The U.S. Supreme Court on Thursday handed the Obama administration another victory in its fight to keep Obamacare alive, ruling that the words “established by the state” regarding exchanges and subsidies mean established by the state or the federal government.
The Supreme Court’s 6-3 decision, authored by Chief Justice John Roberts, who wrote the opinion affirming Obamacare’s individual mandate three years ago, said tax credits are available to people who obtain coverage through the federally established exchange as well as to those who use state exchanges.
The case addressed some of Obamacare’s key rules, regulations and definitions.
The four people who brought the case live in Virginia, which refused to set up an exchange, meaning only the federal exchange is available to the state’s residents. The four did not want to purchase the coverage and read the language of the law to mean they would not receive the subsidies. Consequently, the cost of their health coverage would be more than 8 percent of their incomes, exempting them from the law.
But the government argued the IRS was correct in redefining the law and allowing subsidies to those who use the federal exchange, meaning the plaintiffs would be forced to buy the coverage.
Robert’s opinion said the meaning of the words “established by the state” was ambiguous. If the law is read in context, he argued, it’s clear that lawmakers intended the subsidies to be available to everyone.
Associated Justices Ruth Ginsburg, Sonia Sotomayor, Elena Kagan, Stephen Breyer and Anthony Kennedy joined the majority.
“At issue in this case is whether the [Obamacare’s] tax credits are available in states that have a federal exchange rather than a state exchange,” states the majority opinion. The law “provides that the amount of the tax credit depends in part on whether the taxpayer has enrolled in an insurance plan through ‘an exchange established by the state under section 1311.'”
After the law was passed, the IRS adopted a rule expanding the subsidies to customers of the federal exchange.
In the Virginia case, the 4th U.S. Circuit Court of Appeals ruled the subsidies can come through the federal exchange, which conflicted with the District of Columbia Circuit, which said the rule “unambiguously restricts” tax credits to state exchanges.
“Oftentimes the ‘meaning – or ambiguity – of certain words or phrases may only become evident when placed in context,'” Roberts wrote.
He said three things are required: An individual must enroll in an insurance plan through an exchange, that exchange must “established by the state” and the exchange must be established under Obamacare.
The law, he said, instructs the federal government “to establish and operate the same exchange that the state was directed to establish.”
“In other words, state exchanges and federal exchanges are equivalent – they must meet the same requirements, perform the same functions, and serve the same purposes.”
Roberts wrote that the act itself defines “state” to mean “each of the 50 states and the District of Columbia,” which would exclude the federal government.
He concluded, then, that “established by the state” is “not so clear.”
He said law also defines a qualified individual as someone living in a state that establishes an exchange.
“And that’s a problem: If we give the phrase ‘the state that established the exchange’ its most natural meaning, there would be no ‘qualified individuals’ on federal exchanges. … These provisions suggest that the act may not always use the phrase ‘established by the state’ in its most natural sense.”
The “upshot,” Roberts found, is that the phrase is ambiguous and “it is … possible that the phrase refers to all exchanges – both state and federal – at least for purposes of the tax credits.”
In a scathing dissent by Justice Antonin Scalia, who was joined by Clarence Thomas and Samuel Alito, the majority’s decision was called “quite absurd.”
“And the court’s 21 pages of explanation make it no less so,” they said.
“This case requires us to decide whether someone who buys insurance on an exchange established by the secretary [of Health and Human Services] gets tax credits. You would think the answer would be obvious – so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money … an individual must enroll in an insurance plan through an ‘exchange established by the state.'”
They pointedly noted the federal exchange was not established by a state.
“Words no longer have meaning if an exchange that is not established by a state is ‘established by the state.’ It is hard to come up with a clearer way to limit tax credits to state exchanges than to use the words ‘established by the state.'”
The dissent appeared to hint at something behind the scenes.
“Under all the usual rules of interpretation, in short, the government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present court: The Affordable Care Act must be saved.”
Scalia said: “The court interprets 36B to award tax credits on both federal and state exchanges. It accepts that the ‘most natural sense’ of the phrase ‘exchange established by the state’ is an exchange established by a state … (Understatement, thy name is an opinion on the Affordable Care Act!) yet the opinion continues, with no semblance of shame, that ‘it is also possible that the phrase refers to all exchanges – both state and federal.’ (Impossible possibility, thy name is an opinion on the Affordable Care Act!).
“The court claims that ‘the context and structure of the act compel it to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.'”
Context, however, Scalia wrote, “is a tool for understanding the terms of the law, not an excuse for rewriting them.”
Roberts’ opinion, he wrote, “goes beyond giving words bizarre meanings: it leaves the limiting phrase ‘by the state’ with no operative effect at all.”
He said the ruling has to cross out “by the state” seven times.
His summation? The majority used “interpretive jiggery-pokery.”
‘Architect’ admitted intent
The case impacts an estimated 6.4 million people in three dozen states that did not set up their own exchange.
In support of the claim that only “state” exchanges were intended to provide subsidies was Jonathan Gruber, a self-confessed architect of the Obamacare law and a professor at MIT.
He repeatedly stated that the law was written specifically to exclude benefits for people living in states that do not have their own exchanges.
Gruber, who famously said the law was passed thanks to the “stupidity of the American voter,” had admitted the intent of the wording was to force states to set up exchanges by punishing citizens if they didn’t.
“I think what’s important to remember politically about this is if you’re a state and you don’t set up an exchange that means your citizens don’t get their tax credits,” Gruber said.
“But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges and that they’ll do it, but you know once again the politics can get ugly around this,” he said.
WND reported recently that Obama was accused of trying his hand at “bullying” the Supreme Court ahead of the decision.
Fox News reported Obama was in Europe for a summit when he said it was a case the high court “should never have taken up.”
Obama also claimed it has been well-documented that Congress never intended to exclude people who got their insurance through the federal exchange.
But Jay Sekulow of the American Center for Law and Justice told Bill Hemmer in a Fox News interview: “I think this is almost like a bullying technique. The president here is upset because the Supreme Court took it. Well, there was a conflict in the circuits and when the circuits are in conflict with each other the Supreme Court resolves the conflict.”
Sekulow said the president “keeps saying, well, it’s just four words,” “established by the state.”
But it’s four words, he said, “that carry billions of dollars, hundreds of millions of dollars of subsidies with them and it affects the way his law’s being implemented, and IRS – this is the part that everybody forgets – the IRS was the one who changed this rule.
“It’s like a political campaign against the Supreme Court here. … This president has shown a pretty consistent disregard for the Supreme Court when he doesn’t like their opinion,” Sekulow said.
“I think here’s what he’s doing. He’s trying to say if the Supreme Court upholds the law as it’s actually written … then you the America people blame the Supreme Court. The correct response is maybe someone should have read this law before they passed it.”
See the Sekulow interview:
A fifth case was filed recently by Judicial Watch on behalf of Kawa Orthdontics, which alleges it was damaged because Obama refused to follow the law as written and impose an employer mandate as Congress ordered.
Judicial Watch said it has filed a petition asking the court to review the case in which Kawa alleges it lost “the value of the time and money it spent in 2013 preparing for the mandate to take effect in 2014.”
That was because Obama changed the deadline written in the law.
The 11th U.S. Circuit Court of Appeals decided not to address the central question of the case – “whether the executive branch could ‘ignore the clear, congressionally imposed deadline’ of the ACA, also known as Obamacare – because it concluded that Kawa Ortho did not demonstrate injury sufficient to establish legal standing.”
Judicial Watch, in announcing the appeal, said the question, therefore, is whether “an entity that loses the value of the substantial time and resources it prematurely expended and the time value of the money it spent on anticipatory compliance costs is sufficiently injured to confer Article III standing.”
The case is based on Kawa’s expenditures of “substantial time and resources, including money spent on legal fees and other costs” because of the looming 2014 deadline for the employer mandate under Obamacare.
From the past president of the Association of American Physicians and Surgeons is available some critically important advice, “Surviving the Medical Meltdown: Your Guide to Living Through the Disaster of Obamacare.”
Then Obama changed it.
It was nearly three years ago that the court decided the penalties in Obamacare were taxes, meaning the law didn’t violate the Constitution.
Then the Supreme Court ruled that government could not force certain employers to violate their faith and subsidize abortions, as Obama had wanted.
Then came the case over subsidies.
The justices also also refused to take a case about whether the law is an illegal invasion of privacy. The argument is that its Independent Payment Advisory Board – which has been dubbed a “death panel” by critics – is unconstitutional because it would make life-and-death decisions for patients.
The complaint was brought by the Goldwater Institute, which has insisted the case is not over.
“This case is not dead; we’re simply in a holding pattern,” said Christina Sandefur, a senior attorney for the group. “We will bring this challenge again once the Independent Payment Advisory Board takes action.”
“Republicans have a plan to create a bridge away from Obamacare,” wrote Sen. Orin Hatch, R-Utah, along with fellow senators Lamar Alexander of Tennessee and John Barrasso of Wyoming, in an op-ed for The Washington Post, recently.
Their strategy is, first, to give people money to help them “keep the coverage they picked for a transitional period,” they wrote, citing King v. Burwell, a lawsuit that claims that health care recipients in 37 states have been illegally receiving Obamacare subsidies.
“It would be unfair to allow families to lose their coverage, particularly in the middle of the year,” they wrote. “Most of these people have gone through the wringer to get this insurance.”
And then step two: Work with the governors of those 37 states to get them the “freedom and flexibility” they need to shift away from Obamacare and toward some sort of replacement health care system, they said.
They also noted that if a fix would be needed to Obamacare, it would be an “opportunity” for Congress to “stop Obamacare’s damage and create a pathway to reforms that move our health-care system in the direction of freedom.”
Obama has not been willing to allow Congress to make any adjustments in Obamacare because of changes from Congress that such a bill could include.