King v. Burwell’s shadow constitutional avoidance

It has been nearly two months since the Supreme Court upheld the structure of ObamaCare for the second time in three years. The Court rejected a vision of the law’s insurance subsidies as inducements to compel state action, affirming the availability of these subsidies to insurance consumers nationwide.

It was a resounding victory for the ACA and the Obama administration. Yet there was one curious absence from at least the surface of the Court’s opinion: there was no discussion of the troublesome constitutional implications of the challengers’ interpretation of the law and the need to avoid them.

But a closer view of the majority opinion — and its vulnerabilities raised by Justice Scalia’s dissent — shows that there might be more going on here. Though the Court seemingly avoided avoidance in King, perhaps the coercion issues nonetheless played a role in steering the Court away from the challengers’ interpretation and all of its federalism baggage.

As the challenge to ObamaCare’s subsidies wound its way through the lower courts, I advocated a sort of fail-safe argument for why the Court should endorse nationwide subsidies. This argument drew on the rule against coercing the states and the canon of statutory construction that cautions courts to avoid interpretations of laws that trigger constitutional issues. Putting these two doctrines together, I argued, should lead the Court to reject the challengers’ broadside to the ACA. It was a trump card; a last resort that struck at a potential Achilles’ heel in the challengers’ case.

I began writing about this argument on blogs and then in an amicus brief to the Court with my former professor Abby Moncrieff. Our brief’s argument gained traction at the Supreme Court’s oral arguments, drawing favorable pronouncements from both Justice Kennedy and Justice Sotomayor.

Yet when the opinion dropped, there was nothing at all about coercion or avoidance. Abby came to call avoidance the “argument that wasn’t.” But the more I think about the King opinion, the more I see shades of a more subtle form of avoidance. Ruling for the challengers would have required the Court to grapple with difficult constitutional questions, so the Court steered clear of this legal tangle and affirmed the Obama administration’s implementation of the ACA.

In our brief, Abby and I had argued that (1) Congress is constrained from imposing insurance market death spirals on states that decline to create exchanges, and (2) that this constraint comes from the Tenth Amendment’s anti-coercion principle — that Congress may not pose coercive inducements upon the states. Given the ambiguity of key phrases in the law like “such exchange,” the Court should avoid an interpretation that would threaten states with death spirals, thus affirming the availability of subsidies on all exchanges.

In the section of its opinion analyzing the “broader structure” of the ACA (the focus of my discussion here), a majority of the Supreme Court agreed with Point (1), but not on the grounds proposed in Point (2). Instead, the Court reasoned that the anti-death spiral constraint arose from the statute itself. “[T]he statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid,” Chief Justice Roberts held.

The problem for Roberts and the rest of the majority, however, is that the ACA never explicitly prohibits death spirals — that is, the anti-death spiral constraint does not arise from the plain text of the statute itself.   Just the opposite, in fact: as Justice Scalia points out in dissent, Congress explicitly enacted death spiral inducing regulations in the long-term care market and in the federal territories. “How could the Court say that Congress would never dream of combining guaranteed-issue and community-rating requirements with a narrow individual mandate,” Scalia asks, “when it combined those requirements with no individual mandate in the context of long-term-care insurance?”

Scalia’s point echoes the decision of a panel of the D.C. Circuit Court of Appeals ruling for the ACA’s challengers a year ago. To argue that Congress is still constrained from imposing death spirals on the states, one would seemingly need to look externally from the statute. One beckoning possibility is the Tenth Amendment. As I wrote last July, “states are entitled to special protections in our constitutional order that the territories and long-term care markets emphatically are not. [ ] One of these protections is the [Tenth Amendment’s] prohibition against federal attempts to coerce the states.”

So the majority could have intercepted Scalia’s objection by relying on an anti-death spiral constraint arising from the Tenth Amendment’s rule against coercion on the states. Yet the Court chose not to do so. Instead, the majority insisted on locating an anti-death spiral principle in the ACA itself, despite statutory text to the contrary. It grounded this principle in a different set of federalism considerations. Instead of focusing on top-down federalism — that is, limits on what the federal government can do to the states — the Court emphasized bottom-up federalism: the states’ roles as policy innovators and so-called “laboratories of democracy.”

In the early pages of its opinion, the Court traces the 1990s health reform efforts at the state level in New York, Washington, and Massachusetts. These states all attempted to expand coverage by imposing community rating and guaranteed issue without an individual mandate. All of these states fell far short of universal coverage, while thoroughly destabilizing their individual insurance markets. Only Massachusetts was able to successfully expand coverage and calm its insurance market by ultimately imposing an individual mandate.

In the Court’s understanding, Congress watched the 1990s reform efforts play out and lifted Massachusetts’s successful scheme for national primetime: reform based on community rating and guaranteed issue coupled with an individual mandate. Thus, Massachusetts became the national model for successful health reform.

By adopting this narrative of the legislative process behind the ACA, the Court reads an anti-death spiral principle into the law’s legislative history: If Congress wanted to turn the country into Massachusetts, then of course it wouldn’t put in place the kind of regulatory scheme that failed in New York and Washington.

However, the states-as-laboratories view of the ACA’s legislative history could have a darker spin, too. Just as Congress drew on Massachusetts as its chosen model for health reform, it could have drawn on the discredited reform efforts in New York and Washington to prod states toward establishing their own exchanges. That is, if Congress was such a keen observer of state health policy experiments, what if it had threatened the states with deliberate New York-style insurance market instability if they refused to adopt their own exchanges?

This punitive twist on states-as-laboratories federalism would be completely unprecedented — but it was exactly what the ACA challengers’ interpretation of the law entailed. As I wrote in June, such a reading of the law would “cast Congress in the role of evil scientist, resurrecting the failed experiments of the states to bludgeon its way to getting its chosen policies enacted nationwide.” This type of congressional threat would almost certainly require the Court to revisit its nascent coercion jurisprudence.

To avoid dealing with the coercion issue, the Court had to read the ACA in a broad, purpose-driven way. The Court’s thinking goes something like this: In passing the ACA, Congress’s primary aim was to expand health insurance, so it solely wanted to turn states into Massachusetts. It wouldn’t threaten some with becoming New York for the sake of promoting state-run exchanges (a deeply subsidiary goal of the law). Doing so would undermine the overarching aim of expanding health insurance coverage.

Now this is an eminently reasonable understanding of Congress’s priorities. Indeed, it’s a refreshingly broad-minded counter to the ACA challengers’ myopic hypertextualism.

But it also revives old school purposivist interpretation — a mode of statutory construction traditionally associated with liberal jurisprudence. The Court invoked the relatively barren canon of construction cautioning against negating statutory purposes, relying on New York State Dept. of Social Servs. v. Dublino, a case that has been seldom used since the 1970s, and a canon that inherently requires courts to first identify a statute’s overarching purpose based on its structure and presumed aims.

This is uncommon ground for Chief Justice Roberts and Justice Kennedy to tread. Judicial conservatives rarely rely on the supposed purpose of a statute to guide their decision-making. But in doing so in King, Roberts and Kennedy may have turned the ACA into what legal scholar William Eskridge calls a “super statute.”   Certain significant, high profile pieces of legislation are interpreted by courts with great deference to Congress’s legislative purpose. These statutes aren’t subject to plain meaning limitations, and seem to defy the typical rules of statutory interpretation.

So when Justice Scalia laments that King “changes the usual rules of statutory interpretation for the sake of the Affordable Care Act[,]” he’s not entirely wrong. The question is why the Court went to these lengths and bent some interpretive rules to arrive at its decision.

One plausible reason was that the Court really wanted to avoid delving back into coercion doctrine. At oral arguments, Justice Kennedy seemed persuaded that the challengers’ interpretation of the ACA presented a “serious constitutional problem” under the Court’s coercion holdings. Justice Sotomayor too was troubled by these constitutional implications in the challengers’ reading.

The problem with the Court’s anti-coercion principle, however, is that it opens a giant judicial can of worms. The rule against coercion is rife with line-drawing problems and malleable, poorly defined standards. Just how substantial does a federal inducement have to be to cross the line into coercion on the states? How burdensome does a conditional regulation need to be? The whole enterprise plunges the Court into endless difficulties.

Regardless of any line-drawing problems inherent in the anti-coercion constraint, it seemed crystal clear to me that threatening states with insurance markets wrecked by federal regulation — as ObamaCare’s challengers postulated — would be extremely problematic no matter where one draws the coercion-inducement line.

Rather than reckon with this outcome and revisit a vexing constitutional principle, the Court took a different route to reach the same result, upholding the ACA’s subsidies nationwide. To avoid even touching upon the coercion issue, the Court landed on an expansive reading of the ACA that, if anything, bolstered the law’s standing and reach. And it settled for reasoning with glaring weaknesses, teeing up Justice Scalia’s objections based on the federally induced death spirals in the CLASS Act and the federal territories.

Between the lines then, King might read like an odd sort of avoidance opinion after all in its contortions to avoid passing upon the coercion issues at play. Indeed, perhaps this is a pure from of avoidance: stretching alternative reasoning to avoid discussing or developing a constitutional doctrine at all. (If so, then King is the polar opposite of Chief Justice Roberts’s commerce clause opinion in NFIB v. Sebelius, wherein he fully analyzed the individual mandate’s commerce clause implications before invoking avoidance.)

This might explain some of the compromises and strains apparent in the Court’s opinion. In fact, its concluding language echoes that typically found in constitutional avoidance cases: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.” (emphasis added)

A ruling for ObamaCare’s challengers would have forced the Court to directly confront the coercion issues embedded in the challengers’ interpretation. The complexities arising from these issues only made it more difficult for the Court to contemplate a ruling for the challengers.

Justice Kennedy said at oral arguments that the constitutional considerations are “in the background of how we interpret this [law].” If coercion added a judicial hurdle — even if only in the background — that kept the Court from ruling for the challengers, then the constitutional avoidance argument did its job in King.

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