Obama Wouldn't Circumvent SCOTUS On Subsidies

by Michael Dorf

In a very clever NY Times Op-Ed on Tuesday, University of Chicago Law Professor Will Baude offers a plan B in the event that the federal government loses in King v. Burwell: The government could "announce that it is complying with the Supreme Court’s judgment — but only with respect to the four plaintiffs who brought the suit." Professor Baude explains that the Court's judgment would only be formally binding as to those plaintiffs. Although the courts would treat the ruling in King as a binding precedent, few cases would arise for the very reason that the law's challengers had such difficulty finding plaintiffs in King itself: Most people are happy to take the subsidy and purchase health insurance on the federal exchanges.

But even if most people would be happy with their subsidies, wouldn't the Administration be violating the law by giving those subsidies following a (hypothetical) ruling that the law doesn't allow them? Without naming the theory, to respond to this objection Baude tacitly invokes "departmentalism"--the idea that each branch of government gets to say what the law is in its own sphere, with judicial rulings having force only in judicial settings or where, as an exercise in prudence, political actors choose to give broader effect to judicial rulings. (For some earlier thoughts of mine on departmentalism, click here or here.)

Although Baude is not exactly wrong, I would note a number of objections.

(1) Strong departmentalism of the sort that Baude proposes--the kind that says the executive can take a legal position directly contrary to an authoritative construction by the Supreme Court so long as it can get away with doing so--is a minority position within the commentary. Yes, Lincoln espoused this view in his first Inaugural but he later backed away from it somewhat. So when Baude says that "the Constitution supplies a contingency plan," he is somewhat overstating the case. What he ought to say is that "a highly controversial approach to the scope of judicial precedent supplies a contingency plan."

(2) More important than the rejection of strong departmentalism by most scholars is the fact that the Obama Administration itself apparently rejects strong departmentalism. How do I know? Because the Administration's approach to the Defense of Marriage Act (DOMA) prior to the SCOTUS ruling in United States v. Windsor is inconsistent with strong departmentalism. If the Administration were content to take whatever legal position it wanted regardless of what the courts say, then it would have simply refused to enforce Section 2 of DOMA. When Edith Windsor sought a refund of the $363,053 in estate tax liability which she claimed was not owed due to DOMA's invalidity, a departmentalist Obama Administration would have simply cut her a check. But that's not what the Administration did. Instead, it refused to pay her and though it eventually sided with her on the merits, it continued to refuse to pay her until the SCOTUS itself ruled that DOMA was invalid. Indeed, the whole point of the enforce-but-don't-defend approach was to enable the Administration to permit litigation to go forward--and there is every indication that the Administration would have continued to enforce DOMA if the Court upheld the law. The Administration's refusal to cut a check to Windsor without the Supreme Court's blessing very strongly indicates that it would refuse to cut checks (i.e., provide refundable tax credits) to persons seeking subisidies for federal exchanges if it loses King v. Burwell.

(3) While I have some sympathy for the departmentalist view as a matter of first principle, there is also very good reason to worry about its application in these circumstances. When, in the past, presidents have flirted with departmentalism, they have typically done so in a context in which they clearly had some inherent power. For example, President Jefferson's decision to issue pardons and stop a prosecution for violations of the Sedition Act were clearly permissible exercises of the pardon power and prosecutorial discretion--presidential powers that he could exercise even on the assumption that the courts are final and that the Federalist judiciary thought the Sedition Act valid. Likewise, when Andrew Jackson vetoed the bill rechartering the Second Bank of the United States, he made arguments that had been rejected by the SCOTUS in McCulloch v. Maryland, but he did not need to rely on any inherent power of presidents to disregard laws they think unconstitutional. He could exercise the veto power on policy grounds.

By contrast, the President doesn't have any inherent authority to spend unappropriated money, which is what he would be doing by giving subsidies that, according to the Supreme Court's authoritative construction of the relevant provision of the ACA, are unlawful. No version of departmentalism of which I am aware authorizes the President to usurp congressional power in order to prefer his own understanding of a statute over that of the Court.

(4) As Baude himself recognizes, there may in fact be people or entities who would have standing to challenge an Administration decision to provide subsidies under its non-judicial construction of the ACA.

(5) Even if Baude's solution worked, it could be easily undone by a Republican President, who would then win the politics by saying that he's simply following the law.

Accordingly, Baude's fix is and should be unavailable. If it comes to it, the Obama Administration rightly won't resort to it--and therefore, no Supreme Court Justice should erroneously conclude that the stakes in King v. Burwell are low: Adopting the plaintiffs' reading of the law really would destroy the ACA in the majority of states that haven't established their own exchanges. Some states would establish their own exchanges in response but others, under ideological pressure, would not. Baude has not found an escape hatch.