Justice Kagan brilliantly exposed a flaw in the huge challenge to Obamacare

Elena KaganAPJustice Elena Kagan.

The Supreme Court is expected to issue a decision any day now in a case that could
severely damage healthcare reform in America, in a challenge that famously focuses on four words in the law.

During oral arguments in March, Justice Elena Kagan asked a clever question that drew laughter in an apparent attempt to explain why four words in one section of the law shouldn’t be read literally.

The case will determine whether the US can keep subsidizing health insurance for people in the roughly three dozen states states whose insurance exchanges are run by the federal government.

One part of the law specifically says the federal government can establish insurance exchanges on behalf of the state, but another section says people buying insurance through exchanges “established by the state” get subsidies. The law’s opponents contend this means that those buying insurance through exchanges set up by the federal government don’t get subsidies.

Kagan’s question, however, seemed to suggest those four words should be read in context of the entire law, which clearly aims to provide insurance subsidies for people who need them. From the transcript:

So I have three clerks, Mr. Carvin [the lawyer for the challengers]. Their names are Will and Elizabeth and Amanda. OK? So my first clerk, I say, Will, I’d like you to write me a memo. And I say, Elizabeth, I want you to edit Will’s memo once he’s done. And then I say, Amanda, listen, if Will is too busy to write the memo, I want you to write such memo.

Now, my question is: If Will is too busy to write the memo and Amanda has to write such memo, should Elizabeth edit the memo? [Laughter]

Kagan’s question seems to imply the answer is yes, Elizabeth should edit the memo.

ObamacareREUTERS/Jonathan ErnstJumaane Cook (bottom R), age 5, of Cleveland, Ohio stands with his father James Cook (obscured, holding sign at R) as they join Obamacare supporters demonstrating at the Supreme Court building in Washington March 4, 2015.

Here’s Kagan’s point: The ACA asked states (in her example, her clerk Will) to set up health exchanges that would get federal subsidies (“edits” by Elizabeth the clerk).

But the law also specified that the federal government (equivalent to Amanda) could step in and set up the marketplaces if the states couldn’t. Those marketplaces still need the subsidies to operate in the same way the memo needed Elizabeth’s edits.

Kagan was not the only justice who had tough questions for the lawyer opposing Obamacare. Justice Anthony Kennedy, a key swing vote, said during oral arguments he saw a “serious Constitutional” issue with the position taken by the latest opponents of the ACA.

Here’s Kennedy’s problem: Under the interpretation put forth by the law’s opponents, states will effectively be coerced into setting up their own exchanges if they want their citizens to have insurance.

“If that’s Kennedy’s view of the case, there’s almost no chance that the challengers can win,” UCLA constitutional law professor Adam Winkler told Business Insider.

A decision in this case is expected as soon as Thursday.

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