Will Obamacare survive “destructive analysis”?
King v Burwell in the US Supreme Court

It may be on Thursday; it may be next week. But soon, the US Supreme Court will give its opinion in King v Burwell, a case on interpretation of the Affordable Care Act with huge potential consequences for President Obama’s healthcare reform. From an English point of view, the legal argument being made for the petitioners “sounds like a voice from the past”, as Lord Denning would have put it.

This is the third attempt to defeat “Obamacare” in the courts. In NFIB v Sebelius, the Supreme Court ruled the Act’s “individual mandate” (making health insurance compulsory) compatible with the Constitution; then in Burwell v Hobby Lobby Stores it allowed some employers a religious opt-out from covering their workers for contraception. King is an attempt to wreck Obamacare, based on a literal reading of the Act which would block tax subsidies to people enrolled on federal health insurance “exchanges”.

Section 1311(b)(1) of the Act requires states to set up insurance exchanges:

(1) IN GENERAL.—Each State shall, not later than January 1, 2014, establish an American Health Benefit Exchange (referred to in this title as an ‘‘Exchange’’) for the State that—

(A) facilitates the purchase of qualified health plans …

But section 1321(b)(1), intended to give states flexibility, says that if a state does not elect to set up its own exchange, then

the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State …

the “Secretary” being President Obama’s Health Secretary, Sylvia Burwell.

The key question in the case is how these provisions relate to section 36B of the Internal Revenue Code (inserted by section 1401 of the ACA). This provides for the calculation of tax credits to make health plans affordable in respect of any month in which a person is covered by a health plan (section 36B(c)(2)(A)(i))–

that was enrolled in through an Exchange established by the State under section 1311 …

The petitioners’ argument is simply this: in a state which chose not to set up its own exchange, no tax subsidies can be paid to those enrolled in plans through the “fallback” federal exchange because that’s not, literally,

an Exchange established by the State under section 1311.

The entire question in this case is whether those plain words rule out the tax credits. The petitioners say they do, and that applying the “plain meaning” of the Act, the government must stop subsidising the health plans of millions of Americans in the states covered by federal exchanges.

Admittedly, the provisions are badly drafted. Nonetheless, the petitioners’ argument seems so obviously at odds with what President Obama’s (then) Democrat majority in Congress wanted – affordable healthcare, with federally-subsidised health insurance for all Americans – that it’s hard for an English lawyer to see how it could possibly succeed.

The contemporary English approach to statutory interpretation was summed up by Lord Bingham in 2003 in R (Quintavalle) v Health Secretary (see para. 8):

The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said … But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty. Such an approach … may … (under the banner of loyalty to the will of Parliament) lead to the frustration of that will, because undue concentration on the minutiae of the enactment may lead the court to neglect the purpose which Parliament intended to achieve when it enacted the statute … The court’s task, within the permissible bounds of interpretation, is to give effect to Parliament’s purpose. So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment.

Applying this sort of approach to legislative meaning, I think there’s little doubt the UK Supreme Court would uphold the lawfulness of the tax credits. Nor does the petitioner’s case really make sense in terms of the “sophisticated text-based interpretive approach” supposedly favoured by American conservative judges, as Abbe R. Gluck has argued. On the contrary, what we’re dealing with here is the sort of “destructive analysis” Lord Denning wanted to reject back in 1950.

The ACA may be saved by the application of specific American canons of interpretation: I’m thinking of “constitutional avoidance” in pursuance of the “anti-commandeering doctrine”, an approach which may appeal to one or two of the Justices. Congress cannot use tax credits (or their denial) to bully states into implementing federal policy; and therefore such an unconstitutionally literal reading should be avoided if possible.

But the case illustrates something important and interesting about American legal culture. In England, respect for Parliament’s sovereignty means judges usually try to find its genuine legislative intent (I don’t think they really did in the recent case about Prince Charles’s letters). Some American judges in contrast seem willing to use every legal tool – not only constitutional principle but a wrecking literalism in interpretation – to frustrate legislators.

Thanks to the Oyez Project of IIT Chicago-Kent College of Law, you can listen below to the whole oral argument in King v Burwell. And you can read all about the case, and all the briefs filed in it, and the outstanding SCOUTUSblog. The Court’s opinion’s due this week or next.