SCOTUS Has Accepted Appeal of Case That Could Topple Obamacare


On Friday, United States Supreme Court agreed to hear the appeal in King v. Burwell. The plaintiffs in that case assert that the Patient Protection and Affordable Care Act only allows tax credits to people who buy insurance “from an exchange established by a state.” The Fourth Circuit Court of Appeal disagreed and ruled that the federal government may interpret that language as allowing tax credits to purchasers who bought insurance on one of the federal exchanges, operating in the more than 30 states that declined to create their own.

On the same day the Fourth Circuit delivered its decision in King, a panel in the D.C. Circuit found for the plaintiffs in a companion case captioned Halbig v. Burwell. This conflict would ordinarily invite SCOTUS to weigh in. However, the D.C. Circuit then accepted a rehearing en banc in Halbig. Thus, even though the King plaintiffs appealed, many observers speculated SCOTUS would wait to see if a conflict really developed, or if after rehearing in Halbig, the courts ended up aligned.

As a result, it is somewhat surprising that SCOTUS accepted the King appeal, and it may signal bad news for the Affordable Care Act. As Nicholas Bagley writing a SCOTUSblog explains:

[F]our justices apparently think—or at least are inclined to think—that King was wrongly decided. … [T]here’s no other reason to take King. The challengers urged the Court to intervene now in order to resolve “uncertainty” about the availability of federal tax credits. In the absence of a split, however, the only source of uncertainty is how the Supreme Court might eventually rule. After all, if it was clear that the Court would affirm in King, there would have been no need to intervene now. The Court could have stood pat, confident that it could correct any errant decisions that might someday arise.

There’s uncertainty only if you think the Supreme Court might invalidate the IRS rule. That’s why the justices’ votes on whether to grant the case are decent proxies for how they’ll decide the case. The justices who agree with King wouldn’t vote to grant. They would instead want to signal to their colleagues that, in their view, the IRS rule ought to be upheld. The justices who disagree with King would want to signal the opposite.

And there are at least four such justices. If those four adhere to their views—and their views are tentative at this stage, but by no means ill-informed—the challengers just need one more vote to win. In all likelihood, that means that either Chief Justice Roberts or Justice Kennedy will again hold the key vote.

If I read this correctly, the speculation is that four (or more) SCOTUS justices agreed to accept the case in order to send a signal to the lower courts still considering challenges to this provision of the ACA. The signal they wanted to send is that those other courts should not necessarily follow King, because SCOTUS might think it was wrongly decided.

A reversal of King (i.e., a finding in the plaintiff challengers’ favor) would seriously undermine—perhaps fatally—the structure of the Affordable Care Act. Fully 87% of the people who purchased policies through the federal exchanges during the first open enrollment period are receiving subsidies. If the government cannot give subsidies to low-income purchasers, it cannot tax them for failing to have the insurance, and the entire system collapses under its own weight. Fewer people can afford the insurance, the risk pool shrinks, costs rise, and more people are forced to opt out.

If on the other hand, SCOTUS upholds tax credits not authorized by Congress, it would be one more in a long line of revisions, waivers, exemptions, delays and modifications made to the law made by the very administration that purports to uphold it.

Sarah Baker is a libertarian, attorney and writer. She lives in Montana with her daughter and a house full of pets.