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The Supreme Court puts the screws to 36 state governments

The Supreme Court puts the screws to 36 state governments
Dr. Strangelove would still say the Halbig argument is insane. (Columbia Pictures)

No piker when it comes to cliffhanging drama, the Supreme Court late Friday placed the governors and legislatures of 36 states in a corner, by taking up a challenge to the Affordable Care Act that directly threatens their citizens.

The states are those that failed to create their own ACA insurance exchanges, leaving the task instead to the federal government. A group of conservative critics challenged the government's authority to provide tax subsidies to residents of those 36 states, on the grounds that a section of the law says the subsidies are applicable to residents where there are exchanges "established by the state."

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What's at stake? Affordable health insurance for as many as 4.7 million Americans currently receiving subsidies in the 36 affected states.

Most objective commentators say the critics' argument is nonsense. The language at issue is an artifact a drafting glitch; to take it literally would make a hash of the entire law. And since the basic principle of statutory analysis is that a law must be read in its entirety, precisely to keep a stray, easily correctable error from wrecking a legislative initiative, elevating these four words to the defining principle of the Affordable Care Act is absurd.

Two appeals courts weighed in on the matter on the same day in July. In King v. Burwell, the appeals court in Richmond, Va., rejected the challenge. In Halbig v. Burwell, a three-judge panel of the District of Columbia circuit accepted it. But the DC panel's ruling has been withdrawn by the court, which is prepared to sit en banc to rehear it. (The Supreme Court, technically, is reviewing the King ruling, but the overall issue is typically known as the Halbig argument.)

That's what unnerves the ACA's supporters: there's no urgency to the Supreme Court's taking up the case, because at the moment there's no conflict among appellate circuits for the Court to resolve. (The full DC court has been expected to uphold the law.) So supporters fear that the Supreme Court's conservative majority is fixing to use this absurd issue to overturn Obamacare. Only four justices need to vote to accept a case for review, but five to overturn the law. That means the ACA may again be on a knife-edge, depending on the good sense of Chief Justice John Roberts or Justice Anthony Kennedy to rescue it.

What has been most instructive during the debate over Halbig is the sheer glee of its proponents at the pain and suffering that would occur were they to prevail. Millions of Americans left without affordable care? What's the upside to that?

As Northwestern University political scientist Andrew Koppelman put it earlier this year, "The opponents of Obamacare have from the beginning found themselves driven by the logic of their position to make arguments that are increasingly morally repulsive."

Of course, the 36 state governments where the ACA hangs in the balance could take steps any time to nullify an adverse Court ruling before mid-2015, when the judgment is expected to come down. For example, they could establish nominal state exchanges, either to become operational or to partner with the federal exchange.

As Larry Levitt of the Kaiser Family Foundation has pointed out, those state government "would have to want this to happen." Many of those states also refused to expand Medicaid under the ACA, so their commitment to the health of their citizens is clearly in question. On the other hand, a dozen of those states have come around on Medicaid after refusing at first, so they may be inclined to follow through with the exchanges.

What would be the point of failing to do so? Establishng a state exchange, if one does it with federal partnership, is cost-free to the state. The federal tax subsidies don't cost states anything. No state governor or legislature said it was refusing to establish a state exchange because it would cost the state money; almost all did so strictly on ideological grounds.

Now those ideological actions come with a hefty price tag for millions of their middle- and low-income citizens. As we observed this week, many Republicans rose to victory on Election Day by campaigning against the economic problems facing millions of voters. We asked whether they were paying more than lip service to their constituents' travails; here's the acid test.  
But the bottom line is that the Halbig/King argument makes no sense whatsoever in the context of the Affordable Care Act. It posits that Congress deliberately aimed to punish states that didn't establish insurance exchanges, by denying subsidies to their citizens. 
The problem is that no legislator has come forward to validate that idea. No state official has confessed to having contemplated it as a goad--and as Dr. Strangelove pointed out 50 years ago, the whole point of a threat is lost if you keep it a secret! No one who followed the long, complex drafting process in 2010 ever heard this idea mentioned. 

So, yes, the Affordable Care Act is threatened again, by the dumbest argument of all. Governors and legislatures who wish to save the Supreme Court from making a terrible mistake, and save their millions of citizens from losing their healthcare, know what to do.

Keep up to date with the Economy Hub. Follow @hiltzikm on Twitter, see our Facebook page, or email mhiltzik@latimes.com.

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