A DIFFERENT LOOK AT THE OBAMACARE DECISION

The Supreme Court’s Opinion on the Affordable Care Act’s subsidies brought with it the inevitable torrent of political commentary.  Depending on what side of the isle politicians and pundits sat, the Court’s decision marked either the end or the culmination of American civilization.

From a purely legal standpoint, Chief Justice Robert’s decision may fairly stand as a reminder that reading a statute is a little bit different from like reading a book  Parsing an Act of Congress (or other law) is steeped in rules of interpretation designed to extract the intent of the lawmaker out of not always artful words.  That does not always coincide with plain English (sadly) and that is also why having an attorney go through the law of the land – or a contract – has definite advantages.

In the ACA (i.e. Obamacare) subsidies case, the Court faced a statute centered on the idea that insurance policies and subsidies to buy those policies would be offered through marketplaces called “exchanges.”  It did so in three steps:

• First, the states were asked to establish those exchanges.
• Second, if they declined, the federal government would “establish and operate such exchanges,” meaning they would establish exactly the same exchanges as the states would have. That exchange came to be known as healthcare.gov.
• Third, it directed the IRS to give out subsidies in the form of tax credits to certain individuals purchasing health insurance on exchanges “established by the states.”

But wait – is that last part to be taken literally? May only state-operated exchanges offer subsidies? Or does that include the federal exchange, which after all is exactly the same as those the states were meant to establish?

The words “such exchange” in reference to the federal marketplace would support the latter; so would the use of the words “exchanges established by the states” in other parts of the statute, where taking it literally would eviscerate the law completely.  Now, one of those famous rules of interpretation dictates that one should not read a statute in a way that leads to an absurd result.  And admittedly, it would be absurd for Congress to pass a statute, but write it in a way to make it devoid of any meaning.

On the other hand, a natural, plain-English meaning of a word is usually favored.  So the words “established by the states” came to be ambiguous, that is to say, they are capable of two separate meanings.  Should their plain meaning trump avoiding an absurd result, or vice-versa?

That took the Court to another rule, or to be more precise, to a legal doctrine.  It is one under which Courts defer to administrative agencies (here, the IRS) when they interpret ambiguous language in a statute they are charged with administering.  But that deference in effect acknowledges a delegation of duties from Congress (the law’s writer) to an agency (refining the law through its regulations and interpretation).  In this case, the Court refused to accept that Congress would delegate such a fundamental part of the law to an agency, leaving it to sway this way and that with every change of occupant in the White House.  So it would not defer to the IRS’ opinion of what “established by the states” mean.

Still faced with ambiguous language and now without the luxury of deferring to agency experts, the Court next turned to the “structure of the law” – to reading those ambiguous words in the context of the law as a whole to uphold its stated purpose.  That, too, is a rule of interpretation.

And here, the law’s structure reflected a three-part policy: to guarantee health insurance coverage, to mandate health insurance coverage in order to offset the guarantee, and to subsidize coverage for lower-income individuals.  Interpreting the law to strike out subsidies for most otherwise qualified individuals would defeat its stated intent, so the words “established by the states” had to include those cases where the Feds established “such exchanges.” It may not be the most natural meaning, the first to come to mind if you were sitting by the beach reading a paperback, but it is the meaning, the Court held, that the statute required.

That interpretation was also, ultimately, an exercise in separation of power, letting Congress write laws (even when they do so very poorly – the ACA has three sections with the same number) while the Court merely reads them.  In the Chief Justice’s words:

“In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined—‘to say what the law is.’ That is easier in some cases than in others. But in every case we must respect the role of the Legislature, and take care not to undo what it has done.” (Quotation Omitted.)

Agree or disagree.  But it takes a certain skill set to even cogently argue over what a statute may mean, one that appellate attorneys in particular work hard to sharpen.