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The Five Most Likely Outcomes in the Supreme Court Obamacare Case

Allison Shelley / Getty Images

By Monday, but possibly as early as this morning, we’ll know how the Supreme Court decided King v. Burwell. Its ruling in that case will determine whether the Affordable Care Act continues operating as designed, or whether its most zealous opponents successfully convinced five conservative justices to discontinue the law’s crucial tax credits in states that use federally facilitated exchanges.

Because the formula for determining the value of those subsidies is tied to the price of insurance purchased through an “exchange established by the state,” Obamacare’s challengers argue that the value of subsidies for insurance purchased through a federally facilitated exchange should be $0. This incomplete calculation ignores abundant contextual evidence showing that the ACA’s authors crafted federal exchanges to be identical substitutes for state-created exchanges.

Whether the justices choose to admit that evidence will determine whether the health care law survives or becomes crippled in about three dozen states. But the holding won’t be as simple as thumbs up or down. The way the majority crafts its decision could carry important ramifications for law and politics well into the future. Here are the most plausible outcomes.

The Government Wins

Any decision that keeps subsidies flowing to federally facilitated exchanges will be described as a victory for the government. But such a decision could take different forms, with wildly different implications.

1. Clear language

The Court’s first task will be to determine whether the statute is unambiguous with respect the issue at hand. Does the law clearly authorize subsidies in all states? In oral arguments, liberal justices suggested that they believe it does. “The statute tells the Secretary [of Health and Human Services] to set up such exchange—namely a 1311 State Exchange. And there’s nothing else in this statute,” said Justice Stephen Breyer. “So what’s the problem?“

If four other justices think Breyer’s right about this, then the government will win conclusively, the challenge will be completely repudiated, and the story will be over.

As welcome as this result would be, it’s also one of the most unlikely. Several liberal judges in lower courts were persuaded that the law is in fact ambiguous. And none of the conservative justices betrayed a sense that the challenge is without merit during oral argument. Without at least one of their votes, this opinion is unlikely to carry.

2. Deference

What if some or all of the liberal justices believe the law is clear, but can’t convince a fifth? The issue will then turn on whether any of the conservative justices believe the statute is ambiguous. The so-called Chevron doctrine compels the Court to defer to agencies when they adopt plausible interpretations of ambiguous statutes. If the text of the ACA is unclear, but the Obama administration’s interpretation of it is permissible, then it should stand. The court’s four liberals could join one or two conservatives in according the administration deference, while issuing a concurrence arguing that the law has been implemented exactly as the law prescribes. The government would win but the King story would not be over. As Chief Justice John Roberts noted in a possibly telling interjection during oral arguments, “that would indicate that a subsequent administration could change that interpretation.” And Republican presidential candidates would be off to the races.

3. Avoidance

Imagine this administration, or a subsequent one, embraced the challengers' interpretation, and discontinued the subsidies out of the clear blue? Millions of people would lose their health plans. Insurance markets in over 30 states would begin to unravel. Chaos would ensue. States that were previously disinclined would come under immense pressure to establish exchanges. Wouldn’t this suggest, as Justice Anthony Kennedy stated in oral arguments, “that they’re being coerced?”

If so, the government could conceivably win in a slightly different way. A majority would deem its interpretation the only viable one by default, because the challengers’ interpretation, while textually plausible, raises constitutional concerns. Depending on how explicitly and broadly they detailed those concerns, the justices would be inviting new legal challenges to different federal regulatory laws, rather than tossing Obamacare back into the political realm. However, it’s unlikely that the Court’s four liberals would join an opinion that carries far-reaching constitutional implications.

The Government Loses

1. Clear language

On the other hand, five conservative justices could determine that the text of the law is clear in the other direction, and that the law as written doesn’t authorize subsidies to flow through federally facilitated exchanges. The government would almost certainly lose, and a political maelstrom would follow. But the legal story wouldn’t necessarily end either.

2. Doomsday

As Simon Lazarus explained here recently, the Court’s five conservatives could theoretically combine their famous distaste for coercion with their even more famous distaste for Obamacare and place both Obamacare, and potentially many other laws, in constitutional crosshairs.

Since Kennedy believes that, so understood, the exchange provisions would raise a serious constitutional question, that would mean either that he would simultaneously, in King itself, hold those provisions unconstitutional, or would in effect be aiming to provoke a new round of lawsuits that would directly pose that question. In either event, were five justices to rule the exchange provisions a “gun to the head” threat, that could, given the centrality of tax credits to the overall scheme of the ACA, put much of the rest of the law in legal as well as practical jeopardy.

If the law is written to withhold subsidies from non-capitulating states, and that makes it unconstitutionally coercive, then absent a legislative intervention the Court would ultimately have to grapple with how to sever provisions of the law in a way that meliorates the constitutional issue. This could be accomplished by removing the words “established by the state,” but there’s no indication that five justices would agree to such a peculiar ruling. It could be accomplished by doing great violence to the law or voiding it entirely, but this possibility wasn’t remotely suggested by anything discussed at oral arguments.

Lazarus adds that “there is little basis for taking this doomsday scenario seriously,” and he is correct.