Obamacare Is Doomed! Everybody Panic!

Not so fast, progressives. It’s far from a sure thing that the Supreme Court will destroy the Affordable Care Act.

Affordable Care Act
A woman waits for the Affordable Care Act website to come back online as she tries to purchase a health insurance plan on March 31, 2014, in Miami.

Photo by Joe Raedle/Getty Images

The purveyors of doom are certain—once again—that the Supreme Court is poised to unravel Obamacare. The catalyst for this week’s panic is the justices’ decision late Friday to grant review in King v. Burwell, assessing whether the federal government can offer health insurance subsidies to individuals in the states that opted not to create insurance exchanges. To be sure, the optics are bad: The court, absent a split in the federal appeals courts, reached out three days after a midterm election to take a case that has more political salience than legal merit. But it is hardly certain the court will rule the way the doomsayers fear it might. And even if the justices eventually do so, it is not even clear that would be bad for Obamacare.

Under the Affordable Care Act, states have the option to set up statewide insurance exchanges. If they do, consumers can go to those state exchanges and purchase health insurance. If a state declines to do so, however, its citizens are not out of luck. The federal government also maintains its own exchange, and citizens of states without exchanges could—and did—enroll on the federal exchange.

At the heart of the King case are the tax subsidies offered by the federal government to those who cannot afford their own insurance. These subsidies are critical to achieving Obamacare’s goal of insuring even the least well off. At present, those eligible for subsidies can get them whether they purchase on the federal exchange or a state one. That could change on account of a glitch in the ACA, which can be read to say that you can only get a subsidy if you signed up on a state-managed exchange. If the Supreme Court signs off on this interpretation, the federal government cannot subsidize insurance for the less well-off in any state that has declined to set up its own exchange.

In King v. Burwell, a unanimous decision by a panel of the U.S. Court of Appeals for the 4th Circuit sided with the Obama administration, rejecting the challengers’ argument that the provision of the ACA that authorizes tax credits for insurance purchased on an exchange “established by the State under section 1311” doesn’t authorize tax credits for insurance purchased on an exchange established by the federal government. Supporters of the ACA call this a mere “drafting error.” Opponents claim this is a clear case of statutory interpretation: The law says “state” exchanges, and that is what was intended. If this interpretation prevails, more than four million people lose those subsidies.

Why are the purveyors of doom, well, purveying doom? Because they are certain the decision to hear the case means the end of Obamacare, as the Supreme Court typically does not take a case for review unless it really has to or really wants to. We just saw that with the same-sex-marriage cases: The Supreme Court declined to take them and—just before that decision came down—Justice Ruth Bader Ginsburg suggested that unless there was a division among the appellate courts on gay marriage, there is “no need for us to rush.” (The federal appeals courts finally split on same-sex marriage just last week, so now it is likely that the justices will weigh in.) On the ACA issue, there is no formal circuit split—a panel of the D.C. Circuit had ruled against the subsidies but the en banc court was reconsidering—and the Fourth Circuit had read the federal statute as the federal government would prefer. So why the rush?

The only reason to take the case, the doomsayers suggest, is because at least four of the justices want to—and this must be because they have it in for Obamacare. Of course, it takes four justices to grant a case for review, and five to rule in a particular way. So, let’s assume that the four conservative justices who voted to strike down the ACA in 2012—Alito, Kennedy, Scalia, and Thomas—are anxious to hear this case. They still need to come up with a fifth vote, so all eyes are on the Chief Justice, who was willing to scuttle the Medicaid expansion but not to strike down the ACA in its entirety the last time he had the chance to do so. The current thinking, then, posits that Roberts, having upheld the statute once, will now switch sides and do everything he can to undercut it.

Ipso facto, come June—and this case is truly being rushed to be decided this term—the expectation is that the Supreme Court will decide by a 5-4 vote that the federal government can’t subsidize insurance for anyone in a state that has not adopted Obamacare. And if that happens, ACA subsidies will evaporate for millions of beneficiaries, and the ACA as a whole may be at risk.

Not so fast.

First, it is simply wrong to assert that the justices never take a case like this absent a split in the lower courts, unless—like the Big Bad Wolf in “Little Red Riding Hood”—they are licking their chops to kill something. To the contrary, as some have already argued, it makes perfect sense for the justices to take a case of this importance the first chance they get. If the subsidies ultimately are unlawful, there will be a lot of disruption; people need to know as early as possible what is going to happen, and states need to figure out how to react. Even though there is not a formal split in the circuits at this moment, some lower courts—both trial courts and the D.C. Circuit in its original ruling—have gone against the government. Therefore, there is room to wonder what the ACA means exactly, and it takes the Supreme Court to resolve this confusion definitively.

Certainly there is precedent for the justices taking a case without a split in the circuits, even to uphold the federal statute. In Bond v. United States, for example, the justices granted certiorari to consider a challenge to the constitutionality of Section 229 of the Chemical Weapons Convention Implementation Act. The petitioner was charged with violating the statute when she committed a common law assault, and she argued that the statute stepped on state prerogatives and thus was an unconstitutional exercise of Congress’s power. The appellate court had upheld the validity of the statute, yet the justices took the case anyway. They also upheld the constitutionality of the statute. (To be sure, the court said the application of the statute in Bond’s case was impermissible, but they did not strike it down, as some hoped they would.)

Second, it is possible everyone has their political calculus wrong with regards to the Chief Justice, just as we did the first time the Supreme Court looked at the ACA. Roberts, according to all accounts, did a last-minute 180 on Obamacare in 2012. We may never know why, but it seems likely it had something to do with preventing a backlash against the court. While such a backlash is less likely now—especially given the just-completed midterms that gave Republicans control of the whole Congress—Roberts is savvy enough to know how a ruling against the federal government in this case could be perceived. In a recent speech to the University of Nebraska College of Law, Roberts said that he didn’t want Americans to start to view the Supreme Court as a “political entity.” “I worry about people having that perception, because it’s not an accurate one about how we do our work. It’s important for us to make that as clear as we can to the public.” A 5-4 anti-Obamacare vote in King v. Burwell would accomplish the exact opposite: Eliminating the federal government’s subsidies, when there is such widespread agreement that Congress never, ever intended such a thing, would look like nothing but a political swipe.

Third, while ideology decides lots of cases, the justices happen to be lawyers as well. This is a statutory interpretation case, not a constitutional one. There are really good legal reasons why the best reading of this statute is the one that allows the federal subsidies. Indeed, Abbe Gluck explains on SCOTUSblog how voting to uphold the subsidies is right in line with Justice Scalia’s preferred method of interpreting statutes. Whether one is persuaded by this or not, the point remains that statutory interpretation cases often prove less ideological than purely constitutional ones.

Fourth, even if the justices did decide that the subsidies were invalid, that might actually help Obamacare, not hurt it. There’s going to be a lot of pushback to yanking the subsidies out of the hands of the 4.6 million people that are already getting them. In this scenario, many of these people would have had health insurance for one brief moment and then would again be unable to afford it. There is a difference between denying a benefit you never experienced and taking away a benefit that made your life immeasurably better for a brief period of time. If the court sides with the challengers, it is going to put pressure on the states that opted out of creating an exchange for ideological reasons to do something to ensure that those who can’t afford it can get insurance. Perversely, the existence of the sprawling federal exchange and subsidy made it easier for states to thumb their noses at the ACA. It gets a lot tougher if state exchanges are the only realistic possibility for many people. In the end, striking the federal subsidies may push more states into the Obamacare fold.

Finally, and for this very reason, issues of state sovereignty will put some of the justices in an awkward ideological position. As things now stand, Obamacare is pretty respectful of federalism. States can decide on their own what to do. Eliminating the federal option may ultimately limit that choice, as states are forced to acknowledge their role in depriving people of affordable health insurance. Conservative justices will have to decide whether they want to take a swipe at Obama for the sake of wrecking his signature health care accomplishment, or whether they’d rather keep the pressure off exchange-less states, most of which are red states.

None of this means that there isn’t naked partisanship motivating the lawyers who have pushed for this second bite at the Obamacare apple. And judges—including Supreme Court justices—often vote on the basis of ideology, and sometimes on the basis of partisanship itself. Some commentators are already calling this the next Bush v. Gore. But even if that were true here, is taking health care subsidies away from millions of citizens really the partisan hill that the justices want to die on?

In the end, SCOTUS may deal this blow to the ACA come spring. But we would caution against placing such an uncertain bet. If we learned anything from the 1.0 version of the Obamacare fight, it’s that judicial outcomes can be hard to predict, and that months of preemptive panicking don’t necessarily foretell the final result.