King v. Burwell and Red State Intellectual Honesty

On Wednesday the Supreme Court will hear arguments in King v. Burwell, a case testing whether the Obama Administration can gut key provisions of Obamacare. It’s possible that you haven’t heard the case described this way, but the challengers in the case simply seek to have Obamacare provisions promoting the creation of state-run exchanges through federal tax subsidies for healthcare plans on an exchange “established by the state” applied as written and intended by Congress. If the Supreme Court applies Obamacare as written, it would invalidate the IRS’s illegal extension to federal exchanges of those subsidies and the penalties on employers that accompany them.

While the legal question is simple, the stakes are high. One estimate is that insurance premiums for federal exchange participants in 34 states will increase by 256% if the Court enforces Obamacare as written and voted for exclusively by Democrats in Congress and signed by the President. Petitioners and conservatives urge the Court to respect the rule of law and not permit the IRS to expand the law by administrative fiat to avoid an undesirable result. Arizona’s experience with Obamacare is an example of conservative intellectual honesty on the distinction between state and federal exchanges – even when the stakes are high for pro-life conservatives too.

Obamacare permits states to opt out of abortion coverage on their exchanges (whether state or federal run). Arizona was the first state to invoke this provision and opt out of abortion coverage on its exchange. But when it did so – prior to the actual creation of any exchange – it prohibited abortion coverage in plans offered on an exchange “operated by the state.” When AZ later chose not to pursue a state exchange and instead to permit the federal government to operate an exchange in Arizona, the Arizona Department of Insurance interpreted this opt-out as inapplicable to these plans on a federal exchange.

Unlike King v. Burwell, there is no doubt that the Arizona legislature anticipated eliminating abortion coverage on plans on any Arizona exchange. It was not attempting to incentivize itself to create any state-operated exchange in the future. The Arizona legislature would have a stronger case than the IRS for insisting that the textual distinction between state and federal exchanges here should be ignored and the spirit of the law given effect.  But even with something as important as abortion at stake, Arizona applied the law as the legislature wrote it, excluding abortion only on a non-existent state-operated exchange.

The Arizona legislature is now doing what a legislature in a nation operating under the rule of law does. The legislators – not unelected bureaucrats from the Department of Insurance – are working to enact a law excluding abortion coverage from this federal exchange operated in Arizona. Should the Supreme Court hold that the IRS’s creative interpretation of Obamacare is invalid, the Administration is also free to ask Congress to intervene. Congress is free to decline to do so. It is also free to change much more about this law – or scrap it entirely. I’ve written before that there are several reasons why pro-lifers should desire a decision for petitioners in King, including the possibility of significant pro-life and pro-religious liberty changes to Obamacare at a minimum.

As the Court considers whether the IRS is free to ignore the important distinction between state and federal exchanges and expand its own authority, it is worth considering that when faced with a very similar decision Arizona (and pro-life conservatives) put their textual interpretation where their mouth is and are working to change the law the old fashioned way, through the legislature.

Casey Mattox is Senior Counsel at Alliance Defending Freedom.

Follow me at @CaseyMattoxADF