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A Poisoned Door Knob and the Fate of the Affordable Care Act: Reading Tea Leaves at the Supreme Court

Liz Carlson, a self-employed student, attends a health care enrolment fair co-sponsored by Planned Parenthood of Northern New England and the State Employees Association at Great Bay Community College in Portsmouth, New Hampshire November 9, 2013. Carlson was unable to create a user account on the Affordable Care Act website, HealthCare.gov, and left with a paper application.

On July 22nd three-judge panels of two U.S. appellate courts released decisions that go directly to the viability of the Affordable Care Act. The Court of Appeals for the D.C. Circuit decided by a 2-1 vote that Congress intended that the Act’s subsidies for people and families with lower incomes be available only to those who acquired health insurance through a state run exchange. Those who purchased insurance through the federal exchange, the alternative intended for people who live in states that do not establish exchanges, were, according to the majority’s reading of the statute, intended to be out of pocket and out of luck. Since more than half the nation’s states did not establish exchanges, if this decision holds millions who have subsidized health insurance stand to lose their subsidies, and the insurance markets on which the ACA relies will be disrupted nationwide. Almost simultaneously with the D.C. Court’s decision, three judges on the Court of Appeals for the 4th Circuit decided unanimously that the insurance subsidy provisions of the ACA were intended to apply regardless of whether insurance was purchased on a state or a federal exchange. While the D.C. panel’s decision may well be reversed by the entire Circuit Court sitting en banc, whether this happens or not, it seems almost certain that the Supreme Court will, in the not too distant future, be called on to resolve the issue.

A possible clue to how the Supreme Court might resolve the issue is found in a case decided six weeks before the Circuit Court decisions came down: Bond v. United States. Bond is a bizarre case—one that makes a person want to scream at the U.S. government, particularly a supposedly liberal government, and ask the U.S. attorney who brought the case and the Attorney General who chose to defend the prosecution, “What were you thinking?” The defendant in this case, Carol Anne Bond was an angry lover, and she had good reason to be. Bond’s best friend, Myrlinda Haines, was pregnant, and the father, Bond learned, was her own husband. Needless to say, the friendship was destroyed, but Bond wanted to harm more than that. As a microbiologist, she had access to toxic chemicals, some of which she stole and spread on Haines’ car door, door knob and other places she thought her former friend would touch. She didn’t seek to kill Haines; rather she wished to gain revenge by causing Haines to suffer an uncomfortable rash. One of her 24 attempts to do so “succeeded” in that it caused Haines’ thumb a bit of easily cured discomfort. Needless to say, Bond’s actions were criminal, violating several Pennsylvania laws. There was no need to make a federal case out of it, but this is what the U.S. Attorney for the Eastern District of Pennsylvania did.

To do so, the U.S. invoked 112 Stat. 2681-856, the law implementing and giving domestic effect to the Chemical Weapons Convention, an international treaty ratified in 1997, which, among other things, prohibited the “Use of Chemical Weapons”. In its legislation implementing the newly acquired treaty obligations, Congress sought to prohibit almost all conduct the Convention could reach, including the use, possession or threatened use of any chemical weapons. It defined chemical weapons broadly to include toxic chemicals intended to be used for other than peaceful purposes, and it provided an equally broad definition of toxic chemicals, including all chemicals that can cause death, temporary incapacitation or permanent harm to humans or animals. Reading the statute literally, Bond’s actions are encompassed by the statute’s language. Recognizing this Bond entered a conditional plea of guilty, reserving the right to argue that the implementing legislation was unconstitutional because it took from a state, matters reserved to it under the 10th Amendment. She also argued that the legislation did not cover behavior like hers because in excluding the use of chemicals for “peaceful purposes,” Congress meant to encompass all non-warlike behavior, even behavior aimed at doing harm.

Three Justices, Scalia, Alito and Thomas, the Court’s most conservative trio, saw the statutory language as clear and felt obliged to take the statute as written. Thus they addressed Bond’s constitutional claim and found that the implementing legislation invaded powers reserved to the States under the 10th amendment. Six Justices, including Chief Justice Roberts, who wrote for the Court, and Justice Kennedy, the 5th member of the Court’s more conservative bloc, were willing to look beyond the literal text and held that Congress never intended its implementing legislation to encompass behavior of the kind Ms. Bond had engaged in. In the course of his opinion, the Chief Justice wrote that “’Part of a fair reading of statutory text is recognizing that “Congress legislates against the backdrop of certain unexpressed presumptions,’” and that “correctly reading a statute” depends, in Justice Frankfurter’s words, on an “awareness of certain presumptions.” Bond bears on the fate of the ACA because if either the Chief Justice or Justice Kennedy finds that Congress intended to provide subsidies for those who purchased insurance on the federal exchange, the 4th Circuit’s opinion upholding the subsidies will almost certainly be confirmed. Moreover, if the dicta in Bond advocating attention to context are taken seriously, there can be no doubt that the ACA allows the federal government to provide health insurance subsidies to citizens in states that rely on the federal exchange.

But dicta are not always taken seriously, even by judges that wrote them, and as clues to how a closely divided court will come down in a politically charged case, a judge’s words can be as murky as a smear of tea leaves. Salient differences between Bond v. U.S. and the ACA subsidy cases exist, and they cut in different directions. In Bond, if the majority had not concluded that Congress never intended the Chemical Weapon Convention’s implementing legislation to apply to behavior like Bond’s, it would have had to decide whether that legislation was a “necessary and proper” way to implement the Convention’s obligations, or whether the implementing legislation infringed on powers reserved to the states under the 10th Amendment. A decision to invalidate the implementing legislation would have been momentous, for the Court has never held that legislation the Congress saw as necessary and proper to implement a treaty were subject to overturning because they interfered with powers reserved to the states.

Because decisions holding legislation unconstitutional pit two supposedly co-equal branches of government against each other, it is a long established canon of Supreme Court jurisprudence that the Court should not unnecessarily confront constitutional questions. Hence there is a well-established principle that if a statute is fairly subject to two interpretations, one of which would run afoul of the Constitution and the other of which would be constitutional, the interpretation that renders the statute constitutional should be favored. This is the tack that Chief Justice Roberts, writing for the majority took. Despite the encompassing language of the statute, he and five other Justices assumed that Congress never intended the implementing legislation to apply to small scale, single target, apolitical crimes that fell squarely within a state’s criminal law jurisdiction. If this is all Bond tells us, the decision will give no solace to the defenders of the ACA because the claim that Congress never intended subsidies to be available to those who bought insurance on a federal exchange raises no constitutional questions to be avoided.

From another perspective, however, Bond is a precedent that defenders of the ACA should find helpful. In Bond not only did the literal language of the implementing legislation appear to cover Bond’s behavior, but also nothing in the implementing legislation or its legislative history suggested that the law’s language was not intended to cover behavior like Bond’s, and holding that the legislation did cover it would not have interfered with the treaty’s operation or enforcement. The only justification for the majority’s position in Bond is that they could not imagine that Congress in passing the implementing legislation ever considered the possibility that it might be applied to behavior posing a threat as trivial as Bond’s, and that it was reasonable to suppose that had Congress considered this possibility, it would have drafted the enabling legislation to exclude such petty crimes. The majority’s refusal to reach the constitutional question is defensible because they are most likely correct in their assessment of what Congress intended.

In each of these respects, however, the claim that the ACA, fairly interpreted, embodies a Congressional intent to subsidize insurance purchased through the federal exchange is stronger than the claim Bond could make for an other-than-literal reading of the law under which she was prosecuted. Indeed, it is not clear that one need go beyond the text of the ACA to find an intent to subsidize purchases made through the federal exchange, for there is language in the statute indicating that in states that had failed to establish exchange, the federal exchange would substitute for and be equivalent to the exchange a state might have established. It is also clear that subsidies are integral to the ACA’s goal of vastly expanding the number of Americans who can afford to acquire health insurance, and that this aim would be subverted if people purchasing health insurance through the federal exchange could not benefit from subsidies. There is, in fact, nothing in the ACA’s legislative history to suggest that any legislator intended to limit the ACA’s subsidies to those who purchased their insurance through a state exchange. If placing oneself in the position of a legislator makes it reasonable for a Justice to suppose that Congress never intended the Chemical Weapons Convention’s enabling legislation to apply to almost harmless petty assaults, it is beyond peradventure that a Justice acting in good faith should assume that the Congress that passed the ACA intended subsidies to be available regardless of whether insurance was purchased through a state or the federal exchange. If this is not enough, another canon of statutory construction holds that when legislative language is ambiguous, courts, including the Supreme Court, should respect, if not defer completely to, any permissible interpretation put on the law by the administrative agency charged with the law’s application.In this instance the IRS, which is charged with enacting relevant regulations, has concluded that subsidies are available for those who purchase insurance through the federal exchange.

With this being true, one might wonder how two judges on a federal circuit court could decide that the drafters of the ACA did not intend to make subsidies available to those who purchased insurance on the federal exchange. The answer lies in a combination of conservative politics, extreme literalism and judicial sophistry. At the one point where the ACA ties subsidies directly to exchange-purchased policies, it mentions only state exchanges. A person looking only at this language and ignoring all context, including other language indicating that the federal exchange might stand in the place of a state exchange, might pretend that the literal language was clear, but doing so would ignore admonitions that legislative language should be read in context. Thus the D.C. Circuit Court majority felt obligated to find some additional reason to believe that the literal reading was what Congress intended. To do so they provide as fine an example of judicial sophistry as we have in recent years seen. With no evidence beyond their imaginations, the majority argues that Congress meant to deny subsidies to people purchasing insurance on the federal exchange so that states would have an incentive to establish their own exchanges. Why Congress would want to do this at the expense of those they were trying to benefit is a matter the majority never addresses. They similarly ignore other ways that Congress might have incentivized states to establish their own exchanges if this were an urgent concern, including providing financial incentives to states establishing their own exchanges and threatening to impose costs on states that did not establish exchanges, as they did when they attempted to mandate state expansions of Medicaid eligibility.

Reading the tea leaves of Bond, there is little reason to expect that the Supreme Court’s three most conservative Justices will eschew the combination of literalism and political preferences that led them to insist that the 10th Amendment issue could not be avoided and to decide that under their reading the 10th Amendment trumped the Constitution’s necessary and proper clause. However, the Court’s two other conservative justices, who may share a similar political distaste for the ACA, argued in Bond that statutes must be interpreted in context. Even though Bond can be distinguished in that looking to context was necessary to avoid a difficult constitutional issue, as a principle of statutory interpretation, the relevance of context is not limited to situations where interpreting language in the light of context allows the Court to avoid difficult constitutional issues. Thus, it is not too much to expect that Chief Justice Roberts and Justice Kennedy will conclude that Congress intended the ACA’s subsidies to be available for policies purchased on the federal exchange. A decision to the contrary would not only gut the ACA but will also call to mind an observation George Chapman made in 1654: “The law is…an ass.”
  • Richard O. Lempert is the University of Michigan's Eric Stein Distinguished University Professor of Law and Sociology emeritus. During 2012-2013, he was a visiting fellow in Governence Studies at the Brookings Institution. From June 2008 until July 2011, he served as chief scientist in the Human Factors/Behavioral Sciences Division of the Science and Technology Directorate in the Department of Homeland Security; and from June 2002 through May 2006, he took leave from the University of Michigan to serve as the division director for the Social and Economic Sciences at the National Science Foundation.

    Currently he does business as RLempert Consulting, LLC. He is an elected member of the American Academy of Arts and Sciences, past president of the Law & Society Association and current secretary for Section K (Sociology, Political Science and Economics) of the American Association for the Advancement of Science. His research interests are broad, encompassing, among other things, matters related to national security, government bureaucracy, juries, race relations and social science methods.

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