Back when the Supreme Court decided NFIB vs. Sebelius– the celebrated Obamacare case- I distinctly remember watching the news that June morning. Every broadcast was anticipating the decision since it was the last day of the term. Every station was there and they all broke into their regular scheduled programming to bring the news. They all erroneously initially reported that the law had been struck down based on the opening words of Chief Justice John Roberts: the law must fall if it were to be based on the Commerce Clause. This was followed with a “but wait…,” then an explanation that the law was, in fact, upheld under Congress’ Taxing authority.
On the left, there was virtual dancing in the streets. To them, Obama and the Democratic-controlled Congress which forced this law on America through parliamentary sleight of hand was vindicated. Obamacare was constitutional all along. On the Right, the initial euphoria quickly turned to shocked surprise followed by the inevitable vitriol against the Court that “sided with the administration.” John Roberts himself was vilified on the Right and the level of vilification reached silly proportions.
In a series of articles leading up to argument in the case, I alluded to the fact that it seemed strange the Court would act as it did in accepting the case. When a petition to the Court is granted, they specify certain questions that are to be answered in the required briefs and then limit oral argument to those questions. Straying from those questions is simply ignored in an effort to limit any decision to statutory interpretation or the constitutionality of the underlying law in dispute. One of the questions put forth was whether the case involved an arcane law called the Anti-Injunction Act. That law deals with suits against the government in tax cases. Namely, courts are barred from granting injunctions against taxes imposed or proposed until such time they “harm” a potential plaintiff.
At issue in the case was whether the individual mandate was a tax and if so, then the AIA would allow the mandate to stand until such time someone was harmed by it- that is, after the first penalty had been assessed against an American taxpayer. The Roberts decision dismissed these arguments under the AIA, but then argued that the mandate was, in fact, a tax and it therefore opened the door to future challenges. However, Roberts then closed that door by noting since the mandate was a tax no matter how Congress phrased it, they clearly had the constitutional authority to pass this tax. Whether it is good policy or not is not the question, nor the role of the Supreme Court to determine. That is a problem left to Congressional debate. And if Congress could pass a tax, then they could surely rescind that tax in the future.
It will be years before we have any idea of what went on in a Supreme Court conference over this case. These are private meetings held on the Friday after cases are heard where only the nine Justices are present and they initially vote on the case. We do know that the Roberts opinion specifically found that if the case was strictly to be decided on the Commerce Clause, he would strike it down. The more liberal Justices obviously sided with Roberts on the Taxing Clause issue since they joined his opinion to uphold the law on those grounds. However, their concurring opinions went further and justified the law under the Commerce Clause also, something Roberts refused to do. The dissenting opinions rejected the law under the Commerce Clause. The result was, in effect, less a majority opinion and more a plurality opinion where the law was upheld with the reasoning differing among the Justices, except the minority who stuck to their Commerce Clause guns. Unfortunately and fortunately, it created a legal morass that is now before the Supreme Court in the case of King vs. Burwell.
The unfortunate part is that the mandate was allowed to go into effect. It also allowed other aspects of the law to go forward unfettered. Hence, since it was essentially, as far as the Supreme Court was concerned, a huge tax law, the IRS was implicated. The fortunate part is that this is a tax case plain and simple. It is also one of statutory interpretation, not constitutional in nature. Therefore, the next article will be about the Roberts Court and how they attack the issue of statutory interpretation.
An important consideration is the so-called Chevron deference when it comes to agency interpretations of laws and the regulations they enact as a result. That is what this case is about- an IRS interpretation of whether a tax subsidy to purchase insurance can be extended to those who did so on the federal rather than a state exchange. In essence, this case is about statutory interpretation and administrative law.
So, how do the current members of the Court vote in such cases? In 219 citations of Chevron in cases previous to this, there is a 66% chance any Justice will side with the IRS’ eventual interpretation. The Justice most likely to side with the agency in such cases is Kagan at 82%; the Justice least likely is Scalia at 55%. Looking at ideology, the four liberals side with the government 67% of the time, the three strict conservatives (Scalia, Thomas and Alito) side with the government 59.2% of the time and the two key swing votes (Roberts and Kennedy) 65% of the time. Based strictly on these statistics, the government enters this case with an approximate 65% chance of winning (the subsidy is legal and King loses), based solely on Chevron-type cases. And it will be interesting to see if the government cites the Mayo Foundation decision written by Roberts for a unanimous Court that determined Chevron deference absolutely applied to the Treasury Department’s interpretation and administration of income tax laws. Since the subsidy is handled through the IRS, one would suspect they would side with the Obama administration.
However, the one thing the Petitioners have in their favor is that any interpretation cannot withstand scrutiny under Chevron if the decision was “arbitrary and capricious.” The initial interpretation by the IRS came to an opposite view and it was only after the administration put pressure on the IRS that they changed their interpretation. Therefore, one thing to watch for in oral argument is how much emphasis any single Justice places on Chevron and if the subject of “arbitrary and capricious” is discussed.