Obamacare will have its day in court, again.

Photographer: Drew Angerer via Getty Images

Obama's Lawyers Can Save Obamacare

Noah Feldman is a Bloomberg View columnist. He is a professor of constitutional and international law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “Cool War: The Future of Global Competition” and “Divided by God: America’s Church-State Problem -- and What We Should Do About It.”
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The Affordable Care Act challenge that the U.S. Supreme Court will consider later this year, and presumably decide in June, could be the biggest case of the year. It will definitely be the most important statutory interpretation case in a long time. It's tempting, therefore, to depict it as a battle royale between the two leading theories of statutory interpretation that have been fighting it out at the court for the last two decades, known to cognoscenti as textualism and purposivism. I've certainly tended to see it that way, and in a column this week I suggested that two textualist statutory interpretation decisions written by Justice Antonin Scalia might provide a preview of what's coming.

In response to my column, I got polite but insistent e-mails from a range of scholars and legal activists urging me to think again. Although reasoning from different premises, my correspondents agreed on one thing: The Obamacare case, King v. Burwell, shouldn't be seen as a conflict between interpreting the text of the statute and interpreting the statute’s underlying purpose. Instead, they said, the case is about a conflict between the text of one fragment of the statute taken out of context and the text of the statute taken as a whole.

Is that true? And if it is, does the difference matter? The answer, I think, reveals something striking about how the Supreme Court's ideas of statutory interpretation have been changing in the era of Scalian ascendancy.

It turns out that the Department of Justice lawyers who have been arguing the ACA case in the federal courts have scrupulously avoided using the language of purpose. Presumably, they are confident they can get the votes of the four Democratic appointees to the court, who are in principle at least somewhat open to the idea of legislative purpose as relevant to statutory interpretation. To win the case, however, the Department of Justice needs a fifth vote. That vote will have to come from one of the conservatives. And the Department of Justice wants that conservative, whoever it may be, to be able to argue with a straight face that his decision (it has to be a he) depends on the text of the statute and not its purpose.

In other words, for reasons of tactics, Barack Obama's Department of Justice is conforming to a conservative view of legal doctrine and actively avoiding what might be the most compelling argument in favor of its interpretation of the statute.

Health Insurance Exchanges

A brief word on the details of the case: You may recall that it’s about the state-level health insurance exchanges that the ACA set up and on which its ability to deliver insurance depends. The law authorized state governments to create the exchanges. The ACA also contemplated the possibility that states would fail to create the exchanges, and authorized the federal government to establish exchanges on behalf of the states if they didn't act.

The trouble arose with a single sentence of the ACA, one connected to a crucial feature of the exchanges. Once they are created, the states receive subsidies in the form of tax rebates that go to their residents who buy insurance on the exchanges. In that context, the law refers to an “Exchange established by the State.”

The clever anti-ACA lawyers hit upon these words. They argue that the subsidies are only available to exchanges that are literally established by the state. Consequently, they reason, when the federal government establishes the exchange on behalf of the state, the subsidies aren’t available. And if the subsidies aren't available, Obamacare may collapse. The U.S. Court of Appeals for the D.C. Circuit agreed with the ACA opponents in a 2-1 decision called Halbig v. Burwell.

What's the argument on the other side? Here's where things get really interesting. You would think that the best argument derives from common sense: Congress couldn't possibly have drafted the ACA in such a way that if states don't create their own exchanges, the whole health-care plan fails. Indeed, there would be no reason at all to provide for the creation of  a health-care exchange by the federal government if this absurd condition were to apply. For this reason, some observers have thought that the phrase “established by the State” should be considered a statutory “glitch” or drafting error. (Interestingly, that view has been shared by both some supporters of the law and some opponents.)

But that's not the argument the Department of Justice has chosen to advance. Rather, the Justice lawyers insist on using the text of the statute to establish the counterargument. Their best textual argument refers to the creation of the exchanges by the federal government. In the relevant provision, the law says that the federal government shall “establish and operate such Exchange within the State.” The Department of Justice says that the words “such Exchange” (with the capital letter) proves that the federally created exchange is in fact a state exchange for purposes of the law. In addition, it argues that other provisions of the law as written would be rendered meaningless if “established by the State.”

This argument is probably correct, and it’s at least plausible. But on its own, it also leaves the possibility that a close textual reader might conclude not that the two texts work in harmony, but that they contradict each other. Once a contradiction is believed to exist, you'd think it would be a logical time to introduce purpose.

But the Justice lawyers won't do it -- because they think they can't if they want to win. The stakes are high, and I'm sympathetic to the idea that zealous lawyering means making the argument most likely to win. But we should also keep in mind the long-term costs associated with conceding to the logic of textualism and its refusal to consider purpose. If the Department of Justice loses, the court's opinion may well say that the case was all about the text and nothing but the text. By avoiding the logic of purpose, the Supreme Court might be able to turn the law upside down. And that, if it happens, will be a great argument against textualism.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Noah Feldman at nfeldman7@bloomberg.net

To contact the editor on this story:
Stacey Shick at sshick@bloomberg.net