employees International Union, hold signs depicting numbers of people who have lost heath care coverage during a rally outside the Supreme Court in Washington, Wednesday, March 4, 2015  Andrew Harnik/AP

But, now that the court has taken the case, the potential damage of a ruling against the government would be immense. A wholesale gutting of the federal government's ability to provide health care subsidies to individuals in 36 states would effectively cut the ACA off at the knees, forcing a congressional fix for the law to regain functionality, an outcome unlikely in today's political environment.

If the court were to rule that federal subsidies were not authorized by the ACA, 7 million people would see their average premium costs jump from $150 to $374, making it unaffordable for many and almost certainly guaranteeing the collapse of the insurance markets in those respective states.

On top of 7 million people potentially losing health insurance overnight, the economic implications of such an outcome could be equally severe. Insurance providers throughout the country have voiced their concern, with many likely to exit the insurance market should the decision come down against the Obama administration. Such an exit would upend insurance markets and the health care industry, both regionally and nationally, as insurers would scramble to redo their actuarial requirements and address the sudden loss of millions of paying customers.

Accepting the opposition's argument would cause "the insurance market death spirals that the statutory findings specifically say the statute was designed to avoid," Solicitor General Donald Verrilli Jr., the lawyer for the government, argued before the court. "That cannot be the statute that Congress intended."

"Of course it could be," Scalia pushed back. "I mean it may not be the statute they intended. The question is whether it's the statute that they wrote."

Where the justices stand: Following Tuesday's arguments, seven of the nine justices' opinions seem decided, with Justices Ginsburg, Stephen Breyer, Sonia Sotomayor and Kagan ruling in favor of the government and Justices Scalia, Thomas and Samuel Alito ruling against the government.

That 4-3 split leaves a great deal of power in the hands of perennial swing vote Justice Anthony Kennedy and conservative Chief Justice John Roberts. Kennedy went beyond the language of the law and asked whether accepting the opposition's argument would create an unconstitutionally coercive relationship between the federal government and the states. Accepting the opposition's argument would raise "a serious constitutional question," Kennedy said.

Roberts, who cast the deciding vote in the 2012 case that upheld the constitutionality of the ACA, asked just one substantive question Tuesday. In a notably uncharacteristic act, Roberts joked with the attorneys about the outcome of the 2012 case but made no indication of his position on the case before the court, leaving his final vote in play.

With two justices unaccounted for, potential outcomes remain a mystery. For now, the law's challengers and the Obama administration will be forced to wait to see both how the final votes fall and what the final opinions rule. The court's decision is expected to come in late June or early July, near the end of the court's term.