The Supreme Court and Obamacare: Somehow, Common Sense Prevailed

Jared Bernstein Senior Fellow, Center on Budget and Policy Priorities

At one level, today’s Supreme Court decision to preserve the tax subsidies that allow low- and middle-income people to afford health insurance is a marvelous, miraculous win. I’m sure that the millions who depend on those subsidies (in states where the federal government runs the exchange) are hugely relieved that they can continue to receive affordable coverage. I can tell you for a fact, listening to the hallways here at CBPP (and interviewing myself), that those who helped craft and have advocated for the Affordable Care Act are hugely elated.

And having just caught snippets of the President on TV, I can confirm for you that he’s pretty happy too.

But at another level, and this comes out surprisingly clearly from Chief Justice Roberts’ majority (6-3!) decision, the suit made little sense in the first place. His opinion—highly readable, btw—shows that a common sense reading of the issues points clearly in the direction of Congressional intent: the subsidies are an integral part of the law’s structure, and Congress intended them to do what they’re doing, regardless of whether the state or the feds set up a particular state’s exchange.

Ian Millhiser pulls out a key section from Roberts’ opinion (my brackets):

As discussed above, Congress based the Affordable Care Act on three major reforms: first, the guaranteed issue and community rating requirements [can’t deny coverage and can’t vary premium costs within areas based on age, gender, health status]; second, a requirement that individuals maintain health insurance coverage or make a payment to the IRS; and third, the tax credits for individuals with household incomes between 100 percent and 400 percent of the federal poverty line. In a State that establishes its own Exchange, these three reforms work together to expand insurance coverage. The guaranteed issue and community rating requirements ensure that anyone can buy insurance; the coverage requirement creates an incentive for people to do so before they get sick; and the tax credits—it is hoped—make insurance more affordable. Together, those reforms “minimize . . . adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.”

The majority recognizes that the drafting was ambiguous around the issue of exchanges set up by the feds, but argues that when such ambiguity exists, you look at the over-arching intention of the law—the provision of affordable coverage—and the linkages between the ambiguity in question, the structure of the law, and its goal.

When you do so, according to these justices, there’s no question that Congress intended that regardless of who sets up a given exchange, it must provide tax credits to fulfill that link in the chain nicely articulated above.

This was all clear on day one, so—and I’m not the biggest SCOTUS watcher by a long shot—why take it up in the first place?

I guess the fact that decision wasn’t 9-0 gives a partial answer to that question. But the whole episode—and I promise you, I’m elated with the outcome and plan to smile all day long—is a reminder that we live in a period of highly constrained rationality, where facts are too often on the run, and simple common sense is a cause for celebration.

It’s hard to run a successful democracy under those conditions, but today at least, we managed to do so.


This has been reposted from Jared Bernstein's blog.

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow.  From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author and co-author of numerous books, including “Crunch: Why Do I Feel So Squeezed?” and nine editions of “The State of Working America.”