Obamacare: Cert Granted on Friday, and Gruber III on Saturday

It was very good news, delivered in a very surprising way. Shortly after noon last Friday, the Supreme Court announced that it would review our Fourth Circuit Obamacare challenge, King v. Burwell

Ever since we filed the case with the Supreme Court this past July, we’d been hopeful that the Court would take the case. The likelihood of the Court accepting any case is extremely low, but there were several major factors in our favor. 

First, the question involved is extremely important to millions of Americans, be they taxpayers, health insurance policyholders, or workers. (In most cases, they’ll be all three.) The issue is whether Obamacare health insurance subsidies are available nationwide, as the White House claims, or whether they are limited to the minority of states that have set up their own insurance exchanges, as indicated by the language of the statute. Riding on this issue are billions of dollars in taxpayer funds, insurance choices made by millions of individuals and hundreds of thousands of employers, and the huge penalties that such subsidies can trigger for companies in nonparticipating states.

Second, only the Supreme Court could resolve the issue both quickly and definitively. True, the companion case that we had won, Halbig v. Burwell, is now up before the D.C. Circuit for en banc review; the government argued that the Supreme Court should wait for the en banc circuit ruling because it might eliminate the need for any Supreme Court action whatsoever. But even if that court were to overturn the Halbig panel’s ruling, there would still be ongoing challenges in other circuits. Oklahoma’s victory on the issue is now on expedited appeal in the Tenth Circuit, and Indiana just argued its challenge in district court in the Seventh Circuit. In short, while the lack of a split between the D.C. and Fourth Circuits might remove one technical reason for Supreme Court review, it might well do so only temporarily, and Supreme Court inaction at this point would only prolong the uncertainty and multiply the impact of an adverse ruling.

As to the merits, our arguments have been attacked as being “crazy,”, as being based on a “typo,” and for supposedly frustrating congressional intent. Most recently, Paul Krugman characterized them as “frivolous.”

To date, those criticisms have been rejected by two judges on the D.C. Circuit, one district court judge in Oklahoma, and even by the judges who ruled against us in King (who expressly noted the “common-sense appeal” of our arguments). And, as the Supreme Court’s Friday order indicates, at least four justices see the case as deserving high court review.

While Friday afternoons are an unusual time for Supreme Court orders, Saturday brought another surprise—yet another rediscovered Jonathan Gruber video, this one from October 2013, in which he explains the law:

"…was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. So it was written to do that. In terms of risk-rated subsidies, if you had a law which made explicit that healthy people pay in and sick people get money it would not have passed. Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical to get the thing to pass.”

It may be time to start numbering these unearthed videos. Gruber I, you may recall, had the professor stating that states that didn’t set up their own exchanges would be ineligible for subsides—a statement directly at odds with his more recent attacks on our litigation position as “crazy.” (There’s also an audio clip of Gruber making a similar statement about subsidies; we’ll call that  Gruber II.) The appearance of Gruber III raises the prospect of a betting pool—how many more of these will appear before the Supreme Court decides King, and how many after?

As the new Gruber video indicates, if people had known what was in Obamacare at the outset, it may not have been enacted at all. And as the Supreme Court’s taking this case indicates, the legality of the IRS subsidies-for-all rule will finally be resolved. The end result may well be a golden opportunity for Congress to revisit and overhaul this law.