Court’s ruling reasonable on Obamacare

What is the meaning of four simple words, “established by the State”?

This critical question for Supreme Court watchers was answered in the landmark decision in King v. Burwell on June 25.

Resolving this seemingly trivial question made all the difference between the decisive six-justice vote upholding a key section of the Patient Protection and Affordable Care Act — popularly known as “Obamacare” — and the scalding three-justice dissent.

Is the better judicial approach to interpret those four words in isolation or in the context of the act?

In my view, the contextual approach of Roberts’ majority opinion is far more persuasive as legal analysis and as plain old common sense.

The four words in question are part of the “subsidies” provision, one of three key pillars of the act.

The other two parts were not at issue: the “non-discrimination rule,” requiring health insurance companies to offer affordable plans to everyone, and the “individual mandate” provision, requiring everyone to obtain health insurance or pay a penalty.

“Subsidies” are tax credits for people who buy their health insurance through an “exchange,” which the act envisioned each state would create for individuals otherwise unable to get insurance easily, such as the self-employed and unemployed.

The act also authorized the federal government to step in and provide exchanges and subsidies in states that declined to do so; presently, 34 states are in this category.

The Obama Administration argued that the clear intent of the act’s comprehensive coverage was to include the federal government when it is forced by state inaction to step in and fulfill the exchange and subsidy requirements. The challengers argued that the four words should be read narrowly and without reference to their context.

From this semantic thicket, the majority opinion resolved the question convincingly by following well-accepted modes of statutory interpretation.

The high court held that the words “established by the State” in isolation were ambiguous, given surrounding provisions’ clear inclusion of the federal government when states failed to establish exchanges and subsidies.

Without the federal subsidies, insurance markets in non-exchange states would not work properly. This would drive up insurance premiums and deter enrollment, creating a “death spiral” that Congress surely did not intend. The majority concluded that such a reading would be “implausible.”

In dissent, Justice Antonin Scalia lamented that the majority’s rationale was “absurd” and that words “no longer have meaning.” But Scalia’s strict textual reading undermines the very structure of the act.

Statutory interpretation should be a contextual analysis, not a straitjacket of conflicting messages. Every lawyer _ including the dissenters — knows that words and phrases can be ambiguous or clear, depending upon their placement.

Words in isolation can mislead. An airless box of literalism sheds little light on the actual meaning of a text.

The Supreme Court has a long history of going beyond the “four corners” of a phrase to ascertain its meaning, whether the text is the Constitution or a statute.

Take for example the first five words of the First Amendment, “Congress shall make no law...”

An absolutist reading would prohibit Congress from making any law respecting an establishment of religion or interfering with the rights of free exercise, speech, press, assembly and petition.

But of course Congress makes such laws; the meaning of the phrase is that these laws must be closely scrutinized. Similarly, a statute may rightly be criticized for “inartful drafting,” as Roberts wrote of the phrase in question, yet still be comprehensible and sustainable.

In sum, the court’s conclusion was logical, fair and sound. The challenged words not only have meaning; they also fortify the rest of the act and ensure that it has a chance to operate as Congress intended.

Margaret M. Russell is a professor of constitutional law at Santa Clara University in Santa Clara, Calif. She earned a law degree from Stanford University. Readers may write her at Santa Clara Law, 500 El Camino Real, Santa Clara, CA 95053 or email her at mrussell@scu.edu