The Supreme Court will hear arguments on Wednesday. Health coverage for more than 6 million Americans hangs in the balance.
WASHINGTON — The first lawsuits challenging the Affordable Care Act were still in the early stages, but conservative lawyers were already working on a backup plan in December 2010 if the first line of attack failed.
It was Thomas Christina, an employment-benefits lawyer from Greenville, S.C., who found a new vulnerability in the sprawling law.
“I noticed something peculiar about the tax credit,” he told a gathering on strategists at the American Enterprise Institute.
Supreme Court spokeswoman Kathy Arberg on Monday said the justices have rejected requests from The Associated Press, C-SPAN and others to have an audio recording
of Wednesday’s high-stakes argument about tax subsidies that are critical to President Obama’s health overhaul posted online shortly after the argument concludes Wednesday.
The Associated Press
Christina pointed to four previously unnoticed words in the health-care law, enacted nine months earlier. They seemed to say its tax-credit subsidies were limited to people living where an insurance marketplace, known as an exchange, had been “established by the state.”
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The Supreme Court will hear arguments on the implications of Christina’s theory Wednesday. If a majority of the justices accepts it, more than 6 million Americans could lose health coverage and insurance markets could collapse in about three dozen states where the federal government runs the exchanges, imperiling the health-care law itself.
This case, King v. Burwell, No. 14-114, is the first challenge to President Obama’s signature legislative achievement to come before the Supreme Court since it upheld a crucial provision in 2012, by a 5-4 vote.
The justices must decide whether Congress intended the four words to forbid the government to provide subsidies in states without their own exchanges.
Supporters of the law note Christina did not discover the phrase until well after the law’s enactment, suggesting Congress had been unaware of the possibility that people in states that opted not to run their own exchanges would be ineligible for tax subsidies.
“Petitioners are now telling the justices that Congress deliberately withheld subsidies to force states to establish exchanges,” said Doug Kendall, president of the Constitutional Accountability Center. “The fact that it took nine months from passage of the ACA for even its most vitriolic opponents to discover this ‘feature’ of the act is evidence enough that this is a baldfaced lie.”
The law’s defenders add that other provisions in the act, along with its structure and purpose, make clear that it called for subsidies in all 50 states. They add that the subsidies, which are intended to reduce premiums for low- and middle-income people, are vital to the economic underpinnings of the law.
Opponents of the subsidies say it is the text of the law that matters, not what individual lawmakers knew or believed.
Christina, 59, is soft-spoken and deliberate, with a cautious manner. A Harvard law graduate, he worked in the Justice Department in the Reagan administration, then joined Covington & Burling, a major Washington, D.C., law firm, where he became fascinated by employment-benefits law, which concerns pensions, 401(k) plans and other workplace programs.
He said he had discovered the language about subsidies while poring over the law’s hundreds of pages and trying to master its intricacies so that he could advise his clients at Ogletree Deakins, a labor and employment firm.
“I wasn’t looking for holes in the law,” he said.
Back in 2010, Christina thought the subsidies were unconstitutional, reasoning that they would coerce every state to set up exchanges. That was an echo of a successful challenge to the law’s Medicaid expansion, which would prevail at the Supreme Court in 2012 by a 7-2 vote.
Robert Weiner, a former Justice Department official who oversaw the defense of the law before the court in 2012, said the notion that it was meant to force the states to create exchanges was a curious one.
“There is no indication,” he said, “that anyone in Congress thought they were making a threat.”
Christina did not anticipate that the Internal Revenue Service would in August 2011 propose and in May 2012 adopt regulations interpreting the law to allow subsidies in all 50 states, including those where the federal government ran the exchanges.
By then, two conservative scholars — Jonathan Adler, a law professor at Case Western Reserve University, and Michael Cannon, director of health-policy studies at the Cato Institute — were reshaping Christina’s idea. They said the proposed IRS regulation was at odds with what Congress had authorized the administration to do.
In November 2011, Adler and Cannon published an opinion article in The Wall Street Journal titled “Another Obamacare Glitch.”
“The text of the law is perfectly clear,” they wrote. “Without congressional authorization, the IRS lacks the power to dispense tax credits or spend money.”
The Competitive Enterprise Institute, a libertarian advocacy and litigation group in Washington, recruited plaintiffs and provided financing for two similar lawsuits, filing one in the District of Columbia in May 2013 and the other in Virginia in September 2013.
Michael Carvin, the plaintiffs’ lawyer, responded by pointing to a 2009 article by Timothy S. Jost, a law professor at Washington and Lee University and a supporter of the health-care law. He had written about the possibility of using tax subsidies in order to encourage states to set up exchanges.
Judge Thomas B. Griffith wrote the majority opinion for a divided three-judge panel of the court, ruling that only people in states that run their own exchanges are eligible for subsidies.
In dissent, Judge Harry T. Edwards said the case was a “not-so-veiled attempt to gut” the health-care law. He said the challengers had cited a “single piece of evidence” — Jost’s article — to “support their claim that Congress intended to restrict subsidies to state-run exchanges.”
The same day the appeals court in Washington issued its decision, the 4th U.S. Circuit Court of Appeals, in Richmond, Va., ruled against the plaintiffs. That is the case the Supreme Court will consider Wednesday.
Two days after the dueling decisions, conservatives seized on another comment. Jonathan Gruber, a former health-care adviser to the Obama administration, had been recorded at a January 2012 conference saying that “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”
The recording was posted on The Volokh Conspiracy, a legal blog. Sam Kazman, the general counsel of the Competitive Enterprise Institute, said the remarks confirmed the theory behind the lawsuits.
“I think we were responsible not for discovering it,” he said of the remarks, “but for viralizing it.”
For his part, Christina said there were valuable features to the law even though he was opposed to parts of it.
He added that the issue at the heart of the Supreme Court case was straightforward. “I don’t think,” he said, “that there is any ambiguity about what the statute says.”