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SCOTUS for law students: Interpreting statutes

When the Supreme Court takes up the Affordable Care Act again on March 4, the fate of President Obama’s health-care law will once again be on the line, as it was in 2012. Only this time, the Court will be playing a different role than in the landmark decision of National Federation of Independent Business (NFIB) v. Sebelius.

In 2012, the Justices were exercising their power to interpret the meaning of the Constitution, but in the new case, King v. Burwell, they will be wrestling with the meaning of specific words in the statute passed by Congress.

There is a tendency in law school to think of big cases as those involving the Constitution – for example Brown v. Board of Education, Roe v. Wade and the upcoming same-sex marriage appeals. Indeed, many law students, perhaps most, never study statutory interpretation or give it only cursory attention. But although it is, perhaps, obvious, it is worth remembering that statutory cases may sometimes have just as much impact, or more, than constitutional decisions.

In a constitutional case, the Justices may be painting on a broad canvas that is shaped by the language of the Constitution as well as a provision’s historical meaning and context. For some Justices, the meaning will also be determined by contemporary societal values, while for others the interpretation will be rooted more in the intent of the Constitution’s Framers. There may be other influences, as well: the structure of the Constitution, deference to other branches, perhaps federalism concerns where relevant, and to an extent Supreme Court precedent.

The Court’s role is somewhat narrower when it comes to statutory interpretation. Although it is by no means entirely simple or straightforward, the process of statutory interpretation requires an effort to determine the meaning of a statute, typically a federal law passed by Congress. The process first involves an examination of the text of the law. If there is uncertainty or ambiguity in the meaning of the text, the process may also involve an effort to ascertain the intent of Congress in passing the provision. Determining intent or practical goals may involve resort to other tools that guide statutory interpretation. Some Justices will turn to legislative history – committee reports, debate among lawmakers – while some others, like Justice Antonin Scalia, question the legitimacy of legislative history as a means of elucidating congressional intent.

The Affordable Care Act provides a perfect vehicle to consider these different roles for the Supreme Court.

Recall that in the Sebelius decision in 2012, the Supreme Court issued a multi-faceted ruling on the constitutionality of the health-care law. The Court ruled, by a vote of five to four, that Congress was not regulating interstate commerce and so could not have been using its commerce power when it passed the requirement that uninsured individuals buy insurance or pay a penalty to the federal government. A different five-to-four majority found, however, that this so-called “individual mandate” provision was passed as a valid use of Congress’s taxing power. The net effect was to uphold the individual mandate but to underscore that Congress’s power under the Commerce Clause is limited. In yet a third voting majority, the Court ruled seven to two that Congress exceeded its spending power by urging states to expand Medicaid coverage for low-income people and then threatening to cut off all federal support for Medicaid for any states that declined to expand the program.

In each facet of this ruling, the Justices were weighing arguments about what limits the Constitution places on Congress’s power to legislate, whether through the Commerce Clause or its taxing or spending power. Because the question whether Congress could even enact the law put the entire statute in jeopardy, the stakes in the case were enormous. Reflecting the gravity of the case, Chief Justice John Roberts concluded: “The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.”

In contrast to major constitutional interpretations by the Court, cases of statutory interpretation are sometimes narrower. Sometimes statutory cases are narrow in terms of the Court’s role in analyzing the language used by Congress; sometimes such cases are also narrow in their impact. There are other times when the Court’s role in reading acts of Congress is narrow but the practical effect is significant.

For the latest Affordable Care Act case, the practical impact may be enormous, although the Justices will still be engaged in the comparatively narrow task of trying to figure out the meaning of words chosen by Congress.

The case now before the Court turns on what Congress meant when it authorized the Internal Revenue Service to grant tax credits to help pay for health insurance for lower-income individuals who cannot afford to pay for their health benefits. What Congress said was that tax benefits should be granted for such individuals who purchase their insurance in exchanges “established by the State.” The exchanges are insurance marketplaces where those who must buy coverage can find health policies. Congress apparently envisioned that states would establish exchanges and that the federal government would fill in gaps with its own exchange for insurance purchasers.

But more than half of the states chose not to establish their own insurance exchanges, leaving the federal government to create exchanges in those states. The tax benefit is estimated to be necessary to help millions of Americans be able to afford the health insurance they are required to buy. The issue for the Supreme Court is whether the tax benefit may legally be available to those who have purchased insurance on exchanges that were established by the federal government after the states have declined to create exchanges. Briefs in the case estimate that over four million people who purchased their insurance on exchanges created by the federal government, rather than a state, are relying on these tax benefits.

The statutory question seems simple: Congress said exchanges established by “the State.” So did Congress mean that the tax benefits to help those with lower incomes would only be available for those who buy their insurance on state exchanges, excluding those who buy their insurance on federally created exchanges?

Advocates on one side argue, as the U.S. Court of Appeals for the Fourth Circuit held, that the law must be interpreted according to what Congress intended. Looking at the overall context of the ACA, they argue, Congress’s aim was to provide tax benefits to lower-income Americans to underwrite the cost of insurance; it should make no difference if the exchanges are being run by the federal government instead of the states. Indeed, they argue that when the federal government creates an exchange, it is acting for the state and that the exchange is still literally a state exchange that is fully covered by the tax benefit provision.

Advocates on the other side maintain that there is no basis for the Court to consider intent or context when the language of the statute is plain and unambiguous. They argue that Congress in the ACA referred only to “a State” and that the tax subsidy should therefore only be available for those who bought policies through exchanges established by states.

The challenge for the Court is to sort out this debate over plain meaning versus intent. The task may sound straightforward, but that is deceptive. And the stakes are every bit as high as they were in the constitutional fight in 2012. If the Court knocks out tax benefits for the 4.2 million people who are covered from policies bought on federal exchanges, this will likely be a fatal blow to the Affordable Care Act with virtually the same impact as if the Court had found the law unconstitutional in the first place.

Recommended Citation: Stephen Wermiel, SCOTUS for law students: Interpreting statutes, SCOTUSblog (Feb. 18, 2015, 12:47 PM),