Tags: Healthcare Reform | obamacare | justices | subsidies | ginsburg

Supreme Court Justices Weigh Challenge to Obamacare

Wednesday, 04 March 2015 12:10 PM

The U.S. Supreme Court appeared divided on ideological lines on Wednesday as it heard a second major challenge to President Barack Obama's healthcare law, targeting tax subsidies intended to help people afford insurance, with Justice Anthony Kennedy appearing to be the possible swing vote in a decision.

Kennedy, a conservative on the nine-member court who often casts the deciding vote in close cases, raised concerns to lawyers on both sides about the possible negative impact on states if the government loses the case, suggesting he could back the Obama administration. But he did not commit to supporting either side.

Chief Justice John Roberts, who was the key vote in 2012 in upholding the healthcare law in the previous challenge, said little during the argument to signal how he might vote. The court's four liberals all appeared supportive of the government, while conservatives Antonin Scalia and Samuel Alito asked questions sympathetic to the challengers.

At one point during the 85-minute oral argument, Alito suggested that if the court rules against the government, it could give states time to prepare for the impact by saying the ruling would only go into effect at the end of the year.

Kennedy's concerns focused on the possibility that if the law allows subsidies only for states that set up their own insurance exchanges, it would raise a new, more serious question about whether the law is unconstitutionally coercive by essentially punishing states that fail to establish exchanges.

"There's a serious constitutional problem if we adopt your argument," he said to the challengers' lawyer, Michael Carvin.

Kennedy said throwing out subsidies would unlawfully pressure states and cause an insurance "death spiral." Kennedy added that the challengers may win anyway based on the plain meaning of the provision at issue.

A decision is due by the end of June.

On a chilly, damp, cloudy day in the U.S. capital, about a couple hundred demonstrators mostly from pro-Obamacare forces including labor unions, a nurses group, Planned Parenthood and women's groups gathered on the sidewalk in front of the white marble columned courthouse ahead of the argument.

A couple of dozen demonstrators from the conservative Tea Party movement rallied against the law. Marsha Blackburn, a Republican congresswoman from Tennessee, told the gathering that she was confident the court would rule against the subsidies in the law. Conservatives have denounced the law as a government overreach.

Some demonstrators chanted, "Healthcare under attack, stand up, fight back." Some of the signs said "Don't take my care" and "8 + million could lose coverage."

One of the demonstrators, Pittsburgh nurse Michelle Boyle, said it is important that Americans who need help buying health insurance continue to get it under this law.

"You shouldn't have to choose between a roof over your head or healthcare - or do I go to the doctor today, or do I make sure my kids can eat something today?" Boyle said.

If the court rules against the Obama administration, up to 7.5 million people in at least 34 states would lose the subsidies that help low- and moderate-income people buy private health insurance, according to the consulting firm Avalere Health.

The Democratic-backed Affordable Care Act, narrowly passed by Congress in 2010 over unified Republican opposition, aimed to help millions of Americans who lacked any health insurance afford coverage.

The case does not affect people who obtain health insurance through their employer.

The legal question, hinging on just a few words in the expansive law, is whether only people who have bought insurance on state exchanges qualify for the tax-credit subsidies.

Thirteen states and the District of Columbia have set up such exchanges, with another 34 run by the federal government and three operating as state-federal hybrids.

The first time Obamacare came before the nine justices three years ago, the court was split 5-4. Chief Justice John Roberts, a conservative appointed by President George W. Bush, was the key swing vote, siding with the court's four liberals to uphold the law on constitutional grounds.

The court will be focusing on whether a four-word phrase in the law has been correctly interpreted by the administration to allow subsidies to be available nationwide.

That provision says subsidies are available to those buying insurance on exchanges "established by the state." The challengers, financed by a libertarian Washington group called the Competitive Enterprise Institute, say the government should lose based on the plain meaning of that phrase.

Hospital stocks, which Wall Street analysts have warned could be volatile around the Supreme Court arguments and ruling, jumped during Wednesday's arguments as tidbits of the justices' questions made their way into news reports.

Community Health Systems Inc shares rose 5.6 percent, HCA Holdings was up 7.7 percent, Tenet Healthcare Corp was up 6 percent. They are among the hospitals that have benefited from new customers from the exchanges and from the Medicaid insurance program for the poor.

Insurer shares, including UnitedHealth Group Inc., Aetna Inc and Anthem Inc, were up slightly, but the financial benefits to them of the exchanges have not been as pronounced.

Kennedy's comments gave the impression he would side with the government, several analysts said.

"I think people are reading that as this is a de-risking event for the hospitals, that the likelihood of it getting struck down has diminished significantly. ... All you need really is one of the question-mark justices to signal how they're leaning and I think we got that today," said Brian Tanquilut, hospital sector analyst for Jefferies.

The case is King v. Burwell, U.S. Supreme Court, No. 14-114. (Additional reporting by Lisa Lambert and Caroline Humer; Editing by Will Dunham)

© 2018 Thomson/Reuters. All rights reserved.

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The U.S. Supreme Court appeared divided on ideological lines on Wednesday as it heard a second major challenge to President Barack Obama's healthcare law, targeting tax subsidies intended to help people afford insurance, with Justice Anthony Kennedy appearing to be the...
obamacare, justices, subsidies, ginsburg
Wednesday, 04 March 2015 12:10 PM
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