Smart Observations on King v. Burwell

Published March 5, 2015

Yesterday’s oral arguments in King v. Burwell have now had time to be fully digested by people far smarter than I, so I thought I’d offer a few links and excerpts from what others are saying.

First up, Jonathan Adler, a professor of law who is one of the legal strategists behind the lawsuit, writes this over at the Washington Post:

Justice Kennedy is not buying the government’s textual arguments. Justice Kennedy may have said some things which were encouraging to the government (see below), but he expressed tremendous skepticism of the SG’s efforts to make textual arguments in defense of the IRS rule. When the SG noted that Section 1401 does not merely reference exchanges “established by the State,” but instead says “established by the State under 1311,” Justice Kennedy cut him off noting that the SG’s argument was heading in the “wrong direction.”

Justice Kennedy is unlikely to defer to the IRS interpretation.  Late in the argument, Justice Kennedy asked the SG whether a potential conflict among statutory provisions is sufficient to create an ambiguity worthy of Chevron deference.  The SG certainly thought it was, though it’s worth noting that this question splintered the court in a case last term.  At this point, however, Justice Kennedy threw cold water on the idea that the IRS should receive deference…

Federalism is the federal government’s best hope, and that makes the federal government uncomfortable.  Justice Kennedy may not have shown much sympathy for the federal government’s textual arguments, but he did seem open to the idea that interpreting the statute as urged by the plaintiffs could raise federalism concerns. In particular, he suggested it may be impermissibly coercive to condition tax credits — and whatever protection such subsidies provide against adverse selection in the individual health insurance market — on state cooperation with federal policy.

Justice Kennedy’s questions suggested he might be a fifth vote to uphold the IRS tax credit rule on the grounds of “constitutional avoidance.”

Randy Barnett, another law professor who hasn’t been directly involved in this case also offered his thoughts at the Washington Post’s site:

From questioning today in King v. Burwell, there is quite a buzz that Justice Kennedy appears concerned about whether interpreting the ACA to deny subsidies to citizens of states with federal exchanges would unconstitutionally coerce states to set up their own exchanges. The alleged coercion would result from the damage caused to the insurance markets of these states by the other mandates in the ACA — for example, by “community rating” that restricts the ability of insurance companies to set their rates according to actuarial risk, and “guaranteed issue,” that is, preventing carriers from refusing insurance based on pre-existing conditions. The concern is that, because these provisions absent a subsidy would cause a “death spiral” in those states, states would be unconstitutionally coerced to setting up their own exchanges lest their insurance markets be destroyed. Therefore, it is contended, under the doctrine of “constitutional avoidance,” the ACA should be interpreted to avoid this unconstitutional result and allow the IRS regulation to stand so subsidies will flow to the states.


Paul Mirengoff over at Power Line has the following to say:

The consensus following oral argument in King v. Burwell is that the votes of two Justices are in play. Based on the questioning, it seems clear that the four-judge liberal bloc will vote to affirm the decision that Obamacare subsidies may be granted to those using the federal exchange. Justices Scalia and Alito appear set to vote to reverse that decision. Justice Thomas did not ask questions — his usual practice — but is considered a likely third vote for reversal.

This leaves Chief Justice Roberts and Justice Kennedy as the “swing” votes. To reverse — i.e., to rule that subsidies are not permissible on the federal exchange — both would have to vote this way.

And in Bloomberg, law professor Tim Jost (a supporter of Obamacare) had this to say: 

The government’s second defense, and its primary argument, is more promising: If the court considers the entire text of the statute and not just a single phrase, it’s clear that Congress intended federally facilitated exchanges to effectively become the exchange in states that chose not to operate one themselves.

There are more than 50 provisions of the law that don’t work if federal exchanges can’t grant premium tax credits. Today’s argument mentioned only a few, but made clear that the statute as a whole authorizes federal exchanges to grant tax credits.   

Today showed the government’s third route to victory could be even more persuasive to the court: Interpreting the ACA to force a state to operate its own exchange — under a threat of forfeiting tax credits for its citizens and risking the destruction of individual insurance markets — raises serious questions of unconstitutional coercion. The fact that the supposed threat was buried deep in the statute, leaving states unaware of it, makes this issue even more serious. 

Justice Anthony Kennedy, a likely swing vote, raised this issue repeatedly. Under what’s called the doctrine of constitutional avoidance, the court should interpret the statute to avoid this constitutional problem and uphold the tax credits.

Lots of other folks are weighing in as well, but I think if you read these four you’ll have a pretty good understanding of what happened yesterday, although I don’t think anybody ought to be predicting one way or another which way the court will rule.