King v. Burwell: Did the Supreme Court already tip its hand?

The Supreme Court will rule this month on King v. Burwell, a case arguing that Obamacare's insurance subsidies are illegal. A decision in favor of President Obama's health-care law could solidify its place in history — but one against would throw the insurance expansion into chaos.

Up until the ruling, Vox will collect the most important news, commentary, and thoughts on what could happen — and what it means for the Affordable Care Act.

Did the Supreme Court tip its hand this week? University of Michigan's Nick Bagley thinks so. Bagley has been a keen observer of the King case, and generally pessimistic about a ruling in Obamacare's favor.

He points to some notable language in a separate bankruptcy decision, Baker Botts v. ASARCO, on the Incidental Economist:

On behalf of a six-justice majority, for example, Justice Thomas wrote that "the only way to reach [the government’s] reading of the statute would be to excise the phrase ‘for actual, necessary services rendered’ from the statute." Substitute "established by the State" and you’ve got the plaintiffs’ argument in King. Later, Thomas said that "[o]ur job is to follow the text even if doing so will supposedly ‘undercut a basic objective of the statute.’" The King plaintiffs say the same.

It’s hard to believe Thomas drafted these portions of the opinion without an eye to King. Indeed, Justice Sotomayor seemed to confirm as much. She was the only one of the four liberals to vote with Thomas, and she wrote separately to emphasize that "there is no textual, contextual, or other support" for the contrary interpretation. That word "contextual" is all over the government’s briefs in King; it’s a signal that Sotomayor doesn’t buy into the rigid textualism that Thomas’s opinion displays.

While Bagley thinks the language here is important, he cautions against reading too much into it; this isn't, in other words, Obamacare's death knell.

"Consider the Court’s internal procedures, too," he writes. "When Thomas circulated his draft opinion in Baker Botts, the Chief and Kennedy would have seen immediately that it included language tailor-made for King. If they were poised to rule for the government in King, would they have asked Thomas to excise that language before they signed on?"

No, King can't kill Obamacare — Ezra Klein makes the argument:

It's common for reporters to say that SCOTUS might "gut" or "destroy" Obamacare — a shorthand for the very real, and truly devastating, consequences of cutting off insurance subsidies in 34 states. I've probably used the formulation myself. Those consequences are real, and for the newly insured, scary. But — in another divergence from the individual mandate case — states can choose whether to face them.

Greg Sargent has similar thoughts:

The absolute worst-case scenario you can envision unfolding from an adverse ruling is a considerably less awful outcome. Put simply, it’s very plausible the health care system would continue progressing towards universal health care in around 16 to 18 mostly blue states, while in many red states, something approaching chaos would set in, at least in the short term.

The Republican response plan is all about block grants — Megan McCarthy and Jon Reid write in the Morning Consult that House Republican leadership will, in the wake of a ruling for plaintiffs, propose a plan "that would send money directly to the states and let them decide how to regulate their insurance markets." How do block grants work? Of course we have an explainer on that.

"An underwriting nightmare": Obamacare critic calls out Republican plans as a mess — Health business expert Robert Laszewski is generally no fan of Obamacare. He was an especially outspoken critic during Healthcare.gov's disastrous rollout. This makes his criticism of the Republicans' post-King plans especially notable.

" What we so far know about these proposals is clearly unworkable in the market and would lead to very big and unfortunate unintended consequences," Laszewski writes on Forbes. He describes one specific proposal as "an underwriting nightmare for the insurance companies leading to much higher prices and fewer options for consumers during the transition period.

Relatedly:

I have a hunch this won't get Bob Laszewski invited back on Fox News any time soon. http://t.co/hiEFuqQ2ER

— Jeffrey Young (@JeffYoung) June 18, 2015

Map of the day

One good proxy for understanding a state government's openness to restoring subsidies in case of a King win is whether the state has opted in to the health law's Medicaid expansion.

In that vein, this map might be the most plausible post-King landscape. It shows the states that have been open to participating in Obamacare by building an exchange or expanding Medicaid (or having a plan to expand Medicaid) — and the states that have outright refused.

Investors on King: ¯\_(ツ)_/¯ — Hospitals could arguably be some of the biggest losers in a decision against Obamacare. If enrollees drop their coverage, that means more uninsured people who don't pay their bills.

But at least right now, hospital investors don't seem especially fazed by the looming decision. Josh Green at Businessweek has been looking at how stocks for the largest hospital chains are doing, and the short answer is just fine.

HCA is most exposed. Here’s its stock price + trading volume over last 3 months: pic.twitter.com/sTXFGEJupz

— Joshua Green (@JoshuaGreen) June 19, 2015

Q&A time: send me your questions! Have a question about the King decision? Email me at sarah.kliff@vox.com. And in the meantime, here's one that turned up in my inbox today: "If the Supreme Court rules subsidies illegal, doesn't the IRS have to get the subsidies back from the people in affected states?"

The likely answer here is no. Right now, IRS rules allow federally run exchanges to hand out subsidies, so Healthcare.gov is following the law. In the case of King going for the plaintiffs, the IRS will likely promulgate new rules saying those subsidies are not allowed, and then they would stop. It's possible the Supreme Court could make its decision retroactive because, well, the Court can craft its decision however it likes. But the smart observers I talk to on both sides of the case don't expect to see a decision like that.

That's all until next time. Well, except for this (hat tip to Harvard's Emma Sandoe for yesterday's most excellent pun).

(Shutterstock)

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