(Bloomberg View) — Opinions about the big Obamacare case the Supreme Court heard this week are highly polarized. But the court could find a way to split the difference between the conservative and liberal readings of the law — and that might be the worst of all worlds.
The case, known as King vs. Burwell (Case Number 14-114), hinges on the wording of the Patient Protection and Affordable Care Act (ACA). The law authorized federal subsidies to help people buy health insurance on state exchanges. Some states didn’t set up exchanges, and let the federal government do so for their residents instead. Conservatives argue that those states are now being illegally subsidized, because the wording of the law is specific to state exchanges. Liberals argue that this amounts to a typo and the subsidies should continue.
The court could end up ruling for both sides. It could find that the conservative reading of the law — that states must create exchanges if they want the subsidies — is right. But it could also say that the federal government has no right to set that kind of condition on states — that doing so would violate the constitutional principle of federalism. By that logic, the subsidies could be allowed to continue.
The justices reached a similar conclusion when they considered a challenge to Obamacare in 2012. The law as originally written tried to get states to expand Medicaid to new beneficiaries by yanking all federal funding if they refused. The court ruled that such a threat was unconstitutional coercion. It rewrote the law so that states that didn’t expand Medicaid could keep getting federal money for their existing beneficiaries. They would only miss out on the extra federal funds they would get for signing up new ones.
This time, the White House is making a softer version of this argument before the court. It’s saying that the law doesn’t require states to set up exchanges if they want federal money, and that if the justices were to rule otherwise they’d be raising constitutional issues.