A Meaning Not So Plain

On June 25, 2015, the Supreme Court decided the case of King v. Burwell and followed precedent in determining the meaning or ambiguity of a phrase in a federal law. On one side of the argument, the plain language of the phrase (“an Exchange established by the State”) is unambiguous with regard to the type of “Exchange” in question. On the other, the words are ambiguous when considered in the context of the law’s structure and purpose. Two lower federal courts had held that the language was ambiguous, but a third federal court had found no ambiguity in the meaning of the phrase.

The federal law at issue in King v. Burwell was the Affordable Care Act (ACA). The phrase appears in a section of the law dealing with tax credits created under the law as a means of making health insurance coverage affordable. Without tax credits, many individuals would be exempt from the ACA’s requirement to have health insurance because the cost of insurance would exceed 8 percent of the individual’s income (the upper limit of “affordable” care under the ACA). The requirement that everyone have health insurance , the availability of federal tax credits to make coverage affordable and the requirement that insurance companies offer insurance plans to everyone at the same prices, regardless of pre-existing health conditions, are the essential structure of the health care law. Opponents of the ACA seized the opportunity to attack the tax credit program and thereby undermine the structure of the entire ACA.

The opponents argued that the phrase meant that tax credits would not be available to individuals living in states that did not establish a health insurance exchange. Currently, 34 states have not created an exchange, although the law requires that each state do so. If a state fails to establish an exchange, the law directs the Secretary of Health and Human Services (HHS) to “establish and operate such Exchange within the state.” Anyone who was paying attention to the health care debate knows that Congress intended to make the tax credit available to everyone in every state. Denying tax credits to individuals who purchased health insurance through a state exchange established by HHS was never part of the discussion.

Justice John Roberts, writing for the six-to-three majority in King v. Burwell, followed the Court’s precedents that the meaning or ambiguity of words or phrases “may only become evident when placed in context” (Brown & Williamson) and that the Court’s duty is “to construe statutes, not isolated provisions” (Graham County Soil and Water Conservation Dist. v. United States ex rel. Wilson). Roberts explained why the phrase is ambiguous when placed in context. He then examined the broader structure of the ACA to determine the meaning of the section on tax credits. Guided, in part, by the principle that “a fair reading of legislation demands a fair understanding of the legislative plan,” Roberts concluded that the law allows tax credits in every state for insurance purchased on any exchange. The Opinion of the Court is persuasive and succinct and cannot be summarized in a blog post (see the full text, King v. Burwell, with added highlights). Roberts notes that the law provides that the tax credits “shall be allowed” for any “applicable taxpayer” and that an applicable taxpayer is someone who has a household income between 100 percent and 400 percent of the federal poverty line. It is only in the provisions dealing with the amount of the credit, in a “sub-sub-sub section of the Tax Code,” that the contested phrase appears. Congress could have written the law in a less confusing way, but as Roberts notes in a monumental understatement: “The Affordable Care Act contains more than a few examples of inartful drafting.”

Justice Antonin Scalia wrote a dissent, joined by Justices Thomas and Alito, arguing that the phrase is not ambiguous and that Congress intended to deny tax credits for insurance purchased on any exchange established by HHS. Scalia argues that the Court should have left it to Congress to decide what to do about the ACA’s “limitation of tax credits to state Exchanges” rather than “rewriting the law under the pretense of interpreting it.” Scalia’s argument, however, rests on his conclusion that there is no ambiguity in the language. In his opinion, it is “obvious” that the ACA denies tax credits to individuals who purchase health insurance on an exchange set up by HHS—“so obvious that there would hardly be a need for the Supreme Court to hear a case about it.” Six of the nine Justices, however, disagreed with him (as did two lower federal courts). It is the Court majority, in the end, that gets to “say what the law is” (Marbury v. Madison), or in Scalia’s formulation, “to pronounce the law as Congress has enacted it.” The Court has done just that in King v. Burwell. If Congress believes that the Court got it wrong and that their intention has been misunderstood by the Court, then it is up to Congress to do the rewriting. If Congress does not act, that acquiescence will be an endorsement of the Court’s interpretation of the ACA. Then it will be “obvious” whose opinion was correct.

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