Three Outcomes From King v. Burwell

Published July 1, 2015

Consumer Power Report #465

President Barack Obama’s view of the King v. Burwell outcome is clear: Obamacare is ‘here to stay.’ I wrote last week on why he’s wrong.

This SCOTUScare ruling presents an accurate reflection of the reality in Washington: that American politics no longer has real checks and balances. The rules no longer apply. Words mean whatever we say they mean at the time that we say them, neither more nor less …

In the context of a nation governed by men and not laws, arguments from the establishment about process, restraint, and the normal give and take of what used to be the American political system for most of the Twentieth Century are going to become weaker and weaker. For the faction that demands dramatic change, the gradualist approach favored by Republican leaders who yearn for the status quo politics of the before time – before the bailouts, before Obama, before the Tea Party – is revealed as a myth.

King v. Burwell targeted subsidies going to a relatively small portion of Obamacare’s beneficiaries (6.5 million subsidized people, many of whom lost coverage they would’ve preferred to keep). The Medicaid portion is really the one aspect of Obamacare that’s working in terms of signing people up, and a King ruling in the other direction would’ve done nothing about that. Those subsidies aren’t working sufficiently – they are not insulating the people on Obamacare from increased costs, including deductibles copays etc. – and with the latest round of cost increases people are going to have more reason to feel like Obamacare isn’t working for them. Had it gone the other way, King would’ve created chaos in just one aspect of Obamacare, and one that is not working well even now.

By losing at the Court, conservatives missed out on a chance for another squishout and for that reason should be breathing a sigh of relief. The hard truth was that the Republican Party was absolutely going to cave on the subsidy question anyway, and do so rapidly, and probably get a bag of basketballs and the medical device tax in exchange. That would’ve both depressed the base and put politicians in an untenable position. Given the certainty of Republicans caving on the subsidies, Obamacare would have emerged with Republican fingerprints all over the idea that we need to be taxing people in order to continue subsidizing able bodied working age adults (as it is, only a handful of Republicans have endorsed that idea). Now Republicans get the added benefit of railing against a law that remains unpopular and that drives health insurance costs ever higher across the country without having to put their legislation where their mouths are.

Let’s take it a step further and look at the outcomes of this case from three different perspectives: politics, policy, and the courts.

The political ramifications of this decision are clear: Republican leadership and presidential candidates are breathing a sigh of relief, whether they admit it or not. The press was dutifully reporting in the months leading up to this decision that while the case would be a blow against Obamacare, it would be a huge problem for Republicans, torn between dealing with the political fallout of millions of Americans losing their insurance subsidies and the potential consequences for their base of shoring up Obamacare, even in the short term. This story was largely accurate. Now that the decision has gone Obama’s way, the press is dutifully reporting that Obamacare is here to stay and that it’s bad for Republicans … but a decision that went the other way would have been much worse, honestly. Republicans would have caved on the subsidy issue rapidly, and gotten little in return – and even in the absence of the subsidies and taxes, the vast majority of Obamacare (particularly the portion that is actually expanding coverage in terms of signing people up – the Medicaid expansion) would’ve remained intact.

When it comes to policy, Obamacare opponents are now dealing with a much cleaner debate than they would’ve had in the aftermath of a subsidy can-kick of any kind. They can run against the status quo of America’s health care reality – higher costs, narrower networks, and all the frustrations attendant to Obamacare – without having to defend any aspect of it bearing the fingerprints of Congressional Republicans. And Hillary Clinton, on the other hand, will have to defend to the hilt a law that in many respects does not actually reflect what she would like to do with health care. Republican policy alternatives offered by presidential candidates can now stand in the context of 2016 as a clear alternative, not one muddied by a temporary (and purely political) measure.

In the long term, the largest ramifications of this decision have to do not with the politics or policy of health care but with the way future Republican presidents will approach the Supreme Court nominating process. The lesson the conservative base is taking from this is that if John Roberts cannot be trusted, no product of the legal elite establishment can be given a pass in the future. This is perhaps not what the chief wanted, but it is what he is going to get. Your must-read of the day to fully understand how disappointing this is for conservative legal minds is this series of comments from attorney Dan McLaughlin. “What is so depressing is seeing such clear evidence that the things we lawyers do every day go out the window due to politics,” he writes. And he is correct: the Court is now going to be viewed as a much more political actor than it was, and this will have a dramatic impact on Republican court nominees going forward.

The threshold will also be lower. We’re about to enter the end of the judicial filibuster era, even for SCOTUS. What this means is that politicians will be leading the lists of SCOTUS nominees going forward, since there will no longer be a 60-vote hurdle or patina of academic rigor required. It will become a far more political position and is all about who your respective party base trusts. For Republicans, this means no more obscure appellate judges. Mike Lee could get 51 votes tomorrow, he has a record and the base trusts him, so any Republican president will stick him on there right quick. You might even see SCOTUS seats held empty until after more favorable midterm election results and made into explicit election issues.

When Chief Justice Roberts “saved” Obamacare the first time by transforming a penalty into a tax, the narrative in Washington was that he did so to save the standing of the court. After he did it, approval for the Supreme Court plummeted among Republicans to the lowest level ever (from 50 to 29% according to Gallup). I doubt he wanted a more explicitly political court selection process out of either of these decisions, but that is what he is likely to get.

— Benjamin Domenech



Today’s decision in King v. Burwell is notable in many respects. It is a significant legal victory for the Obama Administration, a victory for purposivist statutory interpretation, a loss for textualism, and a loss for an expansive Chevron doctrine. In these latter respects, the decision is something of a double-loss for Justice Scalia (which may explain the last line of his opinion). King also means that, in many respects, the PPACA is now the law that Chief Justice Roberts wrote as here, as in NFIB v. Sebelius, the Chief Justice has decided it is the Court’s job to determine what the statute means – even if this requires ignoring or rewriting text – if such is necessary in order to save it. The umpire has decided it’s okay to pinch hit to ensure the right team wins.

The primary basis for the Chief Justice’s decision is that a “fair construction” of the statute requires more than giving meaning to discrete phrases, so “established by the State” need not mean “established by the State” insofar as such an interpretation – given the intervening decision of several dozen states not to establish their own exchanges – would produce untoward effects that Congress would not have intended or wanted when it enacted the PPACA. Specifically, the Chief Justice argued, insofar as an interpretation of the PPACA would undermine the statute’s goals – such as by creating a “death spiral” of increasing costs and declining coverage – it is the Court’s job to avoid it. That the phrase “established by the State” was added to multiple places in the relevant statutory provision (Section 1401) at multiple times is immaterial. “Established by the State” need not exclude an exchange established by the federal government. The majority opinion shows no sympathy for the Solicitor General’s silly argument that “established by the State” was an undefined “statutory term of art.” No matter, for the government wins anyway.

The Chief Justice concluded that the tension between the statutory text and the statute’s structure and purpose rendered the statute ambiguous. Under normal circumstances, this would mean the government wins under step two of the Chevron doctrine, which provides that when a statute is ambiguous, courts should defer to the interpretation of the implementing agency. Not here. Instead, the Chief Justice explained, resolving the ambiguity was the job of the Court.

SOURCE: Jonathan Adler, The Washington Post


When the Affordable Care Act passed in 2010, most people expected that each state would want to run its own health insurance marketplace. That never really happened, as many states opted to let the federal system,, do the work for them. Many of those states that did try running their own marketplaces are starting to think twice.

Now, with the Supreme Court ensuring that every state’s consumers will have equal access to federal subsidies, it is becoming clear that more of those states will revert to a federal system for enrolling people in health insurance.

“There may be a little bit of buyers’ remorse going on in some state capitals right now,” said Sabrina Corlette, the director of the Center on Health Insurance Reforms at Georgetown University. She said states underestimated the difficulty and expense of building and maintaining state marketplaces. Now, she said, many officials are asking: “What did we get ourselves into?”

As the law envisioned, state exchanges would provide an opportunity for state insurance regulators to oversee their markets, a role they have long performed. The state exchange system would also allow a greater degree of policy flexibility and control, so state officials could customize the marketplaces for local conditions. What few people grasped was the technical and logistical challenge of building a complex website and customer service operation from scratch.

“Certainly, one of the lessons learned was that it is much more difficult than was expected,” said Joel Ario, who ran the office in the Department of Health and Human Services devoted to building the exchanges after the law passed. He is now a managing director at Manatt Health Solutions, a consulting firm that is assisting several states.

In the first year of operation, three state exchanges – Nevada, New Mexico and Oregon – had technology failures so profound that they handed the bulk of their operations to the federal government. Other states managed to rebound from a troublesome first year by rebuilding their systems, but only with substantial effort and expense. Both Massachusetts and Maryland essentially started from scratch in 2015.

SOURCE: Margot Sanger-Katz, New York Times


The five largest publicly traded health insurance companies (UnitedHealth, Anthem, Aetna, Humana and Cigna) – all of which were party to an amicus brief in support of the subsidies filed by America’s Health Insurance Plans, a trade group for insurance companies – rose an average of 1 percent over their opening prices by 11 a.m. Thursday. The bounce started at approximately 10:10 a.m., right when SCOTUSblog first announced the Supreme Court’s decision.

That rise amounted to a $3 billion increase in the combined market capitalization of the five companies. And that figure underestimates the decision’s real benefit to these companies. According to FantasySCOTUS, a prediction market that has been fairly successful at forecasting the outcome of Supreme Court decisions, the government was favored to prevail in its case. Assuming investors were similarly optimistic about the government’s chances, the pre-decision stock prices likely reflected the predicted outcome, meaning the bounce started from higher up than it might have otherwise.

SOURCE: Leah Libresco, 538


Medicaid Expansion. About 4 million more Americans would gain coverage if all states expand the state-federal Medicaid programs to cover people with incomes at or slightly above the poverty line. Twenty-one states with Republican governors or GOP-controlled legislatures, including Texas and Florida, have balked, citing ideological objections, their own budget pressures, as well as skepticism about Washington’s long-term commitment to pay for most of the costs.

Anemic Enrollment. Eighteen million Americans who are eligible to buy insurance in federal and state marketplaces haven’t purchased it. Those marketplaces have had particular trouble enrolling Hispanics, young adults and people who object to being told to buy insurance. Federal funding used by state marketplaces to enroll people and advertise is drying up. Many state marketplaces haven’t figured out how to be self-sustaining. Vermont, Hawaii, Colorado and Rhode Island are among those states searching for more money. The penalty for going without coverage rises next year to $695 per adult or 2.5 percent of family income – whichever is larger.

Market Stability. Nationally, premiums haven’t gone up too much on average in the first two years of the marketplaces, but that could change. The federal government has been protecting insurers from unexpectedly high medical bills, but that cushion disappears after next year. At the same time, insurers finally have enough experience with their initial customers to figure out if their premiums are sufficient to cover medical costs. If they’re not, expect increases.

SOURCE: Julie Appleby, RealClearPolicy


Senate Republicans, led by Sen. Kelly Ayotte (R-N.H.), are working to pass a bill that would allow over-the-counter sales of birth control pills. Upon its introduction, many critics were quick to call the bill the GOP’s appeal to women in advance of the 2016 elections.

However, new polling numbers suggest women are split on whether to keep the pills behind the counter, whereas a majority of men say they should be available for purchase over the counter.

Fifty-six percent of men polled said birth control pills should be sold over the counter, compared with 45 percent of women who shared the same opinion.

A plurality of women, 48 percent, said contraceptive pills should be available only through a prescription. Thirty-seven percent of men agreed.

The poll was conducted from June 20 to June 22 among a sample of 1,306 registered voters. Results have a margin of error of plus or minus 3 percentage points.

The gender divide is nonpartisan: Among both Democrats and Republicans, more men than women favored the switch to over-the-counter contraception.

SOURCE: Amir Nasr, MorningConsult