Will Chief Justice Roberts need an escape hatch in King and Halbig?
Congress ... recognized it was enlisting the States in a new health care program. ... As we have explained, “[t]hough Congress’ power to legislate under the spending power is broad, it does not include surprising participating States with postacceptance or ‘retroactive’ conditions.” Pennhurst, supra, at 25. ... What Congress is not free to do is to penalize States that choose not to participate in that new program. ... In light of the court’s holding, the Secretary cannot apply §1396c to withdraw existing Medicaid funds for failure to comply with the requirements set out in the expansion. That fully remedies the constitutional violation we have identified. - NFIB v. Sebelius
In upholding the Affordable Care Act (ACA) in his 2012 opinion, Chief Justice John Roberts also ruled that to the degree the ACA coerced the States to accept Medicaid expansion, such coercion was unconstitutional. As a remedy, the Chief Justice ruled that the grant of power to the Secretary of Health and Human Resources to cut Medicaid funding to the States would be severed from the statute.
This ruling is the starting point of a very clever argument, well reported by Brian Beutler, to save subsidies and tax credits necessary to the function of the exchanges in states where no exchange was formed and the federal government stepped in from the King/Halbig challenge to be heard by the Supreme Court.
Please read below the fold for more on this story.
I’d like to plant a flag in an unlikely, but completely plausible outcome, wherein Chief Justice John Roberts sides with the challengers, but the law survives unscathed nonetheless. In the 2012 challenge to the health care law, the plaintiffs held both that the law’s individual mandate was an unconstitutional use of Congress’ commerce clause powers and that the law’s Medicaid expansion, as originally written, amounted to an unconstitutionally coercive use of Congress’ spending power. Because the law survived, it’s easy to forget that the Court actually agreed with both of these arguments—and still saved the law.
[. . . ] The case coming before the court next year, King v. Burwell, isn’t a constitutional case. It’s a straightforward, (and deeply ridiculous) statutory interpretation case. But Roberts could easily combine the flexibility he showed in the mandate ruling with the logic of the Medicaid ruling, and save the law one more time. In fact, in a world of pure intellectual consistency, there’s no way for Roberts to avoid this conclusion.
[. . . . But j]ust because the case is ludicrous, though, doesn’t mean conservative justices won’t do the right’s bidding. Roberts, too, could agree with the challengers that the plain language of the statute unambiguously precludes the provision of subsidies to states that don’t set up their own exchanges. But that doesn’t have to be the end of the story.
Because if that’s how you read the statute, then you’re positing that Congress has used its spending power to compel states to set up their own exchanges. But if it’s unconstitutionally coercive for the federal government to say “take this [i.e. Medicaid expansion money], or lose all of your existing federal Medicaid funds,” it might also be unconstitutional for the federal government to say, “do this [i.e. set up an exchange] or we’ll break the insurance markets in your state.”
The argument, in its purest form, is before the court arguing for the invocation of a doctrine known as constitutional avoidance
, which states that the court should interpret a statute in order to avoid a constitutional question.
As Beutler reports, "several states ... have argued in an Amicus brief that the challengers' reading of the statute renders the subsidy scheme unconstitutional because Congress can't use its spending power to penalize states without a heads up."
Here's how the Amici put it:
The Pennhurst doctrine forecloses that interpretation because Congress did not give States clear notice that their citizens would be punished and their insurance markets ruined if they elected to rely on a federally facilitated Exchange. And constitutional-avoidance principles likewise weigh heavily against Appellants’ interpretation because the threat of such consequences to pressure States into building their own Exchanges would raise serious constitutional questions under the Tenth Amendment.
Their argument is that the court should not adopt the Halbig/King parties' argument because that would violate the doctrine of constitutional avoidance. Fair enough. But the SCOTUS is not really a court of law and hasn't been for some time. So let's consider the politics.
Chief Justice Roberts was bitterly criticized by conservatives for his opinion in Sebelius. He's made up with them somewhat with his decisions restricting voting rights but here we go again on ACA. By the same token, insurance companies don't want the credits and subsidies struck down. Finally, in terms of politics, striking down the subsidies on federal exchanges creates a huge political headache for Republicans both in Washington and in the various state houses. They will not want to "fix ObamaCare" (REPEAL!!) but at the same time they must fear the political fallout of stripping millions of health insurance. How can Roberts balance these concerns?
I think Beutler has hit on a possible solution for Roberts:
[I]f the court’s reading of the subsidy scheme renders the statute unconstitutionally coercive or injurious, then, per U.S. v. Booker, the court should ask “what 'Congress would have intended' in light of the court’s constitutional holding." And in so doing, Roberts et al would probably have to make the establishment of an exchange optional, with no penalty for using the federal fallback, just like they did when they made the Medicaid expansion optional.
Under this approach, Roberts can fully agree with the King Halbig parties and then move forward and find the provisions in question, consistent with his Medicaid expansion holding in Sebelius
, violate the Tenth Amendment by coercing States to build exchanges by the unconstitutional threat of withholding tax credits and subsidies. As a remedy, Roberts can rule that the coercive threat be read out of the law and that tax credits and subsidies be applied to both state established exchanges and the federal exchanges. Voila
! Conservatives win the argument but the tax credits and subsidies on the federal exchanges survive. The insurance companies are happy. The Republican politicians are secretly happy. And the country is better off.
But of course it all comes down to what Roberts wants as an actual result. This also assumes the ACA 4 (Scalia, Thomas, Alito and Kennedy) will push the chief to this expediency.
After all, the court could just apply well accepted principles like proper statutory construction, Chevron deference and constitutional avoidance and decide the case on the law and in favor of the government. I would not hold my breath on that one.