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The catch in the Supreme Court's Obamacare ruling

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(Bloomberg View) — Thursday’s Supreme Court decision to uphold a pivotal regulation under the Affordable Care Act is, of course, a tremendous victory for the Barack Obama administration. But it also establishes a principle that’s likely to haunt future presidents. (Disclosure: As administrator of the Office of Information and Regulatory Affairs from 2009 to 2012, I worked on, and helped oversee, the regulation at issue in the case.) 

The underlying question is which branch of government has the power to interpret ambiguous legislation. Since the Supreme Court’s 1984 decision in Chevron v. Natural Resources Defense Council, the executive branch has been allowed to adopt its own interpretations, as long as they’re reasonable. And because so many laws are ambiguous, this “Chevron principle” has given great authority to executive agencies and the president. 

See also: Fed to study insurance reg rulesCourt issues contradictory ruling on PPACA plan subsidies and No Clarity On Indexed Life From Appeals Court

But the Chevron principle has been highly controversial, not least within the court itself. Several justices, including Chief Justice John Roberts, have searched for ways to limit it. One of these, which the court as a whole has never clearly embraced, is that if the issue has a great deal of “economic and political significance,” then the Chevron principle doesn’t even apply. If so, courts should interpret the law on their own without paying the slightest attention to what executive agencies say. 

Writing for the court, Roberts today entrenched that principle. His opinion upheld the Internal Revenue Service regulation allowing subsidies for qualified people buying health insurance on the federal exchange, but did so without giving any deference to the IRS. He declared unambiguously that it is “our task,” and not that of the executive branch, “to determine the correct reading.” 

In asserting this power while upholding the regulation, Roberts did something reminiscent of his great predecessor, Chief Justice John Marshall. In Marbury v. Madison, Marshall established the court’s power of “judicial review” — that is, its authority to strike down legislation. In Marshall’s words, it is “emphatically the province and duty of the judicial department to say what the law is.” But ingeniously, he so said in the course of a decision that ultimately upheld the law in question (a provision of the Judiciary Act of 1789). 

Harvard professor Robert McCloskey has described the Marbury opinion as “a masterwork of indirection, a brilliant example of Chief Justice Marshall’s capacity to sidestep danger while seeming to court it, to advance in one direction while his opponents are looking in another.” 

Robert’s impressive opinion today was not quite that dramatic, but it is a masterwork of indirection. It’s already being seen as a final vindication of Obamacare. But it is also a strong assertion of the court’s, and not the executive branch’s, ultimate power to say what the law is.

To contact the author on this story: Cass R Sunstein at [email protected] To contact the editor on this story: Mary Duenwald at [email protected]

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