By Sarah Sipek
Mar. 4, 2015
Posted: 1 p.m. CT
What does today’s Supreme Court hearing mean for you, the employers of America? Move along, nothing to see here. … OK, a bit simplistic, but there is nothing you or anyone can and should do until the justices rule – likely early this summer. From Gary Kushner: “The court seemed quite divided based on the questioning of both Carvin and Verrilli. The more conservative justices seemed to focus on the precise language of the affected section of the ACA, while the more liberal justices questioned both the plaintiff’s standing to bring suit and the interpretation of the ACA in its entirety.”
In other words, they didn't really tip their hands.
Posted: 12:45 p.m. CT
Heading to Vegas to put money down on the fate of the ACA? Here is Gary Kushner’s predictions. Check back in June, but … “Based solely on today’s oral arguments, I’d expect either a 7-2 ruling in favor of the government (mirroring the 2012 part of the ACA decision throwing out Congress’ ability to force states to expand Medicaid or else lose all Medicaid subsidies); a 6-3 ruling in favor of the government (with Roberts and Kennedy siding with the four liberal justices); or a 5-4 ruling in favor of the government (Kennedy providing the swing vote). If the plaintiffs are to prevail, it would only be on a 5-4 vote with Roberts and Kennedy siding with Scalia, Thomas and Alito.
Posted: 12:15 p.m. CT
To reiterate, the King v. Burwell session indeed is over. We will continue to clean out our notebooks and add more thoughts and perspective throughout the day. It was interesting to note that Former Department of Health & Human Services Secretary Kathleen Sebelius was in attendance. According to the Wall Street Journal, “She said she was not a court watcher and could not predict the outcome, but she maintained she ‘always thought the statute was clear.’ ”
Posted: 12:13 p.m. CT
With arguments ended, no clear-cut winner appears to have surfaced. From what I am reading, no blog appears to be calling it one way or another. And the justices appear deeply divided. Perhaps the most telling point to me, anyway – one that was brought up on several occasions – is that of a lack of standing on the part of the plaintiffs. Gary Kushner makes a good point that the government doesn’t appear to be pursuing the lack of standing issue (“although it might get such a ruling,” Kushner adds).
Posted: 12:12 p.m. CT
Six words have been whittled down to one. Justice Samuel Alito questioned why Congress used the phrase, “Exchanges established by the state,” if it intended to include exchanges established for the state by the federal government.” Donald Verrilli responded that the two phrases were meant to be interchangeable in this instance and throughout the entirety of the legislation.
Justice Anthony Kennedy said that if the language were ambiguous, then it could raise a Chevron defense question. Kushner explained that in a Chevron defense, so named from a 1984 case involving the oil company, courts can defer to the interpretation by an expert agency that administers the law, which in this case would be the U.S. Internal Revenue Service.
Verrilli claimed that the law was clear, so there was no reason to get into the Chevron deference issue, but that if the court disagreed, then the government should win under Chevron deference.
Posted: 11:46 a.m. CT
Not all of the justices are convinced that the worst-case scenario will occur if the plaintiffs win. Said Kushner: “Justice [Samuel] Alito said that if that were the case, states that hadn’t yet set up their own exchanges would quickly do so. Mr. [Donald] Verrilli answered that was easier said than done, and that it was complicated and took months for a state to do so. Justice Alito then said the court could solve that problem by delaying implementation of such a ruling so that states had time to get their exchanges up and running. Justice [Antonin] Scalia asked if the court’s ruling turned out to be so disastrous if the plaintiffs prevailed, “You really think Congress is just going to sit there?” Mr. Verrilli responded, “This Congress?” and the courtroom erupted in laughter.”
Posted: 11:34 a.m. CT
Solicitor General Donald Verrilli doesn't want to start an argument over constitutional avoidance. Said Kushner: “Verrilli avoided getting into the Constitutional avoidance argument by saying that Congress could not have intended to present such a choice to the states because no one seemed to know about it, including the affected states that chose not to establish their own exchanges. When the IRS published its guidance on the tax credits, none of the states submitted comments mentioning any concern about their residents losing subsidies if HHS set up the exchange instead of the state.”
Posted: 11:24 a.m. CT
Justice Kennedy sees a “serious constitutional problem” with the idea that Congress would force states to set up exchanges or risk losing federal premium subsidies. He said, “If a state’s failure to establish an exchange triggered such a severe penalty — denying them insurance subsidies other Americans would get — then refusing to participate was not a rational choice for a state to make.”
He then added that this could trigger “constitutional avoidance.” According to Kushner, “That means a reading of a statute in a plausible but not the most persuasive way to avoid finding it unconstitutional.”
Conservative justices, including Justice Anthony Kennedy, are questioning Verrilli about the “plain meaning” of the six words in question in the ACA legislation. Justice Antonin Scalia said that if a statute has plain meaning, “it means what it means.” He also added that it isn't the court’s job to “twist” words of a statute in order for them to make sense. Added Kushner: “This is an interesting argument, since in case after case the more conservative Justices, including Scalia, have said that the courts must look at the entire context of a law and not just individual sentences.”
The issue of legal standing is again being addressed as Solicitor General Donald Verrilli is being questioned. Verrilli said that the government previously raised a question about standing in regard to two of the four plaintiffs, but hadn’t challenged the other two. The key question, he said, is “whether any of them is liable for a tax penalty for not carrying insurance.” Said Kushner: “This seems to indicate that the government isn’t pursuing the lack of standing issue (although it might get such a ruling) because it wants to outright win a decision that the IRS was within its authority to issue the regulation providing tax credits to lower-income individuals in all states, not just those that chose to implement its own Exchanges.”
Michael Carvin, attorney for the plaintiffs, is arguing that states had ample time to set up their own exchanges and knew how to read statutes. He said it would be a “bizarre notion” if the states didn’t know how to read and understand what he said was a very clear legal provision that conditioned insurance subsidies on the creation of a state exchange. Justice Ruth Bader Ginsburg challenged that idea. Said Kushner: “Justice Ginsburg asks the challenger’s attorney that if the nationwide subsidies are struck down, wouldn’t there be disastrous consequences for states that don’t create their own Exchanges? When Mr. Carvin said there would still be benefits to the federal insurance Exchanges, even without the availability of subsidies, Justice Ginsburg questioned what those would be. ‘What customers would buy on the federal Exchange and what insurance companies would sell on it?’ she asked. No answer.”
Interesting that justices are reaching back to the landmark 2012 health care reform ruling as a reference. Notes Gary Kushner: “Justice Kennedy pressed the challenger’s attorney, Mr. [Michael] Carvin, multiple times about whether the challenger’s reading of the provision of where tax credits are only available “in Exchanges established by the state” wouldn’t be problematic after the Supreme Court struck down the Medicaid expansion provisions of the ACA in 2012. There, the Supreme Court struck down the ACA’s planned expansion of Medicaid, saying Congress put too much pressure on the states to accept the law’s expansion plans to cover more lower-income individuals. In essence, Kennedy is asking if the 2012 ruling wouldn’t also apply here, where if a state didn’t establish an exchange, Congress would also be unconstitutionally coercive by denying federal tax credits.”
Justice Elena Kagan, Justice Stephen Breyer and Justice Sonia Sotomayor, all considered to be more liberal leaning, are challenging the plaintiff’s argument that subsidies should only be available in states that have established their own exchanges. Justice Sotomayor questioned the constitutionality of forcing states to choose between establishing their own exchange and sending their state insurance markets into a “death spiral,” because there were no tax credits for lower-income healthy people to buy insurance. She asked, “Tell me how that is not coercive in an unconstitutional way?”
The arguments have just begun and the justices are already hinting at where they might side. Justice Anthony Kennedy, who is anticipated to be one of two likely swing votes along with Chief Justice John Roberts said he sees, “a serious constitutional problem,” in the idea that Congress would force states to set up exchanges or risk their residents losing tax credits. Said Kushner: “If that is truly his belief, he’d be likely to side with the government in its interpretation of the ACA via the IRS regulation in question in the case.”
The question of whether the four plaintiffs have the legal standing to bring their case before the courts is the first question being addressed. Of the four plaintiffs, two are military veterans and may be eligible for VA benefits (and thus precluded from getting subsidies on Virginia’s federally run health care exchange). One plaintiff listed a short-term motel as her legal residence (and is no longer there), and the justices are questioning whether she even is a resident of Virginia. According to Kushner, “The depth of this questioning might provide cover for the justices if they choose to not decide this case since, by our Constitution, all parties must have standing (that is, have suffered some direct harm from the law) in order to bring suit.”
Welcome to our blog focusing on today’s Supreme Court’s hearing on King v. Burwell, which will have a major impact on whether the Affordable Care Act continues in its current form or will potentially be completely gutted. Hearings are set to get underway shortly. Before they do, here’s an initial thought from our ACA expert and Workforce magazine columnist, Gary Kushner: “While the government’s briefs didn’t even mention the issue of whether the four plaintiffs even have standing to bring the case, it’s possible that one or more justices might ask about that issue. It’s how the court got out of dealing with the California same-sex marriage case, and could give the court here an opportunity to bow out without stirring the political waters (if that’s what they’d like to do)."
Read Workforce's coverage of the five-year anniversary of the Affordable Care Act here.
Gary B. Kushner is the president and CEO of Kushner & Co., a benefits consulting firm. You can follow him at @GaryKushner.
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