Q&A: University Professor Carl Schramm on Affordable Care Act Decision
In a 6-3 decision that many predicted to be the death knell of so-called Obamacare if it had gone the other way, the U.S. Supreme Court on Thursday upheld federal tax credits for eligible Americans living not only in states with their own exchanges under the Affordable Care Act (ACA), but also in the 34 states with federal marketplaces. University Professor Carl Schramm, who taught a seminar on the ACA to students at the College of Law (one of the few courses devoted to this subject at any law school), shares his views of the case and its outcome.
Q. It was widely predicted that the ruling in King v. Burwell would swing the other way. Did you foresee this outcome? Why or why not?
A. I was betting that the ruling would come out this way. A recent case saw some hedging on statutory interpretation by several of the justices; I saw this as protecting themselves from being seen as inconsistent. Further, I never thought that the chief justice had made a “mistake,” as some have said, in finding a tax-related justification [for upholding the statute] the first time the ACA had been heard. I had a sense that the external push on the justices in the media about the alarming consequences of overturning Obamacare was effective before, and the push continued. The justices, as it was once said, do read the newspapers.
Q. Can you explain the state exchanges that were at the heart of the lawsuit?
A. It comes down to a few words in the statute. The states had the option of starting insurance pools, really public companies, to sell insurance. If they did, they would get subsidies from the federal budget. States have been baited for four decades into accepting federal guidance in Medicaid in this manner. Policy makers on the left presumed that offering incentives would do the trick. But, surprisingly, many governors and state legislatures balked. They did not institute exchanges because they saw that the federal regulations of health care provision would be a denial of fundamental liberties to patients and providers in their states. This quarrel is not resolved by the King case.
Q. What was the legal principle on which the majority made its ruling? Do you believe it is legally sound?
A. In my opinion, there is no principle involved. The Supreme Court apparently just wanted to make the Affordable Care Act statute work, and ignored the principal of reading plain meaning as the rule of interpreting statutes. One avenue of “reasoning” is not really legal at all. The majority opinion turns to several economic studies to say that if the court overturned the statute, severe economic hardship would descend on uncovered individuals. Ironically, there are now more uncovered individuals than when the ACA passed.
Q. The Affordable Care Act has been subject to many legal and legislative challenges since its inception. Will this latest ruling change all that, or will it spur more challenges?
A. We must remember the law was rammed through the Congress. Many of those who voted for it have left Congress, punished by voters. The law will continue to arouse anger among a wide range of citizens. The government continues to allow, unfairly, selected groups to opt out of coverage or avoid penalties for having, in the government’s view, too much coverage. Many big labor unions have enjoyed this exemption. The scheme has driven health care costs upwards. Look at the market surge of stocks in hospital and drug companies immediately after the decision was announced. Healthcare under the ACA sanctions enormous wealth shifting to health care providers with little assurance that more people will get better care. All of this will continue to feed a sense that the scheme, while now found constitutionally acceptable for a second time, is somehow not working and unfair. When more people find themselves without insurance, or being penalized for not buying it but still finding it too expensive to buy, there will ultimately be more political pressure. So, the game, for now has shifted back to Congress. In King v. Burwell, the court has said this is a political question. I suspect the court won’t take up another case on this, and given what it has declared, that the statute’s words do not mean what they say, lower courts will be reluctant to turn to the statute as guidance. The issue could not have been more clearly put before the court than in the King case. This is the end of the road for judicial review.