'Common Sense' Reigns in King
Writing for a 6-3 majority, Chief Justice John G. Roberts, Jr. sustained premium assistance tax credits for over 6.4 million Americans in King v. Burwell. His opinion prescribes a dose of ‘common sense’ for a law that some view as ‘sick,’ and it could turn the corner on the law’s ‘recovery.’
Does it or does it not? Stitched in quilt-like fashion by several legislative committees, the Affordable Care Act (ACA), also known as “Obamacare,” was enacted without the benefit of proofing in House-Senate conference. Result: several sloppy drafting threads were left un-snipped. The King plaintiffs seized upon one, and in classic molehill-into-mountain fashion fueled a supremacy war between “text” and “context” (as discussed here).
The King plaintiffs claimed that premium assistance tax credits could not be provided in states that did not create their own state exchange. The ACA requires each state to establish an exchange, but if a state does not, it provides each state a back-up federal exchange. Thirty-four states have not created their own exchange, and so their residents default to the federal exchanges.
The ACA grants premium assistance tax credits for the purchase of health insurance by taxpayers with incomes between 100 – 400% of the federal poverty line. The IRS, by rule, provides that taxpayers may claim these credits as premium assistance for insurance purchased in all exchanges, state and federal. The statutory authority for such credits resides in IRC §36B.
In a sub- sub-section of §36B, where the measure of credits is spelled out, an un-snipped drafting thread sticks up. This thread suggests that premium assistance credits are available for health insurance “enrolled in through an Exchange established by the State.” The King plaintiffs argued this meant that only taxpayers who enrolled in insurance in an exchange established by their own state could claim premium assistance credits, and that such credits were not available in the 34 states whose residents default to the federal exchanges. The stakes in King were high because 11.7 million Americans enrolled in the federal exchanges in 2015. Of those, 6.4 million were income-qualified for premium assistance.
‘Common Sense’ prevails. Like Thomas Paine’s revolutionary pamphlet, the King decision is grounded in ‘common sense.’ Chief Justice Roberts describes both what the ACA was intended to do and how it was supposed to do it. He interprets its text in IRC §36B within the context of the entire statute, and holds that the federal exchanges are equivalent to state exchanges for purposes of premium assistance credits. His opinion remains faithful to what Congress meant by including §36B under the subtitle, “Affordable Coverage Choices for All Americans.” “All” includes everyone in the 34 states without state exchanges. And so, everyone is entitled to premium assistance tax credits regardless where he or she resides.
His rationale follows usual canons of statutory interpretation that require legal text to be construed, not with myopic focus on isolated words or phrases, but with fidelity to, and consistency with, all other provisions, statutory structure, and expressed purposes. To be sure, words and phrases have specific definitions, but a text’s true meaning can only be gleaned from contextual usage. And sometimes, as with the ACA, such usage cannot be found in the same sentence or section. The true meaning of §36B is found in the history and structure of the entire law.
The King majority starts the search for meaning by canvassing the history of state experimentation in the 1990’s with insurance market reforms that forbade insurers from discrimination by refusing to insure unhealthy people, excluding their pre-existing conditions, or charging them higher rates. State experiments tried to rectify this discrimination by guaranteeing coverage, banning exclusions, and requiring community rating (which prohibits health-status rating). These experiments fell flat, resulting in “death spirals” in state insurance markets, because two other key reforms were omitted, reforms that Massachusetts employed in 2006 which prevented “adverse selection” and avoided any “death spiral.” The King majority notes that the ACA is fashioned after the Massachusetts reforms, as shown in one of its declared purposes:
[M]any individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the [individual mandate’s] requirement, together with the other provisions of this Act, will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.
With this historical backdrop, King interprets §36B’s text by taking into account numerous other places in the ACA where “Exchange established by the State” is used and where it makes no sense if it means only state-created exchanges. The King majority comes to the common-sense conclusion that the phrase cannot, therefore, mean what its “natural sense” suggests. In context, it can be understood as an ambiguous thread of text that makes sense only if construed to mean that premium assistance tax credits are available to all taxpayers in all exchanges. Thus, the federal exchanges equate to state exchanges for tax credit purposes.
King affirms the Fourth Circuit Court of Appeals, but declines to follow its reliance on Chevron v. NRDC (1984)[1]. “In extraordinary cases,” courts should hesitate before inferring Congress delegated to an agency the power to interpret ambiguous statutes, and Chief Justice Roberts writes, “[t]his is one of those cases.” Citing Utility Air Regulatory Group v. EPA (2014)[2] and FDA v. Brown & Williamson Tobacco (2000)[3], Roberts explains that King involves “a question of deep ‘economic and political significance’ . . . central to th[e ACA’s] statutory scheme.” So, it cannot be answered by deferring to an IRS rule, only by judicial interpretation.
Is King a triumph of “purposivism” over “textualism”? Perhaps, but regardless, it follows common sense which teaches that the true meaning of words can only be understood in context. Lawsuits are filed every day over disputes as to a text’s meaning, and the judiciary’s role is to interpret that text in accord with intent. With the ACA, the King majority crowns context supreme over an isolated thread of text. The majority concludes: “A fair reading of legislation demands a fair understanding of the legislative plan.”
Is King’scontextual interpretation fair? Of course not, the King dissenters declare! But, could their dissatisfaction be veiled by policy opposition?
Justice Scalia’s writing is often terse, but his dissent in King is acerbic. It mocks the majority’s rationale calling their effort to construe the ACA “jiggery-pokery,” and declares “[w]ords no longer have meaning.” The dissent’s central protest distills to this: “Context always matters,” but only if text is ambiguous, and the belief that §36B makes “little sense,” in context, shows only “oddity, not ambiguity.” Contextual analysis cannot negate words that plausibly mean what they say.
The dissenters’ “plausible” interpretation turns a blind eye to consequences, history, and declared statutory purposes. Instead, it crowns text, and text alone, supreme on the principle: “We lack the prerogative to repair laws that do not work out in practice.” The dissent concludes with a hint of policy opposition, observing the ACA has twice been “saved” by the SCOTUS (Supreme Court of the United States): “We should start calling this law SCOTUScare.”
Conclusion. The King majority and dissent agree that both text and context matter in statutory construction. They differ on when to consider text ambiguous and how much context, history, and “legislative plan” to consider in making the ambiguity call. Chief Justice Roberts said in his 2005 confirmation hearing, “Judges are like umpires. Umpires don't make the rules; they apply them.” The rules, however, are not always clear, and so making the correct call, as he says in King, “is easier in some cases than in others.” The King majority made the correct call, and had the King dissenters won, common sense would be the casualty.
A forward looking Post-Script. The King dissenters accuse the majority of a “judge-empowering approach” that only seems “respectful of congressional authority.” Their concern focuses on the judiciary taking on too much of a legislative salvaging role. But, they are silently complicit in another empowerment suggested in the majority’s refusal to defer, under Chevron, to an IRS rule based on the centrality of the “economic and political significance” of the rule’s interpretation of statutory “gaps.” Does this foreshadow a changing judiciary role, if or when agencies fill policy-making voids during periods of dysfunction between the executive and legislative branches?