In King v. Burwell, the Supreme Court surprised many Court watchers, ruling six to three that the Affordable Care Act (ACA) permits individuals who buy health insurance on the federal exchange to receive taxpayer subsidies. The decision represents a decisive victory for ACA supporters, and an equally decisive loss for the rule of law. With King, the Supreme Court has signaled (again) that it is willing to “save” important laws by rewriting them, thus behaving as an all-powerful, unelected, politically insulated, unconstitutional Council of Revision.
King is the second time the Court has rescued the ACA. The first time, NFIB v. Sebelius (2012), involved a frontal assault on the constitutionality of the Act’s individual mandate and its mandatory Medicaid expansion. The five-Justice NFIB majority, led by Chief Justice John Roberts, saved the individual mandate by rewriting the word “penalty” to mean “tax,” and disregarding extensive legislative history indicating that Congress had intended to use its commerce power, not its taxing power.
The NFIB majority also ruled that the ACA’s mandatory Medicaid expansion violated federalism by unconstitutionally coercing states. Because the Medicaid expansion was integral to making the ACA “work,” this constitutional infirmity should have rendered the entire ACA unconstitutional pursuant to a severability analysis. But as with the individual mandate, the NFIB majority opted instead to save the ACA, transforming the Medicaid expansion from mandatory to “optional.” In the words of the four NFIB dissenters, the majority “save[d] a statute Congress did not write.”
To paraphrase Yogi Berra, King is déjà vu all over again. Once again, Chief Justice Roberts has penned a majority opinion rewriting the ACA, but with one important difference: This time, the Court’s rewrite does not even further the policy of “saving” the ACA. If the Court had ruled the other way, the ACA, while not performing well, would have remained largely intact, albeit in a less draconian form that was more respectful of states and individual liberty.
The Obama administration convinced the King majority that the loss of subsidies would trigger a “death spiral,” whereby younger and healthier individuals leave the market, causing less healthy individuals to pay ever-higher premiums. But many – if not most – young, healthy individuals have already shunned the ACA’s expensive, high-deductible coverage, opting instead to pay the less expensive individual mandate “tax.” These decisions were made, despite the availability of subsidies. Thus, while losing taxpayer subsidies obviously makes health insurance more expensive, it does not, by itself, induce an underwriting death spiral. Instead, it would be more accurate to say that it forces individuals to pay the full freight of the benefits-rich insurance mandated by the ACA.
Indeed, the majority’s desire to save the ACA from these perceived policy effects blinded it to the countervailing effects of ruling in favor of the plaintiffs. For example, while a loss of subsidies would have caused some individuals to drop insurance, most would not consequently face the individual mandate “tax,” since it does not apply when premiums exceed eight percent of income. For Justice Anthony Kennedy (who dissented in NFIB) in particular, one would think such a positive effect on individual liberty – escaping the individual mandate – would have carried some weight.
Employers’ liberty would also have been enhanced if the King majority had ruled in favor of the plaintiffs. In the thirty-four states without state-run exchanges, employers would no longer have been subjected to the employer mandate tax, since it is triggered only when an eligible employee receives a subsidy. As Michael Cannon of the Cato Institute demonstrated, ruling against the Obama administration would have freed an estimated eight million individuals and 250,000 employers from paying onerous taxes.
Individual liberty aside, the King Court’s disrespect of states is also surprising since Justice Kennedy – normally the Court’s most strident federalist – joined the majority. The King majority appears to have invoked some odd form of the “clear statement rule” to bolster its conclusion, citing the Court’s 2014 decision in Utility Air Regulatory Group v. EPA and stating, “Whether [tax] credits are available on Federal Exchanges is thus a question of deep ‘economic and political significance’ that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly.”
But as we have written before, the clear statement rule is a rule designed to protect federalism, not individuals. In every single prior instance in which the Court has invoked the clear statement rule, it has been to prevent Congress from using its enumerated powers in a manner that harms the states as states. The clear statement rule is utterly inapplicable, however, when Congress uses its power directly on citizens, as is the case with the ACA tax subsidy.
Moreover, the King majority’s decision denies states a meaningful choice regarding whether to operate a state exchange. Refusing to operate a state exchange empowered states to free many of their citizens from the Act’s onerous mandates and provided a means to voice their strong political opposition to the ACA. While the choice to operate a state exchange was a difficult one, it was a still a choice. The King majority’s invocation of the clear statement rule denies states this basic choice, using the rule not to respect federalism, but to impose a one-size-fits-all approach. By denying states a choice, the King Court has thwarted the liberty-enhancing function of federalism.
Beyond these various policy implications, however, the King decision portends frightening implications for the rule of law. As the King dissenters ominously warned, “Words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’” By ignoring what the ACA actually says, in favor of what the King majority believes the statute ought to have said, or what it thinks Congress meant to say, the Court upset the entire constitutional balance. Yet ironically, the King majority invoked Marbury v. Madison and declared that a court’s proper role was to “to say what the law is.” While this is a correct recitation of the proper role of the judiciary in a constitutional republic, it is sadly not the role the King Court played.
Courts are emphatically not in the law-writing business. The King majority confessed that “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation” and that “the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.”
But by departing from the “natural reading” of a law that is patently poorly drafted, the Court has short-circuited the entire political process. When judges take it upon themselves to “fix” broken legislation like the ACA, they diminish political accountability by encouraging Congress to be sloppy when drafting legislation. And when it comes to the quality of legislating, judicially drafted “legislation” is always worse than even hastily drafted congressional statutes.
Moreover, when faced with a poorly drafted law, the executive branch has every incentive to amend laws unilaterally, rather than working with Congress to amend them. It may be expedient for presidents to issue regulations pretending legislation says whatever the president wants it to say, but such de facto executive-lawmaking inherently lacks the deliberation and compromise that permeates the legislative process.
When the Supreme Court conflates law interpretation with lawmaking – as it has done in King – it diminishes courts’ independence, undermines their legitimacy, and destroys the ability to have judicial decisions heeded by the two political branches. According to Gallup, trust in government is at its lowest since the Nixon years, with only twenty-eight percent of Americans having a “great deal” or “fair amount” of trust in the legislative branch, and only forty-three percent in the executive branch. The judicial branch still fares better, at sixty-one percent confidence, but that, too, is historically low. By rewriting the ACA’s plain language simply because the stakes were high, the Court can expect a further erosion of the confidence of the American people. Indeed, one of the political left’s defining mantras is that “law is politics.” The decision unfortunately both illustrates and amplifies this belief.
Now that the Court has fixed the ACA (again), the political branches can relax. There is no need to start working together to amend the law and engage in the back-and-forth art of political compromise. While this may be good news for the president and members of Congress who were gearing up for an intense round of political chicken, it is horrible news for the American people and the Constitution.
When a law is hastily enacted and consequently has flaws, it is supposed to be amended by Congress. Judges are not supposed to engage in sophistic contortions to find “ambiguity” in their quest to justify rewriting laws. By bypassing the political process this way, the Supreme Court in King has bypassed the Constitution itself.
<em>David B. Rivkin, Jr. is a constitutional litigator at BakerHostetler, LLP, who served in the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. Elizabeth Price Foley is Of Counsel at BakerHostetler and a professor of constitutional law at Florida International University College of Law.</em>