King v. Burwell

The U.S. Supreme Court has ruled 6-3 that the Affordable Care Act allows subsidies for low-income people who purchase health insurance through federal exchanges. The majority opinionby Chief Justice John G. Roberts is a big win for the Obama administration and the viability of its health-care law.

At issue was a provision of the law allowing subsidies for people participating in exchanges “established by the state.” Challengers had argued the law nixes subsidies in the nearly two dozen states that use federal, rather than state-run, insurance exchanges. Justice Roberts (joined by Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan) said that the provision should be read in context of the entire law.

Roberts’ decision was based on a reading of the law rather than “Chevron deference,” which allows federal agencies to fill in gaps in a statute on the theory that the ambiguity is an implicit delegation of power from Congress (viz. Chevron USA v. Natural Resources Defense Council).

If Roberts had ruled the Internal Revenue Service had “Chevron deference” to interpret the law, future administrations could give a different reading to the law. Roberts said the law was ambiguous, but Chevron deference didn’t apply because the tax credits are among the key reforms of the health law, affecting the price of health insurance for millions of people.

Instead, Roberts said, the ambiguity required an analysis of the broader structure of the law. Reading the law to bar subsidies in states using federal exchanges would likely create “death spirals” in the individual insurance market that the law was designed to avoid, Roberts said. “It is implausible that Congress meant the act to operate in this manner,” he said. What the Congress meant, however, the Congress did not know as it did not read the law in order to learn “what’s in it” (Palosi).

On the other hand Scalia’s dissent (joined by Justices Clarence Thomas and Samuel A. Alito) said the majority advanced “feeble argument” made up of “interpretive jiggery-pokery.” In particular, the dissent attacked the clear mis-construction that “[the] exchange [shall be] established by the state” should (pursuant to Roberts) mean “[the] exchange [shall be] established by the state or the federal government.” “That is of course quite absurd, and the court’s 21 pages of explanation make it no less so,” concludes Scalia.

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