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March 4, 2015 6:35 pm

US health reforms head for Supreme Court cliffhanger

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Protesters demonstrate in favour of the healthcare reforms outside the Supreme Court on Wednesday©Reuters

Protesters demonstrate in favour of the healthcare reforms outside the Supreme Court earlier this year

Barack Obama’s signature healthcare legislation could be heading for another cliffhanger verdict at the US Supreme Court. Arguments in a case that may cause millions of Americans to lose their health insurance showed the justices were divided over a key provision.

During opening arguments on Wednesday, the four liberal justices of the nine-member court predictably defended the US government against the conservative plaintiff’s assertion that healthcare subsidies, which made insurance affordable for people in 34 states, were illegal.

But Chief Justice John Roberts, who provided a surprising swing vote that upheld the constitutionality of the president’s healthcare reforms in the last Supreme Court challenge in 2012, said little during the Wednesday hearing.

Justice Anthony Kennedy, another possible swing vote, voiced some concerns about the government’s defence. But he also said he was troubled by the plaintiff’s reading of the statute, saying it raised serious constitutional questions about states’ rights.

Shares in health insurance and hospitals rose as investors bet that either Justice Roberts or Kennedy would side with the liberal justices to uphold the tax credit provision in the healthcare reforms. If the subsidies were struck down, healthcare costs could nearly quadruple for lower income individuals and more than 8m people could lose their insurance.

“We’re going to have the death spiral that this system was created to avoid,” said Justice Sonia Sotomayor of the possible consequences of striking down the subsidies.

Plaintiffs in King v Burwell have seized on one phrase in the legislation, ”established by the state”, to argue that subsidies in 34 states were illegal because those states did not set up their own health exchanges.

Jones Day lawyer Michael Carvin, who also represented the plaintiffs in the 2012 case, said Congress allowed for subsidies to be paid only to those who signed up for insurance on state-run exchanges, and excluded those who registered through the federal government’s site,

US solicitor-general Donald Verrilli Jr argued that Congress meant for the subsidies to be available to everyone who was eligible for them, regardless of whether they signed up for insurance through a state or through the federal government.

“You look at the whole text,” said Justice Elena Kagan of the “established by the state” phrase. “You don’t just look at four words. Of course context matters.”

But conservative Justice Antonin Scalia said if Congress meant “established by the state” to refer only to state exchanges, then that was how the law must be interpreted, even if there were dire consequences.

“There are no statutes that don’t make sense” Justice Scalia said, adding that words could not be twisted to negate the effects of a badly written statute.

We’re going to have the death spiral that this system was created to avoid

- Justice Sonia Sotomayor

The case is another test for President Obama’s signature domestic legislation, which has been one of the main targets of Republican anger. Dozens of supporters and opponents of the reforms demonstrated outside the Supreme Court on Wednesday.

Although Republicans have vehemently opposed the president’s healthcare reforms, the party faces a tricky balancing act if the lawsuit is successful. The party, which hopes to win the White House in 2016, could face the anger of voters who would see an increase in their health insurance costs.

As a result, Republicans in both chambers of Congress have been working on alternative proposals in the event that subsidies are struck down. Senators Lamar Alexander, Orrin Hatch and John Barrasso, who chair key committees in the Senate, highlighted their plan in a recent Washington Post opinion piece.

“Republicans have a plan to create a bridge away from Obamacare,” they wrote. “First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.”

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