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Health care of 8 million on the line as Supreme Court hears ACA case

The Supreme Court will decide whether a phrase in the Affordable Care Act was meant to exclude people who bought health insurance on the federal exchange from receiving tax credits. Marcia Coyle of The National Law Journal offers a look at the arguments, plus Judy Woodruff talks to Neera Tanden of the Center for American Progress and Michael Cannon of the Cato Institute for two takes on the case.

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  • JUDY WOODRUFF:

    A major challenge to the health care law at the Supreme Court today.

    NewsHour contributor Marcia Coyle of The National Law Journal was there.

    And this is the day everyone's been waiting for.

  • MARCIA COYLE, The National Law Journal:

    Big case, Judy.

  • JUDY WOODRUFF:

    So, Marcia, we know the court has already weighed in on the constitutionality of the health care law. So, remind us, who brought this complaint and what was it about?

  • MARCIA COYLE:

    All right, Judy, this is what we call a statutory interpretation case. It involves the justices looking at a provision in the Affordable Care Act and deciding what it means, what Congress intended in the context and text of the law itself.

    This challenge to it was brought by four Virginia residents who claim that there is a provision in the law that says federal subsidies or tax credits for low- and middle-income Americans are available only on exchanges established by the state. They claim that that doesn't include subsidies for purchases on exchanges that the federal government creates.

    The act allows the federal government to step in and create exchanges when a state opts not to. And, as you probably know, only 16 states have created their own exchanges; 34 states opted for the federal government to come in and set up an exchange.

  • JUDY WOODRUFF:

    So it sounds like — and it sounds like the justices just jumped right in and started asking questions right away.

  • MARCIA COYLE:

    I'm going to boil down Mr. Carvin's very lengthy argument, and with apologies to him, and say he made basically two arguments here.

    First, the language, exchanges established by the state, the plain language dictates a result in favor of his client. His second argument was Congress intended to limit the subsidies to state exchanges in order to induce the states to create their own exchanges. Basically, you don't create the exchange, you don't get the federal money.

    His plain language argument immediately drew fire from Justices Breyer, Kagan and Sotomayor. Justice Kagan said, it's not so simple that you focus just on a few words in a phrase. The court looks at the phrase in the context of the entire statute to see if it's harmonious, if it makes sense.

    Justice Sotomayor pointed out that, under Mr. Carvin's and his clients' interpretation of the act, there would be consequences that Congress could not have intended and, in fact, the law was designed to avoid. Without federal subsidies on federal exchanges, those exchanges would have no customers. There would be a death spiral. Healthy people wouldn't buy insurance. Insurance costs would skyrocket.

  • JUDY WOODRUFF:

    Now, what is the government's response to this when it was their turn?

  • MARCIA COYLE:

    The government represented by Solicitor General Donald Verrilli.

    And he agreed with the more liberal justices that the traditional way to interpret a statute is to look at the phrase at issue in the context of the entire statute. He said the consequences that Justice Sotomayor enunciated clearly show that this was — that the challengers' interpretation wasn't the statute that Congress intended.

    But he faced his toughest questioning from Justices Scalia and Alito. Justice Scalia said, well, it may not have been the statute Congress intended, but the question, is it the statute that Congress wrote? And where the language is clear, he said, the court — clear and unambiguous — the court doesn't rewrite the statute.

  • JUDY WOODRUFF:

    And you were just telling me, Marcia, that it looks as if two justices, in particular, are going to be the ones to determine what happens here.

  • MARCIA COYLE:

    I think, at the end of the argument, it looked as though the decision might well rest with Chief Justice Roberts, who said virtually nothing during the arguments — he was very quiet — and Justice Anthony Kennedy, who raised with the challengers what he called a serious constitutional problem with their argument that the Congress intended to induce the states to create exchanges by limiting subsidies to state exchanges.

    This, he said, could be coercion, the kind of coercion of the states that violates the Constitution. So I think those two justices are the ones that may well hold the balance here.

  • JUDY WOODRUFF:

    Marcia Coyle at the court, thank you.

  • MARCIA COYLE:

    My pleasure, Judy.

  • GWEN IFILL:

    We take a broader look now at the case with Michael Cannon, director of health policy studies at the Cato Institute, and Neera Tanden, president of the Center for American Progress. She is a former senior adviser to President Obama and helped write the Affordable Care Act.

    Let's take a little con — let's go for a little context here. Was the administration, in putting these four words that Marcia was just talking about, into this act, was it intentionally trying to conceal or was it an unintentional loophole?

    NEERA TANDEN, Center for American Progress: I actually think it's neither, if you look at what we were deliberating on.

    And, again, there was hundreds of hours of hearings, thousands of hours of discussion in Congress on this issue. The debate that we were having at the time was about where the exchanges, the parameters of the exchanges would be. And we were discussing regional exchanges, the national exchange and the state exchanges.

    And this is very clear. The word is — the concept was state exchange. And the reason there was the creation of the federal fallback was to have subsidies available to everyone, regardless of whether a state chose to establish its own exchange or not.

  • GWEN IFILL:

    But, Michael Cannon, your argument is that federal fallback itself is the problem.

  • MICHAEL CANNON, Cato Institute:

    Well, the problem is that the IRS tried to expand its power under this law by imposing the law's mandates, its taxes on about 57 million people who are by law exempt, and by issuing the disputed subsidies in states with federally established exchanges.

    The law is very clear. It says in multiple places that were added in multiple stages during the legislative process that those subsidies and the taxes that they trigger occur only — quote — "through an exchange established by the state."

    There's no similar language authorizing those measures in federal exchanges. In fact, the statute is quite clear that state-established exchanges and when the federal government establishes an exchange, it's established by the secretary of health and human services, who is not a state. And so there's a clear bifurcation between the two when it comes to the subsidies.

  • GWEN IFILL:

    Let me ask you both about Justice Kennedy, who is the one person today in the arguments who made everybody on both sides probably nervous, in your case because he said he was concerned about the impact if suddenly these subsidies had been made available in a couple of, three dozen states suddenly went away.

  • MICHAEL CANNON:

    Well, that doesn't make me nervous for a couple of reasons.

    One, he only gets to that analysis if he has agreed with the plaintiffs that the text of the statute is clear. And it appeared that he does agree, and he had a lot of skepticism for the government's argument that the court should defer to the IRS' interpretation and expansion of the statute.

    But even if he finds that the statute is clear and the plaintiffs are correct, if he says that that's an unconstitutionally coercive condition that Congress placed on these exchange subsidies, well, then that would create new constitutional law, that would call into question the constitutionality of any number of programs, including the Medicaid program.

  • GWEN IFILL:

    Obviously, you can respond to that, but I also want you to respond to Justice Kennedy's concerns about IRS overreach.

  • NEERA TANDEN:

    You know, I was actually very heartened by Justice Kennedy's arguments, because I think he asked some questions about the IRS. Solicitor General Verrilli responded very clearly.

    But he, both in his questions to the plaintiffs and to the government, raised this issue that a number of the — a number of justices followed up on, which is the conception that the plaintiffs want us to believe is that the federal government, that the Congress passed a law that basically said to every state, you're going to have all these requirements on insurance. If you don't choose not to — if you don't set up an insurance exchange yourself, you still have to have those requirements on your insurers, which will raise the cost of insurance in your state and could create death spirals, and according to insurers who have filed will raise costs for people outside the exchanges, and, at the same time, there will be no subsidy for them.

    So you're going to leave millions of people harmed in these states. And the most important point — one of the most important points, I think, came out in the solicitor general's arguments, is that not a single state during the rule-making process noted, complained, said a word about this problem ,because they didn't see it, because it has been, frankly, an argument made out of whole cloth by judicial activists who have not been able to get their Congress to pass what they would like to have happen, so they have used the courts.

  • GWEN IFILL:

    Michael Cannon, is there a legislative remedy, instead of the courts?

  • MICHAEL CANNON:

    Well, certainly.

    In fact, one of the benefits, I think, of ruling for the plaintiffs in this case is it would create an opportunity for better health care reforms than what we have seen over the past five years.

  • GWEN IFILL:

    And you base that on what, on what action that Congress has taken so far?

  • MICHAEL CANNON:

    What would happen if there's a ruling for the plaintiffs is that a lot of people would see the full cost of the regulations, the mandates that the Affordable Care Act imposes on them, and there would be a lot of dissatisfaction with that.

    And the would create an impetus for reform, for change. Now, a lot of the people who supported the passage of this law don't like that idea. They don't want those costs to be transparent. They want the law to operate another way. What that basically tells us is, they're having buyer's remorse. They didn't know what was in the law before they passed it.

    Now that they see how it works, they don't like it any more than anyone else does. But if there's more public dissatisfaction about the law, then that does create an opportunity for low — for reforms that actually lower health care costs.

  • GWEN IFILL:

    There are very — only a few seconds left, but I want you both to clear something up for people watching this at home. Is this a political debate that is happening at the Supreme Court about the worth itself of Obamacare after the Supreme Court upheld it or is this something else?

  • NEERA TANDEN:

    So, could I just briefly respond?

  • GWEN IFILL:

    Very briefly.

  • NEERA TANDEN:

    Very briefly respond that it's not that someone else is doing this. The Supreme Court would decide to take health care away for millions of people. Nearly nine million people would lose health care coverage.

    So, that is the result of the — what the Supreme Court would do. If you look at what has happened in the Congress in the last several months, including last Friday, it's hard for me to believe that they would do a quick fix. And I think that's one of the reasons why we see this as a political fight.

  • GWEN IFILL:

    Mr. Cannon, brief final word.

  • MICHAEL CANNON:

    If that happens, that's because that's what the Affordable Care Act is. That's how the Affordable Care Act works and we should change it.

  • GWEN IFILL:

    Michael Cannon of Cato and Neera Tanden of the Center for American Progress, thank you both very much.

  • MICHAEL CANNON:

    Thank you.

  • NEERA TANDEN:

    Thank you.

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