There are basically two versions of the looming Supreme Court case against Obamacare. One of them makes sense but doesn't pose enough of a threat to Obamacare to satisfy Republicans. The other poses a real threat to Obamacare, but it's never made much sense — and the New York Times just blew a hole right through the middle of it.
The version that makes some sense goes like this: section 1311 of the Patient Protection and Affordable Care Act is poorly worded, and if you read it completely out of context it seems to say the law's tax credits are only available in state-run exchanges.
The problem for Republicans, as law professor Nicholas Bagley has written, is that the Supreme Court isn't going to gut Obamacare over a grammar dispute. The Court is deferential to other branches of government, so the bar for reinterpreting a law like Obamacare is high; the plaintiffs will basically have to prove that the statute is worded unambiguously and "the IRS’s contrary interpretation is downright unreasonable." But basically everything else in the bill makes clear that the IRS's interpretation is reasonable — and, frankly, correct. So simply arguing that Congress made a drafting error won't get Republicans where they want to go.
Which brings us to the second case against Obamacare, the one Republicans came up with later on: section 1311 of the Patient Protection and Affordable Care Act is worded perfectly. It was always Congress's intent to deny subsidies to federally run exchanges, no matter how much damage that would cause to state insurance markets, and no matter how firmly at odds that seems to be with a law dedicated to covering the uninsured.
The upside of this argument is that it gives the Supreme Court a reason to gut Obamacare: it needs to protect Congress's clear intent and wording against the lawless implementation of the Obama administration. The downside of this argument is that it's wrong.
The case against the case against Obamacare
This argument has baffled pretty much everyone who covered Obamacare's passage. Withholding subsidies from federal exchanges would have sparked a huge debate, because it is an absolutely insane policy idea, but there is no record of any member of Congress on either side of the aisle ever mentioning it.
Moreover, the Congressional Budget Office, which worked with Congress to produce the official cost estimates for Obamacare, always assumed that all exchanges received subsidies. That's particularly telling, because Democrats were doing anything and everything they could think of to bring down the law's projected cost — if the CBO had been overestimating the number of states that would get subsidies, Democrats would have quickly corrected their error.
In Tuesday's New York Times, Robert Pear — probably the best-sourced reporter on Obamacare — retraced his steps and conducted interviews "with more than two dozen Democrats and Republicans involved in writing the law." His conclusion: "None supported the contention of the plaintiff."
Ex-Senator Olympia Snowe, for instance, was the most hotly pursued Senate Republican because she seemed like the Republican likeliest to vote for the final bill. She was on the Finance Committee, which drafted the core legislation, and the Gang of Six, which refined it. Snowe ultimately voted against the bill, but she's unequivocal in her interview with Pear:
"I don’t ever recall any distinction between federal and state exchanges in terms of the availability of subsidies," said Olympia J. Snowe, a former Republican senator from Maine who helped write the Finance Committee version of the bill.
"It was never part of our conversations at any point," said Ms. Snowe, who voted against the final version of the Senate bill. "Why would we have wanted to deny people subsidies? It was not their fault if their state did not set up an exchange." The four words, she said, were perhaps "inadvertent language," adding, "I don’t know how else to explain it."
Pear also quotes ex-Senator Jeff Bingaman, who sat on both the Finance Committee, which drafted the main legislation, and the Health, Education, Labor, and Pensions Committee, which drafted companion legislation that was ultimately folded into the Finance bill. "In all the discussion in the committees and on the floor, I didn’t ever hear anybody suggest that this kind of distinction between federal and state exchanges was in the bill," he says.
Pear's piece underscores the absurdity of the argument against Obamacare: it asks that you believe Congress and the Obama administration built a doomsday device into Obamacare to punish states that didn't set up their own exchanges, and then never mentioned it to anyone — they kept it from the interest groups pushing for Obamacare, from the agency estimating Obamacare's cost, from the journalists covering Obamacare, from the members of Congress voting on Obamacare, from the agencies implementing Obamacare, and from the states.
And on top of all that, they are arguing that the law clearly says all this, even though no one who voted for the law believes it says any of that. As I've written before, this is less an argument than it is an attempt at a Jedi mind trick.