King v. Burwell: The Return of “Purpose” in Statutory Interpretation

The Supreme Court’s decision in King v. Burwell is interesting not only in its result but in its application of statutory interpretation.

Before the case, so much ink was spilled (and more virtual ink virtually spilled) on the question of deference to the IRS’s interpretation of ambiguity under the statute (under the so-called “Chevron” doctrine) as well as principles of federalism, which were used to argue for results for and against the Administration in the case. There were also questions about the standing of various plaintiffs. There were arguments about the intent of the drafters, and what MIT economist Gruber said, or may have said, or may have misspoken about the way the law was supposed to work. In the end, the Court rejected application of Chevron deference to the IRS and federalism made no appearance. Nor did standing or Gruber get discussed.  Instead the Court’s analysis went basically like this:

The question whether tax subsidies applied to poor people in states that did not set up their own health care exchange is important, so important that it is hard to believe that Congress would have delegated that question to an agency (and particularly to the IRS, whose job it is to collect revenue not design health care policy). So there is no “Chevron” deference on the question. The court has to use its tools of statutory interpretation to decide the case. The law, read as a whole, is ambiguous. It is certainly possible to read the challenged language as giving subsidies only to people in state exchanges and not in the federal exchange. But there are other parts of the law, read in context, that only make sense if subsidies apply to those in state or federal exchanges. In such an ambiguous case, it is the purpose of the law that should govern. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

This means of interpretation is important for a number of reasons. First, it means that a new administration with a new IRS Commissioner cannot reinterpret the law to take away subsidies. Second, it puts more power into the hands of Congress over administrative agencies (and therefore the executive), at least on issues at the core of congressional legislation. Third, and most important as a general principle, it rehabilitates a focus on the law’s purpose as a touchstone to interpretation, over a rigid and formalistic textualism that ignores real-world consequences. If followed through consistently, this principle would greatly improve our statutory interpretation. As I wrote on this point in Slate in July, discussing the various lower court opinions on the Obamacare question:

Unless you are a lawyer or a glutton for punishment, you probably want to avoid reading the new D.C. Circuit and 4th Circuit opinions reaching conflicting results on the legality of key provisions of the Affordable Care Act—the parts that provide subsidies for Americans who sign up for health insurance through the exchanges the law created. The opinions are full of jargon parsing the intricacies of the mammoth health care law. But well within the weeds of these lawyerly discussions is a more fundamental question: Is it the courts’ job to make laws work for the people, or to treat laws as arid linguistic puzzles?

In today’s King v. Burwell, the Court said that in close cases, make the law work the way Congress obviously intended it. That’s a very good thing.


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