The Supreme Court will hear arguments on Wednesday in King vs. Burwell, the latest high-stakes litigation over the future of the Affordable Care Act. The question at hand is whether the law permits the federal government to help pay insurance premiums for people anywhere in the United States — or, as the plaintiffs argue, only in states that have established their own health care exchanges.
Just 16 states (including Minnesota) have established such exchanges. If the court rules in favor of the plaintiffs, an estimated 9.6 million people who bought insurance through HealthCare.gov will lose their coverage.
Tough luck, say the plaintiffs: The harsh consequences of a ruling in their favor should be irrelevant to the justices, whose only job is to interpret the statutory text. In any event, the plaintiffs contend, those harsh consequences are perfectly consistent with what Congress meant the law to accomplish.
But the plaintiffs are mistaken. It’s not irrelevant that a ruling in their favor would inflict such damage. To the contrary, that fact helps us correctly interpret the statute’s text. Indeed, it shows that the plaintiffs’ understanding of that text is wrong.
As the Supreme Court has said time and again, no provision of a statute should be read in isolation. Laws must be read as a whole, with an eye to harmonizing their interdependent parts. That means the court is reluctant to read a stray passage here or there in a way that would destabilize an entire statutory scheme.
The plaintiffs, ignoring that cardinal principle, instead base their argument on snippets of text in a statutory provision that the Affordable Care Act added to the tax code. That provision, which addresses the tax credits that poor and working-class people can use to help pay for a health plan, links the size of those credits to the cost of a plan bought “through an exchange established by the state.” According to the plaintiffs, those seven words represent a congressional threat to the states: Either set up exchanges or lose billions of dollars in tax credits.
But would Congress really have issued a threat of this magnitude in such a backhanded way? When Vito Corleone in “The Godfather” made a man an offer “he couldn’t refuse,” he wasn’t subtle about it: “Either his brains or his signature would be on the contract.” That’s how you threaten somebody. The phrase “through an exchange established by the state” doesn’t cut it.
The states had no reason to suspect that Congress would threaten them by inserting an innocuous phrase into a technical provision of the tax code. Instead, the states properly focused their attention on parts of the statute that detailed the consequences for refusing to establish an exchange. That would have been the natural place for Congress to level a threat at the states.
But not only did Congress issue no threat, it also offered protection. Because Congress understood that some states might refuse to establish exchanges, it included a fallback: The federal government would step in and run the exchange on the state’s behalf.
Yet a ruling in the plaintiffs’ favor would make the fallback exchanges dysfunctional. Without tax credits, many healthy people would forgo insurance; left to cover a sicker population, insurers would raise their prices; as a result, enrollment on the fallback exchanges would decline (by an estimated 70 percent) and premiums would rise drastically.
The plaintiffs claim that Congress always meant the fallback exchanges to fail. The potential collapse of the state’s market for individual insurance, they argue, was just another (hidden) threat to get states to establish their own exchanges.
But that’s nonsense. If Congress had meant to punish uncooperative states, it didn’t have to saddle them with dysfunctional exchanges. It could have left them with no exchanges at all. Congress created a fallback because it wanted to enable everyone — even people in states that objected to health care reform — to secure affordable insurance. That’s the only way to make sense of the law as a whole.
And no one understands the importance of reading the law as a whole better than the four conservative justices who dissented in 2012 in the previous Supreme Court case about the Affordable Care Act. Those justices argued that the individual mandate (the law’s requirement that people have health insurance) was unconstitutional, but even they recognized that it served a critical function in the law.
Without the individual mandate, they wrote, “the other major provisions could impose enormous risks of unexpected burdens on patients, the health care community and the federal budget.” They added that such unexpected burdens — for example, leaving millions of people without health insurance — “would be in absolute conflict with the design” of the law and “would pose a threat to the nation that Congress did not intend.”
What’s true for the individual mandate is true for the tax credits that the plaintiffs in King are looking to eliminate: Without them, the law would pose “a threat to the nation that Congress did not intend.” Let’s hope the court remembers that wisdom on Wednesday.
Nicholas Bagley is an assistant professor of law at the University of Michigan. He wrote this article for the New York Times.