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On Tuesday, Justice Anthony Kennedy blew a gaping hole in the latest Supreme Court case against Obamacare — but perhaps not quite in the way he, or most observers, thinks.
Kennedy observed something interesting: if Obamacare works the way the plaintiffs say it works, then recalcitrant states are being punished so brutally that it may well be unconstitutional. "If your argument is accepted," he said, "the States are being told either create your own Exchange, or we'll send your insurance market into a death spiral."
The comment has excited Obamacare's supporters, as it seems to suggest Kennedy is leaning in the law's favor. But his comment is interesting for more than its constitutional implications: it's a reminder of how bizarre the plaintiffs' case really is.
How Obamacare could work — but doesn't
It's easy to imagine a version of Obamacare designed to force states to build their own exchanges. It would work like this: either the state builds an exchange, or it doesn't. If it doesn't, then there is no exchange, and no money.
This would be similar to what Congress tried to do with Medicaid (though the Supreme Court later ruled the mechanism unconstitutional). There, too, it gave states a choice: either accept the Medicaid expansion, or lose all your Medicaid money.
But the plaintiffs say the government attempted something much crazier: either the state builds an exchange, or the federal government comes in and builds a booby-trapped exchange that basically destroys the insurance market in that state.
A motivation that doesn't motivate
The plaintiffs' argument for why the federal government did this is because they really, really didn't want to build and run federal exchanges. The mechanism was meant to force states to do the work themselves. But the plaintiffs hold that rather than simply do the obvious thing and write the law without any federally run exchanges, Congress instead directed the federal government to build and run crippled, booby-trapped exchanges that would detonate and leave the state's insurance market in tatters.
The plaintiffs' lawyer, Michael Carvin, tries to deny this fact. "There's not a scintilla of legislative history suggesting that without subsidies, there will be a death spiral," he told the Court.
But Michael Cannon, one of the architects of the King v. Burwell case, knows better. The reason he was so interested in the lawsuit, he told Vox, was that removing the subsidies would kick out "one of the three legs of Obamacare's three-legged stool."
The "three-legged stool" refers to the idea that for an exchange to work, it needs three things: regulations that force insurers to sell to everyone, a mandate that forces even young and healthy people to buy insurance, and subsidies to make that insurance affordable. No subsidies, no affordability. No affordability, no critical mass of young and healthy people. No critical mass of young and healthy people, no way to avoid a death spiral.
That's what happens when you remove a leg of a three-legged stool: the stool falls over.
Obamacare was not designed to fail
The goal of the Affordable Care Act was simple: cover as many people as possible. The secondary goal was also pretty simple: slow the rise in health-care prices so more people can afford insurance.
The plaintiffs' contention is that there was a goal Congress cared about more than either of those two: punish states that didn't build their own exchange. This is not something any member of Congress said during the drafting or voting of the Affordable Care Act, it is not how any state interpreted the Affordable Care Act, and it is not how the federal government implemented the Affordable Care Act — but the plaintiffs holds that this was, nevertheless, the clear intention of the Affordable Care Act.
There was a version of this case that didn't insult the intelligence of everyone involved. In this version — the original version — Congress' intent was clear, but the statute was poorly worded, and Republicans were going to try to use that mistake to cripple the law. Fair enough.
But somewhere along the way, the case's advocates decided that wasn't enough. They needed to prove not just textual ambiguity, but also legislative intent. The result has been an effort that looks more like an extended attempt at a Jedi mind trick than a serious argument over the law. It's left pretty much everyone who either was involved in Obamacare's passage or who watched it closely agog.
What Kennedy's comments speak to is that when you zoom out for a minute and look at what is actually being alleged, it is a mechanism so insane, so draconian, that it may well be unconstitutional. It is also a mechanism that everyone involved in Obamacare swears up and down they never considered, a mechanism that no one implementing Obamacare ever used or even mentioned, and a mechanism that no state was ever told about.
So the argument, basically, is that Congress and the Obama administration booby-trapped the law and then never brought it up. They cared so deeply about forcing states to build their own exchanges that they created a doomsday device against states that didn't, but they didn't care enough about convincing states to build their own exchanges to tell the states about it.
If this all sounds crazy, it's because it is crazy. But then, this isn't what's in the law. King's plaintiffs just want to make people think it is.
