The Affordable Care Act — known to one and all as Obamacare — began its latest legal test before the U.S. Supreme Court on Wednesday.
You recall that last fall, the high court agreed to hear a case challenging the legality of Obamacare subsidies in states that have refused to set up their own healthcare exchanges.
The case, King v. Burwell, is an appeal of a July ruling from the 4th Circuit Court of Appeals, which upheld the subsidies.
The essence of the case is one phrase in the law, which says that subsidies — in the form of tax credits — would be offered in health insurance exchanges “established by the state.” But more than 30 states passed on setting up their own exchanges, so the feds stepped in to do so.
Four Virginia residents — the original plaintiffs in the case — claim that the subsidies are illegal in the states where only federal exchanges have been established.
It’s been estimated that should the court rule against the administration, up to nearly 8 million people in at least 34 states would lose the subsidies that help low- and moderate-income people buy private health insurance.
Although this case doesn’t directly involve individuals who receive health coverage through their employers, experts agree that if the court rules the federal subsidies illegal, the whole healthcare reform law could be in deep trouble.
A ‘rational reading’ and a ‘death spiral’
Here are some highlights of Wednesday’s oral arguments, courtesy of the Washington Post:
Attorney Michael Carvin opened the proceedings for the plaintiffs, who said that his interpretation of the phrase “established by the State” is the sole reading that would makes sense to “a rational, English-speaking person.”
But earlier, Justice Sonia Sotomayor told Carvin, “I’m a little concerned with how you envision this provision working,” adding that without the subsidies, the states with federal insurance exchanges would see the market collapse — a “death spiral” for those who receive coverage through the exchange.
“Tell me how that is not coercive in an unconstitutional way,” the Post quoted Sontamayor.
Justice Anthony M. Kennedy echoed Justice Sotomayor’s concern. “There is a serious constitutional problem,” he told Carvin.
Justice Elena Kagan suggested a hypothetical she thought applied to the question of whether the subsidies should apply across the board. Quoting from the Post:
She has three clerks, she says: Will, Elizabeth and Amanda. She asks Will to write a memo and Elizabeth to edit it. If Will is too busy, Amanda is to write it. If Will is too busy to write it, should Elizabeth edit it? she asks, eliciting a round of laughter from the audience.
“It’s obvious that Elizabeth should edit the memo,” she says.
Following Carvin’s presentation, Solicitor General Donald Verilli began the administration’s argument, asserting that Carvin’s opinion on who could receive subsidies would make the law “an incoherent statute that doesn’t work … That cannot be the statute Congress intended.”
Justice Antonin Scalia’s icy response: “The question is whether it’s the statute Congress wrote.”
The court is expected to issue a ruling by the end of June.