Thursday, June 25, 2015

The Supreme Court Reaffirms the Social Contract: The ACA as a Framework Statute


On its face, King v. Burwell was an ordinary case of statutory construction. Did Congress provide that people could receive tax credits subsidizing health insurance if the state they lived in chose not to create an exchange? Did the federally created exchanges stand in the shoes of the state exchanges? The Court answered yes to both questions, based on the text, structure and purposes of the act.

But on a deeper level, King v. Burwell had constitutional overtones. The Affordable Care Act was no ordinary statute-- it was a framework statute like the Social Security Act, the Wagner Act, Medicare, and the Civil Rights Act of 1964. It significantly changed the terms of governance in the United States by reorganizing the health care industry and creating a new guarantee of (virtually universal) health insurance.

Between 2009 and 2012, the United States engaged in a grand constitutional debate about the Affordable Care Act. Should Congress expand the social contract to include universal health insurance? Or was this an unjustified imposition on personal liberty and on state authority that was beyond Congress's powers? In NFIB v. Sebelius, the Court held that the Affordable Care Act was constitutional. It affirmed the change in the American social contract but with a few important qualifications. Americans would have an expanded social contract that now included (close to) universal health insurance. At the same time, individuals could opt out of health insurance by paying a tax, and states could decide whether to opt into health insurance for their poorest citizens. So altered, the Court legitimated this major change in American governance.

Mark Graber, however, has pointed out that the biggest constitutional issues are settled not when courts speak but when one side gives up the fight. The opponents of the Affordable Care Act were hardly ready to give up after Sebelius. Republicans in the House of Representatives passed dozens of attempted repeals of the Act, even if these were largely symbolic. Republican politicians and conservative media repeatedly denounced the Act and predicted its imminent demise. Opposition to the Affordable Care Act, on both policy and constitutional grounds, remained the more or less official position of the Republican Party.

Meanwhile, lawyers and legal scholars opposed to the Act scoured the text of the law for new ways to bring it down.  One argument, that the individual mandate violated the Origination Clause, has not gotten very much traction, but it may be revived after King. The most promising line of attack, however was the challenge to federal tax credits that led to King v. Burwell.

In King v. Burwell, the Court was being asked, once again, to intervene in a constitutional struggle over health care, which had now been reformulated in terms of a dispute about statutory language.

The architects of the litigation, Michael Cannon and Jonathan Adler, are opposed to the Democrats' vision of universal health care. They also believe that the current system violates individual liberty and is inefficient. Their goal was to cripple the Affordable Care Act to force a political reconsideration of its terms.  The key idea was that by eliminating the tax credits for federally run exchanges, many people could no longer afford health insurance. Because people could not afford health insurance, the individual mandate would not apply to them.  And if millions of people were no longer insured, the act's community ratings and guaranteed issue requirements would drive up health insurance costs, making health insurance unaffordable to even more people. By eliminating the tax credits, the challengers hoped simultaneously to destroy the effectiveness of the hated individual mandate-- the source of the original constitutional challenge in Sebelius--and to force Congress and the President to reconsider the entire Affordable Care Act.

The Affordable Care Act was passed when Democrats controlled the Presidency and both houses of Congress. If the statutory challenge in King v. Burwell succeeded, the status quo would be untenable and Congress would have to act. Inertia would no longer be a possibility. But now the reconsideration would occur when Republicans, who are sworn opponents of the act, controlled both Houses of Congress.

If the challenge succeeded, Republicans might have pressured Barack Obama into accepting significant changes in the law, like repeals of the employer and individual mandate.  Perhaps more likely, Obama would have vetoed any changes and tried to blame the Republicans. In that case, the Republicans might wait for a Republican to win in 2016, leading to full repeal in 2017.

Either way, by throwing a monkey wrench into the law, the challengers hoped to get a second bite at the apple, and achieve health care reforms more consistent with their political and constitutional principles.

The resolution of the statutory question in King v. Burwell is also implicitly a reaffirmation of the constitutional question at the heart of the debate over health care. The decision reaffirms that the nation has committed itself to policies that will help ensure health care for all Americans. Guarantees of health care are now part of the American social contract. Challenges may well continue for some time, but the Court has sent a fairly clear message: The Affordable Care Act is part of the way we do things now in the United States, and it will continue to be until Congress repeals it.

In King, the Court treated the ACA very much as a framework statute. It rejected the arguments of the challengers in King because it believed that the challengers' interpretation would seriously undermine the functioning of the act and was counter to its underlying purposes. As the Court explained, its job was to interpret the Affordable Care Act in "to improve health insurance markets, not to destroy them."

In dissent, Justice Scalia fumed that the Court was treating the ACA as its special favorite, and that by reading the act to defend it from challenges it was responsible for keeping it in place. Hence, Scalia, remarked, it should be called "SCOTUSCare." He acknowledged that the Act might be "enduring" like Social Security or the Taft Hartley Act. But that didn't matter. In Scalia's view, all statutes are the same, no statutes should be favored over any others, and all statutes should be interpreted in precisely the same way. Treating the Affordable Care Act as if it had a special status-- as a framework statute, or as part of the social contract--was improper.

In saying this, Scalia thought he was criticizing the Court. But actually, he was describing what courts usually do in our system of government. They legitimate big changes in the social contract by considering constitutional challenges to them. That is what the fight over the New Deal was about. At first, the Court, staffed by holdovers from the previous regime, rejected Roosevelt's proposed innovations to the social contract, symbolized by the National Recovery Act, struck down in the Schechter Poultry case. Roosevelt and the Democrats responded with different statutes--sometimes called the Second New Deal-- including the Social Security Act and the Wagner Act.  Eventually, the Supreme Court came around and ratified these changes to the social contract, and these framework statutes became important parts of our political and constitutional system.  Similarly, during the Civil Rights Revolution, the Warren Court upheld the Civil Rights Act and the Voting Rights Act against constitutional challenges, thus legitimating these major changes to American governance.

Framework statutes that are central to the American social contract-- like Social Security and Medicare, have a special status in the American system of government, and courts understand this implicitly. (That is what made the Court's decision in Shelby County v. Holder so important and so shocking-- it gutted a key part of framework statute from the Civil Rights Revolution--the Voting Rights Act).

In NFIB v. Sebelius, the Supreme Court decided that the creation of a new framework statute designed to guarantee universal health care was a legitimate innovation in American government. Politics should move forward from there.  The challengers in King v. Burwell disagreed. They wanted another attempt to dismantle the Act through statutory arguments. The Court understood what was at stake and, in essence, said, "no dice." We have already told you that this law is legitimate, and we intend to honor our commitment.

In one respect, Scalia is correct: The Court did treat the ACA as special, both in Sebelius, and in King v. Burwell. In each case the majority understood the ACA to be what it is, a new framework statute that alters the terms of constitutional government in the United States.  (In saying this, however, I should also make clear that, quite apart from the importance of the issues involved, Chief Justice Roberts' opinion is a perfectly straightforward textualist opinion. It reads the words of the statute in the context of the entire Act, and it holds that, given the central goals of the ACA as a whole, the best reading of the text is that subsidies exist on federal as well as state exchanges.  As a textualist argument, the opinion makes abundant good sense even if Roberts had not been dealing with a framework statute.  And because Roberts' opinion takes the purposes stated in the statute seriously, it offers a far more convincing textualist case than Scalia's dissent.)

Does the result in King v. Burwell mean that future legal challenges to the ACA will end?  Nobody knows. It is possible that the ACA is here to stay, and Republicans will simply get used to it, as they got used to other social insurance programs like Social Security and Medicare. They no longer try to repeal these programs or have them declared unconstitutional; instead they attempt to alter them (usually in ways that Democrats don't like) while accepting their basic legitimacy.

The test will come the next time the Republicans hold the White House. Then we will have a better sense of the Affordable Care Act, and whether, as Justice Scalia says, it will become an "enduring" feature of our political life.

One interesting feature of King v  Burwell is that the Court held that access to tax subsidies on Federal exchanges was a requirement of the statute itself, and not simply a reasonable interpretation by the IRS. That means that when Republicans once again control the White House, they will not be able to turn off the subsidies by issuing a new administrative regulation.  Instead, they will have to change the law through congressional statute. This feature of the Court's decision is very important, and tends to ensure that the ACA will endure.

In King v. Burwell, the Court sent a signal to the political branches: Don't try to uproot the ACA through technical legal arguments designed to throw sand in its gears. Don't try to blow it up through clever lawyering. If you want to change health care policy, do it through standard political reforms. Do it through democratic politics. If you can't manage to do that, then you had better get used to the idea of universal health care in the United States.

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