King v. Burwell — Is There Reason For Optimism?

Since Dahlia Lithwick and Barry Freidman cite me (not inaccurately!) as a “purveyor of doom” based on my analysis of the Supreme Court’s cert grant in King v. Burwell, it’s worth given even stronger consideration than usual to the always extant possibility that things aren’t nearly as bad as I think they are.

There are two areas where more optimism may be warranted.  The first is the question of how the Supreme Court rule on the merits.  Lithwick and Friedman:

First, it is simply wrong to assert that the justices never take a case like this absent a split in the lower courts, unless—like the Big Bad Wolf in “Little Red Riding Hood”—they are licking their chops to kill something. To the contrary, as some have already argued, it makes perfect sense for the justices to take a case of this importance the first chance they get. If the subsidies ultimately are unlawful, there will be a lot of disruption; people need to know as early as possible what is going to happen, and states need to figure out how to react. Even though there is not a formal split in the circuits at this moment, some lower courts—both trial courts and the D.C. Circuit in its original ruling—have gone against the government. Therefore, there is room to wonder what the ACA means exactly, and it takes the Supreme Court to resolve this confusion definitively.

It’s possible, certainly. But I find the citation of Johnathan Adler on behalf of the proposition that the Supreme Court has good reason to settle this case right now more chilling that reassuring. (I will just observe that he’s still calling this a “a straightforward statutory case” while arguing that the clear intent of Congress was that the Moops invaded Spain and drop the mic.) It’s worth noting one reason why the architects of the latest challenge to the ACA want this decided quickly: the longer the exchanges are given to work, the harder it will be to repeal them, something we’ll return to in a second. Similarly, I’m not really persuaded that political calculations will stop Roberts from gutting the exchanges. I do think that Roberts would prefer not to have his name on a ruling that explicitly says that the Affordable Care Act is unconstitutional. (George Lovell and I tried to explain this dynamic in a paper that’s held up better than I would prefer.) But siding with the plaintiffs here wouldn’t do that, and the resulting chaos would more likely to be blamed on Obama than the Court. Finally, while I agree that the attitudinal model of judicial behavior is too simplistic the behavior of Republican nominees on the lower courts does not do much to make me think that this being a statutory rather than constitutional case will make it less political.

Having said all this, I don’t know that we disagree that much. The rule of four means we can’t be certain that there are five votes to reverse; it may be just the four Sebelius dissenters figuring they have nothing to lose. A justice leaning toward gutting the exchanges might change his (I’m comfortable with this assumption) mind. I think the smart money is that the Court will side with the plaintiffs — it would be very much of a piece with Roberts re-writing the Medicaid decision — but if you had told me Kennedy was going to vote to strike down the ACA I would have given it a 0% chance of survival, so I don’t claim any special ability as a Politburo watcher.

The second area where I may be excessively pessimistic concerns the aftermath of the Court ruling that the subsidies are not available on the federal exchanges. (See also Simon Miloy in Salon.) L/F:

Fourth, even if the justices did decide that the subsidies were invalid, that might actually help Obamacare, not hurt it. There’s going to be a lot of pushback to yanking the subsidies out of the hands of the 4.6 million people that are already getting them. In this scenario, many of these people would have had health insurance for one brief moment and then would again be unable to afford it. There is a difference between denying a benefit you never experienced and taking away a benefit that made your life immeasurably better for a brief period of time. If the court sides with the challengers, it is going to put pressure on the states that opted out of creating an exchange for ideological reasons to do something to ensure that those who can’t afford it can get insurance. Perversely, the existence of the sprawling federal exchange and subsidy made it easier for states to thumb their noses at the ACA. It gets a lot tougher if state exchanges are the only realistic possibility for many people. In the end, striking the federal subsidies may push more states into the Obamacare fold.

I certainly agree that the ultimate policy outcome of a Supreme Court opinion siding with the ACA truthers is uncertain. Denying people benefits they already have is a different political dynamic than passing health care reform in the first place. The combination of the Roberts Court’s inept re-writing of the Medicaid expansion and wrecking the exchanges in a majority of states would create interests — hospitals, medical providers, middle class people who have lost their insurance — more powerful than the uninsured who would be urging statehouses to fix things. If Democrats can maintain the White House and/or Senate to keep the ACA from being repealed or completely gutted, if Obama no longer being president makes opposition to the ACA less intense…it’s not entirely out of the question that red states would start building their own exchanges and take the Medicaid money.

But at least as far as the exchanges are concerned I’d still say it’s a longshot. Certainly, in the short term Republican state legislators have much more to fear from primary voters who would eject them from office for BAILING OUT OBAMACARE!!!!!!! than from any other group of voters or organized interest. Republican state legislators and governors didn’t pay a political price for refusing the Medicaid expansion, and they aren’t likely to think they have to fix the exchanges either. Again, the key problem here is the diffusion of accountability inherent to the American system — Obama will take most of the blame for the actions of a Republican-dominated Supreme Court and Republican statehouses. In this context, the short-term effects of the Court reversing King would be bleak.  And the fewer people that get the benefits of the ACA, the easier it would be for a unified Republican White House and Congress to severely damage or repeal it.

A bad Supreme Court outcome is not certain, and if we get one the only response is to fight — I agree with Lithwick and Friedman on both points. But I still think that a bad Supreme Court outcome is very likely, and I find it hard to envision a scenario in which such an outcome won’t be pretty disastrous. On both counts, I hope I’m wrong — it certainly wouldn’t be the first time.