ObamaCare at SCOTUS: IRS May Decide on Death Spiral

The matter of ObamaCare law is back in front of the Supreme Court today. If the law stays as written, 34 states which set up ObamaCare exchanges will not get the benefits of government subsidies. Oh no! Update: Karen at The Lonely Conservative has a three-minute video explained today’s proceedings. View it here.


The principal argument advanced by the law’s opponents — that four words in the 906-page statute permit the use of tax credits only in states that set up their own health insurance exchanges — appeared to please the court’s most conservative members.

On the other hand, all four liberals sided with the government’s assertion that the entire law — designed to provide health insurance protection to “all Americans” — must be considered paramount to any literal interpretation of those four words.

After 80 minutes of often contentious debate, it appeared the future of Obamacare could hinge on what states were told when the law was passed — that tax credits could be offered in both state and federal exchanges, or only in state exchanges. Under the first interpretation, the law survives. Under the second, it still could survive if the justices find the threat unconstitutionally coercive. Read more.

DRASTIC STEP: From the above linked article, we learn that the IRS might make the decision:

Later in the day, Kennedy suggested the law may be ambiguous enough to give the Internal Revenue Service deference for its regulation allowing tax credits in federal health exchanges. But he said granting the IRS such leeway would be a “drastic step” because billions of dollars are at stake.

Neverminding the law, that’s how we roll in America today.

After nearly ninety minutes of oral arguments today in King v. Burwell, the challenge to the availability of tax subsidies for people who purchase health insurance on a marketplace created by the federal government, six Justices had tipped their hands.  Justices Elena Kagan, Sonia Sotomayor, Stephen Breyer, and Ruth Bader Ginsburg all seemed like solid votes for the federal government, defending the subsidies, while the challengers could clearly count on the votes of Justices Antonin Scalia and Samuel Alito.  Chief Justice John Roberts – who three years ago joined the Court’s more liberal Justices to uphold another provision of the Affordable Care Act, requiring everyone to buy health insurance or pay a penalty (it’s a tax!) – kept his cards close to his chest, asking only a few questions that gave no real hint as to how he might vote.  But even if it ultimately doesn’t get the Chief Justice’s vote, the government could still win as long as it can pick up just one more vote.  And that seemed like at least a possibility, because Justice Anthony Kennedy asked several questions which suggested that he might be leaning more toward the government than the challengers…

But all four of the Court’s more liberal Justices were skeptical of his interpretation of the Affordable Care Act.  Justice Stephen Breyer, for example, offered a step-by-step reading of multiple parts of the act that would support the government’s interpretation.  Justice Ginsburg characterized the part of the act on which Carvin and his clients rely as a relatively unimportant provision used simply to calculate the amount of the subsidies; if it were actually as significant as the challengers contend, she suggested, Congress would have put it in the main part of the ACA instead…

But what may eventually prove to be the key line of questioning may have been kicked off by Justice Sonia Sotomayor, who expressed concern about the consequences of a ruling for the challengers. If a state’s residents don’t receive subsidies, she told Carvin, it will lead to a “death spiral”:  because a large group of people in those states will no longer be required to buy health insurance, but insurers will still be required to offer insurance to everyone, only sick people will buy health insurance.  And that will cause everyone’s insurance costs to rise, leading more people to drop out of the insurance market.  States will then feel like they have no choice other than to establish their own exchanges to ward off the “death spiral” – a scenario that is so coercive that it violates the Constitution.

Perhaps critically for the government, Justice Anthony Kennedy – who is often regarded as a strong supporter of states’ rights – also expressed concern about the possibly coercive effect of a ruling for Carvin’s clients.  There is, he told Carvin, “something very powerful to the point” that if the challengers prevail, the states have to choose between the death spiral and creating an exchange.  “There’s a serious constitutional problem,” he concluded.  (Carvin tried to downplay this concern by telling Kennedy that the government had not raised this issue, but Kennedy quickly retorted that “we sometimes think of things the government doesn’t argue.”) SCOTUS Blog

Is this a nightmare for Chief Justice John Roberts, who cast the vote deeming ObamaCare to be constitutional? Roberts held that ObamaCare is a tax, but…Congress did not pass a tax when it passed the ObamaCare law, and it was not argued to be a tax before the Supreme Court.

He wrote that the penalty imposed on those who don’t buy insurance amounts to a tax, and that Congress has the power to enact that tax. The Affordable Care Act lived to see another day. Source