Having déjà vu? The Affordable Care Act is once again facing a significant challenge in the Supreme Court this week. The piece of legislation, which has become so much the hallmark of the Obama administration that it is more commonly known as Obamacare, represents the most significant overhaul of the healthcare system since the introduction of Medicare and Medicaid in the 1960s. In short, it is designed to increase the availability and quality of health insurance, while also reducing the private and public costs of healthcare. In the summer of 2012, the constitutional validity of the Affordable Care Act came under severe scrutiny when the Supreme Court heard arguments in the case National Federation of Independent Business v. Sebelius. The Court ultimately upheld the validity of a great portion of the law. Yet, this week, Obamacare faces another hurdle in the Supreme Court, as the constitutionality of the law is again being challenged in the case King v. Burwell. The Supreme Court will likely decide this summer whether the Affordable Care Act will remain Obama’s legacy or whether the law will be struck down. Even though the Courts upheld Obamacare in the past, the arguments in the case are significantly different than in the case that was heard in 2012; proponents of the Act should not rest easy assuming that the Supreme Court will decide in favor of Obamacare this time, too.
In the 2012 Supreme Court case, National Federation of Independent Business v. Sebelius, the question at hand was whether the provision in the Affordable Care Act, which required Americans to obtain insurance or pay a penalty, was unconstitutional. The plaintiffs argued that the federal government is not permitted to force individuals to buy services that they don’t want, healthcare included. The defendants argued, in response, that such a mandate was necessary because it facilitated the law as a whole to function. The only way that premiums could become more affordable to those that were being denied affordable healthcare before Obamacare—namely sick people—was if healthy individuals also signed up for the program. Moreover, the Obama administration compared the financial penalty for not participating in the program to a tax, which the Constitution does, in fact, permit. In the end, the Court did place some restrictions on federal regulation of commerce, but the Court’s 5-4 decision allowed almost all of the Affordable Care Act’s provisions to remain standing, with Chief Justice John Roberts delivering the swing vote.
This year, the justices on the Supreme Court are questioning the constitutionality of Obamacare for an entirely different reason. Part of the Affordable Care Act makes tax credits available to states through online marketplaces “established by the State.” When the Act originally passed through Congress, the House Democrats passed a version of the bill in which there was one national health exchange—an online marketplace for health insurance—but the Senate insisted on limiting federal power and giving states more leeway with implementation of Obamacare. Because of this, it was assumed that many states would create their own exchanges. However, after the Act passed, it was clear that many states would continue to rely on the federal government to operate them. The plaintiffs in this case — four Virginia residents who did not want to purchase healthcare — would not have had to purchase healthcare without the tax credits that the Act provides for. They have argued that the clause “established by the State,” means that only those states that create and run their own exchanges are eligible for the subsidy that the Act delineates. However, in 2012, the IRS made these tax credits available to all states. The defendants argue that the conditionality of these tax credits was never made explicit to states, nor is it consistent within the context of the law taken as a whole. The defendants also argue that the Court should consider that a ruling eliminating these subsidies could affect millions of people. While it seems unlikely that the wording of the law itself would not be considered, it does seem at least equally important to consider the impact and intent of the law.
There has been much speculation about whether Chief Justice John Roberts or Justice Anthony Kennedy will serve as a swing vote in favor of the constitutionality of the subsidies. The Chief Justice upheld the validity of Obamacare in the past, but now it faces the Supreme Court for an entirely different reason, under entirely different circumstances, and with different arguments at play. At the end of the day though, all this speculation amounts to just that—speculation. But, what is clear is that, should the Supreme Court rule that these subsidies are unconstitutional, 37 states will be affected, potentially impacting up to 13.4 million people and resulting in a 35 percent increase in the premiums of some individual health plans. The invalidity of these tax credits could be fatal to the goals of Obamacare.
Plus, if the Supreme Court were to rule against the validity of the subsidies, there is very little that the Obama administration could do to resuscitate the Affordable Care Act. The Republican controlled Congress will likely be unwilling to restore the subsidies nationwide, unconditional on whether or not states use their own marketplace or rely on the federal government for operation. Realistic and effective executive action is probably not a possibility. This leaves Obama with only one real option to keep Obamacare alive and well: convince and help those states that rely on federal operation of their exchange to set up their own marketplaces. While there are some ways that the federal government could relieve the operating burden of state-run exchanges, the administration would still have to convince Republican states that have already once refused to participate in the program to start participating. Needless to say, not only would the effects of a judicial blow to the Affordable Care Act be very large and wide-reaching, but the threat may very well be actualized.
King v. Burwell is not being talked about nearly as much as it should, and the decision in the case is not as highly anticipated as that of the 2012 case. Maybe it’s because this is not a presidential election year. Or maybe it’s because many people expect a ruling in favor of the Act—after all, the Supreme Court backed Obamacare in 2012. But this case could not be more different than the case brought before the court in 2012. Yesterday, the issue was whether the federal government had the power to mandate participation and penalize abstention. Today, the issue is whether or not the Affordable Care Act is being implemented the way that it was written and intended. To be quite frank, the danger seems more real today. Opponents of the Act can point to a phrase within the piece of legislation to back their claim, and proponents have been backed into a corner, asking the Court to consider the impact, intent and purpose of the law, rather than the actual wording. Even though the Supreme Court has already ruled that the Act does not constitute an overstep of federal power and, despite the fact that the Act has yielded extremely positive results for millions of Americans, the very wording of the Act may undercut it. While, it is certainly a possibility and a hope that the Justices will loosely interpret the law, advocates of the Act are on thin ice this time.