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SCOTUS sharply divided over Obamacare subsidies

March 4, 2015

The Supreme Court of the United States was sharply divided Wednesday in the latest challenge to President Barack Obama's health overhaul, this time over the tax subsidies that make insurance affordable for millions of Americans.

The justices aggressively questioned lawyers on both sides of what Justice Elena Kagan called "this never-ending saga," the latest politically charged fight over the Affordable Care Act.

Chief Justice John Roberts said almost nothing in nearly 90 minutes of back-and-forth, and Justice Anthony Kennedy's questions did not make clear how he will come out. Roberts was the decisive vote to uphold the law in 2012.

Otherwise, the same liberal-conservative divide that characterized the earlier case was evident.

Opponents of the law say that only residents of states that set up their own insurance markets can get federal subsidies to help pay their premiums. The administration says the law provides for subsidies in all 50 states.

The liberal justices peppered lawyer Michael Carvin almost from the outset of his argument to limit the subsidies.

Justice Ruth Bader Ginsburg said the law set up flexibility for states to either set up their own markets or rely on the federal healthcare.gov. Giving subsidies only to people in some states would be "disastrous," Ginsburg said.

When Solicitor General Donald Verrilli Jr. stepped to the lectern, the liberal justices fell silent, and Justices Samuel Alito and Antonin Scalia took over.

"It may not be the statute Congress intended, but it may be the statute Congress wrote," Scalia said of the provision in question. The case focuses on four words in the law, "established by the state." The challengers say those words are clear and conclusive evidence that Congress wanted to limit subsidies to those consumers who get their insurance through a marketplace, or exchange, that was established by a state.

Verrilli argued that the law can only be read more broadly and noted that millions of people would lose health insurance if the court rules against the administration.

Alito wondered if the justices could delay the effect of such a ruling to allow states and perhaps the federal government to act. Scalia said he believes Congress would act.

"This Congress, your honor?" Verrilli said to widespread laughter in a packed courtroom that included leading congressional Democrats and Republicans.

Kennedy voted to strike down the health law in 2012, but on Wednesday he asked questions of both sides that made it hard to tell where he might come out this time.

He suggested that challenger Carvin's argument raised a "serious" constitutional problem affecting the relationship between states and the federal government.

On the other hand, he seemed less than convinced by Verrilli's reading of the law to allow the subsidies nationwide.

Millions of people could be affected by the court's decision. The justices are trying to determine whether the law makes people in all 50 states eligible for federal tax subsidies to cut the cost of insurance premiums. Or, does it limit tax credits to people who live in states that created their own health insurance marketplaces? More than 150,000 people in Indiana could be affected by the decision.

A ruling that limits where subsidies are available would have dramatic consequences because roughly three dozen states opted against their own marketplace, or exchange, and instead rely on the U.S. Health and Human Services Department's healthcare.gov. Independent studies estimate that 8 million people could lose insurance coverage.

Activists on both sides were in place outside the marble courthouse by 5:30 a.m. Wednesday. Some held placards showing how many people in each state would lose insurance if the court ruled that the law does not allow subsidies everywhere.

Opponents of the Affordable Care Act failed to kill the law in an epic, election-year Supreme Court case in 2012. Chief Justice Roberts joined with the court's liberal justices and provided the crucial vote to uphold the law in the midst of Obama's re-election campaign.

The new case, part of a long-running political and legal fight to get rid of the law also known as Obamacare, focuses on the four words "established by the state" in a law that runs more than 900 pages.

The administration counters that the law was written to dramatically reduce the ranks of uninsured, and that it would make no sense to condition subsidies on where people live. The phrase "established by the state," is what the administration calls a "term of art" that takes in both state- and federally run exchanges. The administration also says the term cannot be read in isolation, and that other parts of the law show that subsidies should be widely available.

Each side in the case argues that the law unambiguously supports only its position. One other option for the court is to declare the law is ambiguous when it comes to subsidies and defer to the Internal Revenue Service's regulations making tax credits available nationwide.

Partisan and ideological divisions remain stark for a law that passed Congress in 2010 with no Republican votes. Of the judges who have ruled on lawsuits over the subsidies, Democratic appointees have sided with the administration and Republican appointees have been with the challengers.

A decision is expected by late June.
 

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