In this week’s Elon Law Now faculty commentary series, Professor of Law and Senior Scholar Steven Friedland examines the significance of the U.S Supreme Court’s reasoning in its historic Affordable Care Act decision in King v. Burwell.
Professor Friedland’s commentary follows:
“What difference can six words really make? In the instance of ‘an exchange established by the State,’ the words could and did mean everything to the survival of a federal law 1990 pages long with almost 20,000 pages of associated regulations. What law? The Patient Protection and Affordable Care Act, (ACA), also commonly called, ‘Obamacare,’ after the president who championed it. The Supreme Court accepted the case of King v. Burwell in its 2014-2015 term to decide what those six words meant, and effectively, whether a major provision of the law would be undermined.
“Let’s begin with some background. The ACA was enacted in 2010 amidst great fanfare and controversy, creating health care exchanges, really online marketplaces, through which individuals could obtain health insurance based on subsidies. More than 10 million individuals are estimated to have participated across the nation in these exchanges. The federal government created an exchange and gave states the option of creating their own exchanges or using the existing federal exchange. Most states opted to use the federal exchange.
“This is where it gets tricky. If people chose not to participate who were eligible, they would be penalized or taxed. Several people in Virginia, including Mr. King, challenged the part of the law stating that subsidies are available to people who participate through ‘an exchange established by the state,’ arguing that the Virginia exchange was actually not established by the state, but rather by the federal government, and therefore the challengers did not have to participate and get insurance. If the challengers won, this would arguably mean that the residents of the more than 30 states that use the federal exchange would not be subject to penalties if they opted out and did not participate. A likely consequence of such a freedom not to obtain health insurance would be the diminishing participation of healthy young individuals, and a resulting large increase in rates to cover the unhealthy and older individuals who still sought insurance. The prognosis for the law overall if this opt-out occurred would not be positive.
“In a 6-3 decision, the majority of the Supreme Court interpreted those six words to mean what they didn’t exactly say. The Court showed how complex and interesting the interpretation of words could be. The Court found that the words, ‘an exchange established by a state,’ while at first glance not appearing to include the federal government and its exchange, were ambiguous and needed the context of their framers’ intent to interpret them. The Court held that the law was intended to apply to all exchanges used, including the federal exchange, even if the states did not actually create the federal exchange. The Court used a canon or method of interpretation that started with the plain meaning of the words of the statute and then progressed to determining the intent of the authors of those six words – the Congress. The Court said that Congress wanted all states to be covered by the ACA, not just those states using health care exchanges of their own creation. In essence, what Congress intended governed, not what it wrote; context was king.
“Cases create strange bedfellows. The author of the majority opinion in this case was none other than Chief Justice John Roberts, who, after upholding the Act against a challenge for the second time, could certainly be called the chief protector of the ACA.”
Elon Law Now is an ongoing faculty commentary series on legal news and current affairs.
Steven Friedland, professor of law and senior scholar at Elon University School of Law, has served as an Assistant U.S. Attorney for the District of Columbia and as an Assistant Director of the Office of Legal Education, National Advocacy Center, for the U.S. Department of Justice. His books on Evidence Law, Constitutional Law, Criminal Law and Procedure and Law School Teaching have been published by the West Publishing Company, Aspen Press, Lexis Publishing Company, and Carolina Academic Press. He has won numerous teaching awards at several law schools over three decades and was named one of the best law teachers in America by the Harvard University Press book, What the Best Law Teachers Do. Friedland holds a juris doctor degree with honors from Harvard Law School, as well as master of law and doctor of the science of law degrees from Columbia University Law School, where he was a Dollard Fellow in Law, Medicine and Psychiatry.