Supreme Court upholds Obamacare subsidies [With Comment by John]

The vote was 6-3. Chief Justice Roberts wrote the opinion. The dissenters were Justices Scalia, Thomas, and Alito.

Two big wins for the Obama administration today, the other being the housing case (see post below).

UPDATE: According to SCOTUSblog, where I’m following today’s developments, the majority acknowledges the strength of the argument that the plain language of the statute permits subsidies only on state exchanges. However, the majority says that “in this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.”

The majority also states: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”

It looks to me like Roberts and Kennedy simply were unwilling to upset the health insurance markets to the extent that a ruling against the government would have. Not surprisingly, pragmatism trumped a proper reading of the law.

Thus, Justice Scalia is not off-base when he suggests in his dissent that, henceforth, the Affordable Care Act be called “SCOTUScare.” The Supreme Court has done what Congress didn’t do — grant subsidies to those purchasing insurance on the federal exchange.

STEVE adds: Looks like I’m going to start drinking early today. (Insert face palm. . . now.)

JOHN adds: This is highly disappointing, for legal, not political, reasons. You can read the decisions here. This is some of the key reasoning in Justice Roberts’ majority decision:

Second, we must determine whether a Federal Exchange is “established by the State” for purposes of Section 36B. At the outset, it might seem that a Federal Exchange cannot fulfill this requirement. After all, the Act defines “State” to mean “each of the 50 States and the District of Columbia”—a definition that does not include the Federal Government. 42 U. S. C. §18024(d). But when read in context, “with a view to [its] place in the overall statutory scheme,” the meaning of the phrase “established by the State” is not so clear. Brown & Williamson, 529 U. S., at 133 (internal quotation marks omitted).
After telling each State to establish an Exchange, Section 18031 provides that all Exchanges “shall make available qualified health plans to qualified individuals.” 42 U. S. C. §18031(d)(2)(A). Section 18032 then defines the term “qualified individual” in part as an individual who “resides in the State that established the Exchange.” §18032(f)(1)(A). And that’s a problem: If we give the phrase “the State that established the Exchange” its most natural meaning, there would be no “qualified individuals” on Federal Exchanges. But the Act clearly contemplates that there will be qualified individuals on every Exchange.

As we just mentioned, the Act requires all Exchanges to “make available qualified health plans to qualified individuals”—something an Exchange could not do if there were no such individuals. §18031(d)(2)(A). And the Act tells the Exchange, in deciding which health plans to offer, to consider “the interests of qualified individuals . . . in the State or States in which such Exchange operates”—again, something the Exchange could not do if qualified individuals did not exist. §18031(e)(1)(B). This problem arises repeatedly throughout the Act. See, e.g., §18031(b)(2) (allowing a State to create “one Exchange . . . for providing . . . services to both qualified individuals and qualified small employers,” rather than creating separate Exchanges for those two groups).

These provisions suggest that the Act may not always use the phrase “established by the State” in its most natural sense. Thus, the meaning of that phrase may not be as clear as it appears when read out of context.


This interpretation of “under [42 U. S. C. §18031]” fits best with the statutory context. All of the requirements that an Exchange must meet are in Section 18031, so it is sensible to regard all Exchanges as established under that provision. In addition, every time the Act uses the word “Exchange,” the definitional provision requires that we substitute the phrase “Exchange established under section 18031.” If Federal Exchanges were not established under Section 18031, therefore, literally none of the Act’s requirements would apply to them. Finally, the Act repeatedly uses the phrase “established under [42 U. S. C. §18031]” in situations where it would make no sense to distinguish between State and Federal Exchanges. See, e.g., 26 U. S. C. §125(f)(3)(A) (2012 ed., Supp. I) (“The term ‘qualified benefit’ shall not include any qualified health plan . . . offered through an Exchange established under [42 U. S. C. §18031]”); 26 U. S. C. §6055(b)(1)(B)(iii)(I) (2012 ed.) (requiring insurers to report whether each insurance plan they provided “is a qualified health plan offered through an Exchange established under [42 U. S. C. §18031]”). A Federal Exchange may therefore be considered one established “under [42 U. S. C. §18031].”

The upshot of all this is that the phrase “an Exchange established by the State under [42 U. S. C. §18031]” is properly viewed as ambiguous.

The majority opinion criticizes the drafting of the Affordable Care Act and the manner in which it was enacted. Cold comfort:

The Affordable Care Act contains more than a few examples of inartful drafting. (To cite just one, the Act creates three separate Section 1563s. See 124 Stat. 270, 911, 912.) Several features of the Act’s passage contributed to that unfortunate reality. Congress wrote key parts of the Act behind closed doors, rather than through “the traditional legislative process.” Cannan, A Legislative History of the Affordable Care Act: How Legislative Procedure Shapes Legislative History, 105 L. Lib. J. 131, 163 (2013). And Congress passed much of the Act using a complicated budgetary procedure known as “reconciliation,” which limited opportunities for debate and amendment, and bypassed the Senate’s normal 60-vote filibuster requirement. Id., at 159–167. As a result, the Act does not reflect the type of care and deliberation that one might expect of such significant legislation. Cf. Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527, 545 (1947) (describing a cartoon “in which a senator tells his colleagues ‘I admit this new bill is too complicated to understand. We’ll just have to pass it to find out what it means.’”).

Anyway, we “must do our best, bearing in mind the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Utility Air Regulatory Group, 573 U. S., at ___ (slip op., at 15) (internal quotation marks omitted). After reading Section 36B along with other related provisions in the Act, we cannot conclude that the phrase “an Exchange established by the State under [Section 18031]” is unambiguous.

UPDATE by John: The Associated Press identifies ongoing legal challenges to Obamacare here.