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A Second Chance For The Chief Justice

Chief Justice John Roberts is likely to get a do-over.

Roberts surprised some observers two years ago when he voted, unlike the justices who are his usual ideological brethren, to uphold the Affordable Care Act’s mandate that individuals purchase health insurance, reasoning that the law’s penalties for failure to buy coverage were a constitutional exercise of Congress’ taxation powers. The statute did, after all, delegate penalty collection to the Internal Revenue Service, though the IRS could not enforce payment with any of the usual tools designed to combat tax evasion.

Roberts provided the key vote in the 5-4 decision on the mandate, which was otherwise split along ideological lines as expected. Roberts also wrote the majority opinion, taking the penalty-as-a-tax position - a compromise interpretation that the four liberal justices, who wanted to uphold the mandate outright, were willing to accept.

Now the health insurance law faces an equally serious threat from a ruling by a Washington, D.C. circuit appeals panel that the statute’s language plainly prohibits the administration from providing subsidies to consumers who buy their insurance through the federally run exchanges operating in 36 states.

The ruling was contradicted on the same day by another federal appeals court in Virginia, which held in the opposite direction, meaning neither decision will have any immediate impact beyond making it obvious that Obamacare is heading for another Supreme Court showdown.

Opponents of the law say the statute clearly makes subsidies available only to consumers on state-run exchanges. The law’s supporters say the statute is ambiguous, and that the courts should therefore defer to the administration’s interpretation, allowing subsidies on federal exchanges.

Affordable Care Act supporters also note that throwing out subsidies for federal exchanges would cripple the individual purchase mandate by making insurance unaffordable to most customers and, at the same time, would undermine the penalties designed to force medium and large companies to provide insurance to their workers. Those penalties are imposed on employers whose workers receive subsidies; they would effectively become meaningless in any state without state exchanges.

Only 14 states, plus the District of Columbia, have set up their own exchanges rather than using the federal version. Oregon, after months of trying to fix its system, gave up in April and announced it would switch to HealthCare.gov for the coming enrollment season. As disastrous as the original federal exchange website rollout was, several state exchanges launched as badly or worse. If the decision to throw out subsidies for policies purchased through federal exchanges ultimately prevails, the effects will be wide-reaching and probably fatal for the Affordable Care Act, which will suddenly find the insurance it peddles unaffordable in most of the nation.

The Obama administration is likely to ask for an en banc review of the anti-subsidy decision, but whether or not it succeeds in getting one is ultimately irrelevant. Whichever side loses will appeal, and the matter will continue up the judicial chain. The three conservative Supreme Court justices will almost certainly vote to hear the case; they only need convince one other justice, probably Roberts or maybe the more centrist Anthony Kennedy, in order to haul Obamacare back before the high court.

When the law once again gets reviewed by the high court “on the merits,” as lawyers like to say, it will essentially be up to Roberts - and possibly Kennedy - to decide whether to allow the administration’s interpretation to stand, preserving the subsidies, or to support the more strict interpretation of the language that actually appears in the statute. Obamacare’s fate will hang in the balance.

The usual rule of statutory construction is that a law means whatever it says. The courts only look to the alleged intent of Congress when a statute is genuinely silent or unclear on a particular point. Affordable Care Act supporters’ argument that Congress’ supposedly apparent intent should trump the actual language of the statute flies in the face of this principle.

Roberts will probably have a couple of extraneous issues on his mind as he contemplates the question of subsidies on federal exchanges, however, beyond the judicial merits alone. One point he will likely think about is that the administration has already engaged in a wholesale rewrite of the statute’s many deadlines and requirements to try to fix some of the law’s many practical flaws.

Another point he will certainly bear in mind is that it is not the Court’s job to fix broken statutes; that power belongs to Congress. Ordinarily, the practical response to this sort of dispute would be something called a technical corrections bill. Congress, realizing its drafting error (if it was, indeed, an error), would simply pass such a bill to fix the law.

But that can’t happen here. Democrats forced the Affordable Care Act through Congress in 2010 with no Republican support at all; voters stripped the Democrats of control of the House of Representatives later that same year. Republicans have no interest in helping Democrats rescue a statute that they see as fundamentally flawed and that they have consistently opposed. They argue, with considerable merit, that the law’s drafters knew how to permit subsidies on federal exchanges, but that they presumably refrained on purpose, in order to encourage states to create their own. If nothing else, the drafters’ intention certainly is not as self-evident as the law’s advocates claim.

Yet another point Roberts may consider is that allowing the Affordable Care Act to unravel over the question of federal exchange subsidies might spare his Court from getting dragged into a constitutional confrontation between the legislative and executive branches. House Speaker John Boehner has promised a lawsuit challenging Obamacare, but that case and other challenges like it would become moot if the Affordable Care Act collapsed in the meantime. If Roberts wants to avoid being drawn into a major constitutional clash, he need only tell the administration that, if it has a problem with what Congress wrote, it should talk to Congress, not the Supreme Court.

The Chief Justice whose vote rescued Obamacare will soon have a chance to change his mind. It will be interesting to see what he does with that opportunity.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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