Supreme Court Hears Oral Argument In King v. Burwell: Will Impermissible Federal Coercion Save The ACA?

Yesterday, the Supreme Court heard oral argument in King v. Burwell, which some describe as an argument over a mere four words - "established by the state." But to the surprise of many, the Justices did not spend most of the time debating canons of statutory interpretation; instead, they, and in particular Justice Kennedy, raised a federalism argument that may prove dispositive in this case.

The issue in King v. Burwell is whether individuals in the 34 states that have not established a state exchange and instead rely on the federal exchange are entitled to subsidies. Subsidies, which come in the form of premium tax credits and cost-sharing reductions, help lower monthly health-plan premiums so that individuals can afford health insurance. Without the subsidies, it is estimated that 9.6 million people would lose their health insurance. The Petitioners argue that Congress stated in clear terms that subsidies are available on "exchanges established by the state," and if Congress had intended the subsidies to apply to federally-run exchanges, it would have just referred to "exchanges," period, as it does in other parts of the Affordable Care Act (ACA). The government counters that this is a complex law and the Court cannot interpret four words of the statute in a vacuum. A review of the regulatory framework established under the ACA, the government argues, makes clear that the subsidies are available whenever an individual buys health insurance on an exchange, whether it is an exchange established by the state or by the federal government.

After few commentators correctly predicted the outcome of the challenge to the ACA in 2012, many are reluctant to speculate this time around, instead noting that the decision could go either way. Justice Kennedy, the likely swing vote, however, may have provided a reason for the government to be optimistic. His line of questioning focused on whether reading the statute to apply only to state-run exchanges would cause "serious constitutional problems of coercion." As Justice Kennedy pointed out, if "States are being told either create your own exchange, or we'll send your insurance market into a death spiral," Congress would not be respecting state sovereignty, but rather forcing states to act by putting a "gun to the[ir] head."1 which would raise serious issues of constitutionality in our federal system. Under the doctrine of "constitutional avoidance," where there are multiple possible interpretations of a...