the relevant question here is, what did the congress that enacted this statute in 2010 do? did they really set up a system in which the states are subject to the kind of onerous situation that the petitioner claims? and i think there are three textual indications objective, textual indications that cannot possibly have been the statutory scheme that congress tried to set up. first, is the existence of the federal exchanges. it would make no sense, no sense for congress to have provided for federal exchanges if, as mr. carvin suggests, the statutory design was supposed to result in every state establishing its exchange. second -- >> well, wouldn't it have been again, talking about federalism , a mechanism for states to show , that they had concerns about the wisdom and the workability of the act in the form that it was passed? >> so, justice kennedy, i think

the federalism values are promoted by our interpretation because if that is, indeed, what a state thought, if a state really would have preferred that -- not to have the state government participate in the implementation of this act, for reasons that your honor identified, the structure of the act that congress put in place and that we're advocating for today fully vindicates that concern. they can decide not to participate without having any adverse consequences visited upon the citizens of the state. and that's why our reading is the pro-federalism reading. it's their reading that seems to me that is the anti-federalism reading, and that's a powerful reason to reject it. and if i could go to the second statutory point, which is related to what we're talking about, justice kennedy, which is section 1321, says that this statute is designed to afford state flexibility. state flexibility. it would be an orwellian sense of the word "flexibility" to use it in the manner that

petitioners say the statute uses it, because it's the polar opposite of flexibility. and the third point, seems to me, is the notice point, that if, indeed, the plan was, as mr. carvin said, that every state was going to establish an exchange for itself and that would cure all of the massive statutory anomalies and textual anomalies and absurdities and impossibilities that his reading provides for, if that was really the plan, then the consequence for the states would be in neon lights in this statute. you would want to make absolutely sure that every state got the message. but instead what you have is a , subclause in section 36b which is a provision that addresses the eligibility of individual taxpayers for taxing purposes. >> this is not the most elegantly drafted statute. it was pushed through on expedited procedures and didn't have the kind of consideration by a conference committee, for

example, that statutes usually do. what would be so surprising if among its other imperfections, there is the imperfection that what the states have to do is , not obvious enough? it doesn't strike me as inconceivable. >> so, justice scalia, i'm going to answer that question by talking about the legislative process, because i think it is quite relevant and i think it ought to be quite relevant even to you with respect to the question you just asked. the language here in 36b was not the product of some last-minute deal, it wasn't the product of scrambling at the end. the language that emerged here the statutory structure with the language of 36b about tax credits, the language that's in 1311, the language that's in 1321 was the product of the senate finance committee markup, which went on for weeks and weeks. it was a public hearing. it frankly, it was covered by c-span. you can go watch it on the

c-span archives if you want to and you will see coming out of that the that the understanding, the clear understanding was with this statutory setup would result in subsidies being available in every state. >> there were senators, were there not, who were opposed to having the federal government run the whole thing, because they thought that would lead to a single-payer system, which some people wanted. and the explanation for this provision is it prevents it -- it prevents the the federalization of the entire thing. >> no. justice scalia, i -- >> that's certainly a plausible explanation -- >> no. >> as to why the provision is there. >> mr. carvin has floated that as an explanation and he and he suggests that it was senator ben nelson who required it. there is absolutely no contemporaneous evidence, none whatsoever, that anybody thought that way, that the solution to the problem that your honor's identified is what congress did by having states have the option to set up their own exchanges with state-by-state federal fallbacks rather than a national

system. senator nelson has made clear, he has stated that he had no intention of the kind. there's no contemporaneous evidence at all that anyone did. and what mr. carvin has suggested is that this was the product of some deal to try to get votes so the act could get passed. what i would suggest to your honor is that there is objective proof that is not true. the provisions in the act that were negotiated at the end to secure the necessary votes are in title x of the act. and if you look in the act pages 833 to 924, that's title x. you can see all of the amendments. not a single one has anything to do with the statutory language before the court now. >> well, the puzzle that's created by your interpretation is this. if congress did not want the phrase "established by the state" to mean what that would normally be taken to mean, why did they use that language? why didn't they use other

formulations that appear elsewhere in the act? why didn't they say "established under the act"? why didn't they say "established within the state"? why didn't they include a provision saying that an exchange established by hhs is a state exchange when they have a provision in there that does exactly that for the district of columbia and for the territories? it says that they are deemed to be states for purposes of this act. >> so -- >> so why would they do that? >> so, of course, the provision doesn't say "established by the state" with a period after state. it says "established by the state under section 1311." and our position textually is and we think this is clearly the better reading of the text that by cross-referencing , section 1311, effectively what congress is doing is saying that exchanges established through whatever mechanism, exchanges set up by the states themselves, exchanges set up by --

>> so you're saying that by cross-reference to 1311, they really mean 1311 and 1321? >> yes. well, let me and i do think that, and let me walk through why i think that's true. >> all right. that seems to me to go in the wrong direction -- >> no, i think -- >> for your case -- >> i think -- >> not the right direction. >> no, i think it goes in the right direction, if you'll just ride with me for a little bit, justice kennedy, on this. >> well, before you before you get on to that, that your answer doesn't explain why "by the state" is in there. then why didn't they say "established under 1311"? >> well, so the second point is that wherever this provision appears in the act, "established by the state under section 1311," it's doing work. and the work it's doing is saying, what we're talking about is the specific exchange established in the specific state as opposed to general rules for exchanges. if you look at the medicaid maintenance of effort provision it works the same way. , >> well, why didn't they say "in the state"? that's the phrase you just used "in the state." why didn't they say "in the state"? >> because i suppose they could have, but it worked perfectly well this way. if you look at the qualified individual provision, it's clearly how they're using it with respect to the qualified individual provision.

and with respect to that provision, it says a qualified individual is a person who is located who resides in the state , that established the exchange. clearly, what they're talking about is a geographical reference to the particular state. that's what's going on there and what's going on every time the statute uses that phrase. so it's doing that work, and that's why it's in there. but now if i could go back to your point, justice kennedy, it says, "established by the state under section 1311." section 1311(b)(1) says, "each state shall establish an american health benefits exchange for the state." it's not, as mr. carvin said, an urging that states do it. it says, "each state shall establish." now, we know that when congress used that language, "each state shall establish," it must have meant something more inclusive than each state government shall itself set up the exchange. we know that because congress is legislating against the backdrop of the tenth amendment, and so it couldn't impose that requirement. and we know that because of

section 1321, because section 1321 provides the means by which the 1311(b)(1) requirement is satisfied. it will be satisfied by a state electing to meet the federal requirements for exchanges, or it can be satisfied in the event that a state doesn't or tries but comes up short by hhs stepping in and establishing the exchange. >> so when the statute says, "each state shall establish," it really means the federal government shall establish if a state doesn't establish. >> i think the right way -- >> and if that were the correct interpretation, you wouldn't need 1321 at all. >> so, no. i think the right way to think about this, justice alito, is that what's going on here is that the right place to focus, let me put it that way. the right place to focus here is not on the who, but on the what. on the thing that gets set up and whether it qualifies as an , exchange established by the state, and these exchanges do qualify. and the reason they qualify is

because they fulfill the requirement in section 1311(b)(1) that each state shall establish an exchange. and 1321 tells you that because it says to the hhs that when a state hasn't elected to meet the federal requirements, hhs steps in, and what the hhs does is set up the required exchange. it says such exchange, which is referring to the immediately prior to the required exchange where the only exchange required in the act is an exchange under section 1311(b)(1). so it has to be what hhs is , doing under the plain text of the statute is fulfilling the requirement of the section 1311(b)(1) that each state establish an exchange, and for that reason we say it qualifies as an exchange established by the state. that's reinforced, as justice breyer suggested earlier, by the definition which says that an exchange is an exchange established under section 1311. 1311, again, has 1311(b)(1) which says each state shall establish an exchange.

and it has to be that way because petitioners have conceded, and it's at page 22 of their brief, that an exchange that hhs sets up is supposed to be the same exchange that petitioners say function just like an exchange that the state sets up for itself. >> well, you're putting a lot of weight on the one word, such such exchange. such it seems to me the most unrealistic interpretation of "such" to mean the federal government shall establish a state exchange. rather, it seems to me "such" means an exchange for the state rather than an exchange of the state. how can the government federal government establish a state exchange? that is gobbledygook. you know, "such" must mean something different. >> it isn't gobbledygook justice scalia. and i think about it and i go back to something that justice alito asked earlier. if the language of 36b were exactly the same as it is now, and the statute said in 1321 that an exchange set up set up

by hhs shall qualify as an exchange established by the state for purposes of section 1311, you wouldn't change the language of 36b one iota, and there wouldn't be any doubt in anyone's mind that the that -- that subsidies were available on federal exchanges. and what we're saying is that effectively reading 1311 and 1321 together, that is what the statute does. certainly that is a reasonable reading of the statute. it is really the only reading of the statute that allows you to be faithful to the text of 1311(b)(1), the word "shall," and to the tenth amendment. in order for their -- >> the word "such" means not just the exchange that the state was supposed to set up, but it means the state exchange. >> it means an exchange that qualifies as -- an exchange established by the state because it satisfies the requirement of 1311(b)(1).

>> no. you have to say it means the state exchange. you have to your case hinges on the fact that a federal exchange is a state exchange for purposes -- >> it hinges on it hinges on it -- qualifying as the state exchange or being equivalent to the state exchange for the purpose of the operation of the statute. that is a reasonable reading of the particular textual provisions, and once you've concluded that it's a reasonable reading of the particular textual provisions, then you have to read it the way that we say it is to be read because it is the only way to make sense of the statute as a whole. it is the only way to bring it into harmony with the act's qualified individual and qualified health plan provisions which do lead to what they admit is an absurdity under their reading under the law. >> would you agree that there are provisions of the act where the exact same phrase, "established by the state," has to be read to mean established by the state and not by hhs? >> i don't -- >> there are some provisions like that. >> they've pointed out some, but i think they're wrong about each one, and i don't know what your honor has in mind. >> all right. well, let's take one let's take one.

i'd be interested in your answer to it. 42 u.s.c. section 1396w3( h)(1)(d) which says that each state shall establish procedures to ensure that an exchange established by the state utilizes a secure electronic interface. and they say that if that is read to if "exchange established by the state" there is read to mean an hhs exchange, that means that the state in which that exchange is established is responsible for making sure that the federal exchange has a secure electronic interface. >> yes. they're just wrong about that. it's just completely wrong. the statute says that the state shall first of all, the , statutory obligation is addressed to the state medicaid and chip agencies. what it says is they shall establish procedures to ensure the coordination. hhs has issued regulations setting forth what that statutory provision requires of states in those circumstance. every state where there is a federally facilitated exchange has met the requirements and fulfilled them, and it worked perfectly fine.

there's no anomaly there at all. >> and the state -- it met the requirements of the regulations you say, but do the regulations track the statute? >> yes, they do. >> do they give the state authority to say whether or not these these conditions have been met? >> the requirements are imposed on the state medicaid and chip end of the relationship. that's what the statute does, and the regulation to implement that statutory requirement, and it's satisfied in every state. and, of course, as your honor reading it to me said, it does say and i think that proves our point. the statute says each state shall. it doesn't say states that have set up exchanges for themselves shall. it says each state shall. it presupposes that there is going to be something that qualifies as an exchange established by the state in every state. so there's no anomaly there, and if your honor wants to ask me about any of the other ones, you can, but i there are no anomalies frankly. >> as i understand your answer to be that there are federal regulations telling the states

what they have to do here, and they've all done it. but the fact remains that the state has some obligation under the regulations to make sure that there is a proper interface with the federal exchange. >> on the state's side of the interface, yes. but that's the chip and medicaid agencies. those are state government agencies, and it's their side of the interface that the statute governs. and, you know, as i said, i don't think there are anomalies of our reading, but if they are, they pale in comparison to the anomalies on the other side. i mean, i really do want to focus on this point about the qualified health plan and the qualified individual, because the statute is quite clear in section 1311 that an exchange, not an exchange established by the state, but an exchange can only sell a qualified health plan. it is forbidden from selling a health plan that is not a qualified health plan. and that's not an exchange established by the state. it is an exchange. now, the statute also says that to certify a health plan as qualified, the exchange has to decide that it is in the interest of qualified individuals. now, qualified individuals are

persons who reside in the state that established the exchange. so if you read the statute, the language, the way mr. carvin reads it instead of the way we read it, you come to the conclusion and in a state in a federally facilitated exchange there are no qualified individuals. therefore, the exchange cannot certify a qualified health plan as being in the interest of qualified individuals because there aren't any, so there aren't any qualified health plans that can lawfully be sold on the exchange. >> what is the provision that says that only a only a qualified individual can be can enroll in a plan under an exchange? >> i will address that, but i just want to make clear the provision i'm talking about with respect to the prohibition on selling a qualified health plan to anybody on anything other than a qualified health plan on an exchange is 1311(d)(2)(b) which is at page 8a of the appendix to our brief.

it's absolutely unambiguous. an exchange, not an exchange established by the state, an exchange may not make available any health plan that is not a qualified health plan. so -- >> qualified health plan. but what's the provision you were referring to when you said that an exchange may enroll only a qualified individual? >> what the statute says throughout is that qualified individuals are eligible to purchase on exchanges, and it's the necessary meaning of that phrase that if you are not a qualified individual, then you are not eligible to purchase health care on an exchange because otherwise, the word , qualified would not have any meaning. the meaning of the word qualified is to distinguish between people who are eligible and people who are ineligible. and as a policy matter, it wouldn't make any sense because think of the people who are not qualified individuals. the people who don't live in the state, the people in prison, and the unlawfully documented. >> this is part of section 1312. a person qualified to purchase

on an exchange must, quote reside in the state that established the exchange. >> right. and there are no such people in 34 states under mr. carvin's theory of the statute. you just run into a textual brick wall. >> i understand your argument is it's a logical inference from a number of provisions that only a qualified individual may purchase the policy, but i gather there is no provision that you can point to that says that directly. well, that's what qualified means, justice alito. it means that, you know, if you're not qualified, you're unqualified. and so, i mean, that's what it means. and so you're just reading the word "qualified" out of the statute if you read it that way. >> "qualified" is used in the in the lay sense of the term, it's not a technical term here. >> well, i think -- well, given the way it's defined, it's defined as a person who resides in the state. it excludes people out of state. it does that because the statute was quite clear that you weren't going to be allowed to shop for insurance policies across state lines because that would infringe on traditional state prerogatives regulating insurance. and with respect to prisoners,

it doesn't make any sense to say that prisoners should be able to get insurance. mr. carvin says, yes, it does because they get out of prison. well, there's a specific statutory provision that says when you face a changed-life circumstance, such as getting out of prison, you can sign up for insurance at that point. he makes the point about unlawfully present persons being both unqualified and not being able to be covered, but that's not surplus, that's there for a very important reason, which is that someone can be in lawful status and, therefore, be eligible for health care, but then lose lawful status and at that point, they can no longer be covered. so, just none of that works for them. none of that works for them. to get to the fundamental point here that both at the level of text, you have clear irresolvable conflicts so that , the statute can't work if you read it mr. carvin's way. you have, at the level of text -- >> is that a synonym for ambiguity? >> i think so, exactly right justice scalia i mean, excuse me, justice kennedy that you

have ambiguity there precisely because you have to you know this is a statute that's going to operate one way or the other. and the question is how it's going to operate. and when you read it their way you -- >> well, if it's if it's ambiguous, then we think about chevron. but it seems to me a drastic step for us to say that the department of internal revenue and its director can make this call one way or the other when there are, what, billions of dollars of subsidies involved here? hundreds of millions? >> yes, there are billions of dollars of subsidies involved here. but two points about that -- >> and it seems to me our cases say that if the internal revenue service is going to allow deductions using these, that it has to be very, very clear. >> so -- >> and it seems to me a little odd that the director of internal revenue didn't identify

this problem if it's ambiguous and advise congress it was. -- at once. >> so a few points about that with respect to chevron deference. first, we do think chevron deference clearly supports the government here and i'll explain why. but before you get to that, you can resolve and should resolve this statute and the statute's meaning in our favor even without resort to chevron deference. that's what the canon of reading a statute as a whole to make it work harmoniously directs you to do. it's what the very important principles of federalism that we've been describing here direct you to do. if you think there's a constitutional problem with the statute, it's what the doctrine of constitutional avoidance directs you to do. now, with respect to chevron section 36b(g) of the statute expressly delegates to the irs the specific authority to make any decisions necessary to implement section 36b. so you don't have any ambiguity. congress said the irs should do this. it is a big question, but as the court said in city of arlington two terms ago, chevron applies to big questions as well as

small. your honor raised this point about the need for clarity in a tax deduction and irs in the statutory reading of tax deductions, there is a learned treatise that describes that as a false notion. and it is certainly not consistent with this court's unanimous decision in mayo two terms ago that chevron applies to the tax code like anything else. and so -- >> if you're right about chevron, that would indicate that a subsequent administration could change that interpretation? >> i think a subsequent administration would need a very strong case under step two of the chevron analysis that was a reasonable judgment in view of the disruptive consequences. so as i said, i think you can resolve and should resolve this case because the statute really has to be read when taken as a whole to adopt the government's position. but i do take -- >> general -- >> if there are any if there are any tax attorneys in the in the courtroom today, i think probably they wrote down what you just said. when we get future tax cases

the united states is going to argue that we should not read them to you know, there should be no presumption that a tax credit is provided by that statute. >> you should read it according to its terms. and when you read this provision according to its terms and you read it in context and you read it against the background principles of federalism, you have to affirm the government's interpretation. thank you. >> thank you, general. four minutes, mr. carvin. >> thank you, mr. chief justice. very quickly on standing. mr. hurst would be subject to a penalty absent relief by this court for 2014. as i've discussed, both he and mrs. leevy, of course, would face the same principle for 2015. if the government is suggesting that their case has become moot because of changed circumstances, under cardinal chemical 508 u.s. 83, it's their burden to raise it, not ours to supplement the record. in terms of the anomaly, in terms of all the states losing 34 states losing their medicaid , funds, the solicitor general greatly distorted the statute.

it's printed at 64a of their exhibit. it says, "a state shall establish procedures," so the notion that hhs established them is obviously contrary to that. it says, "the state will identify people to enroll on their exchanges." well, they can't enroll anybody on their exchanges if there are no such exchanges in the state. therefore, by the plain language, if you adopt the notion that "exchange established by the state" means established by hhs, all of them need to lose their medicaid funding. >> could i follow up on something the general ended with, which -- and justice kennedy referred to, which is the need to read subsidies limited. in a limited way. but so is the need to ensure that exemptions from tax liability are read in a limited way. and under your reading, we're

giving more exemptions to employers not to provide insurance, more exemptions to states and others or to individuals, how does that work? i mean, you've got two competing -- >> no, no. you do get more exemptions for employers under our reading, but again the same principle , applies. is it unambiguous? it's undisputed that one is unambiguous. >> well -- >> the dispute here is whether or not if they win under ambiguity, and they don't because the canon requires unambiguous statutes not to afford the tax credit. in terms of the employer mandate, i think that's very helpful in terms of justice kennedy's concern about federalism. under their view of the statute, the federal government gets to unilaterally impose on states there's an amicus from indiana describing this a requirement that states insure their own individuals. it implies the employer mandate to states. so under their theory, the states are absolutely helpless

to stop this federal intervention into their most basic personnel practices. whereas under our theory, they are able to say, no. so actually, the more intrusive view of the statute is theirs. in terms of the funding condition, head on, your honor i think my short answer is as follows there's no way to view : this statute as more coercive or harmful than the medicaid -- version of medicaid that was approved by this court in nfib and, indeed, the nfib dissenting opinion pointed to this provision as something that was an acceptable noncoercive alternative. but in all events, even if there's a constitutional doubt under a novel constitutional question, as justice scalia pointed out, there's no alternative reading of the statute that avoids that because either way, you're intruding on state sovereignty. in terms of the anomaly, in terms of qualified individuals as predicted, solicitor general did not come up here and tell you, yes, if we prevail here under this theory, they're going to have to empty out the hhs exchanges. nor did he even respond to my argument that with respect to an

exchange under the definitional section only applies to state exchanges. so i think we can view this as a complete tendentious litigation position and not a serious statutory interpretation. in terms of the qualified health plan that he discussed with you, justice alito, the complete answer to that is that is in 1311. 1311 only is talking about state established exchanges. it has no application to hhs exchanges, therefore, it can't possibly create an anomaly with respect to those hhs exchanges. >> thank you, counsel. the case is submitted. >> following the argument, the wife of the plaintiff and attorney for the lawsuit spoke to members of the media. pam hurst is the wife of douglas hurst, the what -- plaintiff. she says she and others should not be taxed for something they

do not want. also speaking, the attorney who represented the other side. this is about 20 minutes. >> hi, my name is pam hurst. i am here with my husband doug. we are here on behalf of the plaintiffs in king versus burwell. decisions made here affect middle-class families, like ours. we believe it is time to those who have been hurt by washington, take a stand. that is why joined the case. we never imagined we would end up in the supreme court. but that shows you how important his case is. not just for us, but for others around the country, who are affected by obamacare. there are millions of americans who have lost your plans, or

their doctors or, like doug and i, are forced by the irs to either buy insurance we don't want, or face a tax penalty. we want americans to have options. we believe there is a better way to take care of people who need help. but there is no reason to force millions of us to pay tax penalties if we don't join a government program. we left our state and national leaders to write laws. we do not let the irs. we believe preventing the irs from rewriting health care laws is the right thing to do for our family, and our country. this is why we are here. what the irs has done isn't

fair. it isn't right. and, it is a legal. -- it is not legal. we will hope the rule -- the court rules to protect our choice and the laws that govern our nation. thank you. >> where in virginia did they live? >> i argued on behalf of the plaintiffs. i believe our case is very compelling. i am confident the court will recognize the merits of our statutory interpretation and not let the irs rewrite the plain language of the statute. >> were you concerned about justice kennedy's question? >> justice kagan and i had a candid exchange of viewpoint. at the end i am sure i

persuaded her. i would remind you that there are nine justices. >> many people have talked about rewriting the law as a whole. >> across -- i very much want them to read the statute as a whole, because that reinforces our point, principally, the point that a clear purpose of the statute was to encourage states to establish their own exchanges, which is dramatically undermined and frustrated by the irs rule, which would -- which provides subsidies require -- regardless of what the states do. >> how concerned were you about justice kennedy's question about how your reading of the law would be about the federal government coercing the states into creating exchanges? >> i said, after the conversation, i think it became weary to everyone -- clear to everyone that this be less colors of than the version of medicaid statues they have just

upheld, and it would be a greater intrusion on state sovereignty to accept the government's positions because that would allow the government to unilaterally enforce the mandate on federal employers as well as employers of the state. >> [indiscernible] >> last time, we were arguing that the affordable care act should not be the law of the land. we are now arguing that it should. and it shouldn't be dramatically altered by an unelected bureaucracy. >> qc contradiction in that? >> i think it is consistent in both circumstances. i have to accept the court's decision. that is the law of the land. we needed to be fairly interpreted. we are here to vindicate the rule of law. >> wouldn't that be a death knell to the affordable care

act? >> not at all. you has seen the popular press. it seems that leaders in congress are prepared to deal with transition issues. i assume the states, if they don't, will have incentive to create the extent -- exchanges that they would have created but for the irs's convention of a lot. >> what you say to americans who might lose their insurance? >> if you're arguing that there is a compelling policy reason to help these people, i am sure of elected officials at the state or federal level will listen to that. the court is not prepared, or equipped to say that they make policy, rather than the legislative branch. >> what about states clearly feeling that they did not [indiscernible] >> they read the statute. the only reason they were confused is because the irs pulled a bait and switch on them. it said statement federal. if they had implemented the law

all of the state would've known what the deal was in the statute. but it takes a lot of chutzpah to come in and say, because we caused one third of the states not to have exchanges, that is an argument in favor of the resolution. >> were you surprised how this went? x i am never surprised by vigorous questions by well-informed and articulate justices. that is the norm. >> are you concerned about this causing the insurance system to collapse? >> again, if the theory is that in insurance premiums will skyrocket for everybody that is simply confirming my political point. that would mean not only people receiving subsidies, but people at all income strata would demand that either congress or the states to do this. the difference is, it would be done with the legislative process rather than the irs hijacking the legislative process.

thank you very much, appreciate it. >> i am the attorney general from oklahoma. i was a part of leading the first case on this in 2012. i want to speak to the state interest, but i want to say thank you to the hearst's or participating in the case. it is no small matter. they should be shown appreciation for their courage. i wanted to thank michael. he has shown great advocacy in this case. he has been a great partner. the state of oklahoma, like 36 other states, had a clear choice to make. and made a decision not to setup a state health care exchange. this is not just about subsidies. as michael indicated, when you invite subsidies into your state, you are inviting and lawyer mandate and -- employer mandates and individual mandate. this is a challenge based upon a single section of law.

it goes to the very structures of the federal government to enforce the law. when states made the decision, over the last couple years, to set up an exchange or not, they made the decision understanding the policy consequences a subsidies, employer mandate penalties, and enforcement of individual ready to. the policy and locations of a victory are significant. as michael indicated both the state and the government stand ready to respond to whatever policy implications they occur by a court doing what the statute intended, i doing what the statute says, which is, if a state chooses to set up an exchange, subsidies and penalties are issued. the seven states have said no. that should be respected. that is not the power of the irs to disregard plainer -- plain reading of the statute. that is what the case is about today. the argument that was presented by michael and the plaintiffs and the petitioners is spot on with respect to the text of the

statute and the intent. thank you for your time. >> i represent the members of congress who authored the law and more than 100 legislators who helped implement the law and to support the obama administration's position in this case and the viability of the affordable. i am joined by former acting solicitor general. >> today, the court did what it often does, ask tough questions of both sides in a vigorous 90 minute argument. idle you yesterday that i thought it would be a good day for the government, and i would say it was an extraordinary day for the government. with a magnificent performance by the solicitor general, and i think, questions that heavily indicated that the court is likely to rule in favor -- in favor of the government.

they are asking tough questions of both sides. i have to say, this was an extraordinary day for the government. it began about five minutes into mr. carbon's argument. my friend emphasized that what looks like a strong point, the law says the words established by state to get subsidies shouldn't that mean that only state run exchanges have subsidies? within five minutes, justice breyer says, we are not reading the constitution, we are reading tax codes that have defined terms. those terms clearly say that when the federal government runs an exchange, it is such an exchange, just like a state one eligible for subsidies. i think you sought that heavily hammered, the idea that this is not an ambiguous provision, this is a provision that everyone understood at the time to provide subsidies to both federal and state exchanges.

>> thank you. i want to emphasize one of the points that justice kennedy made today, which is that the law was written by congress to provide affordable health care to all americans, and to provide for state flexibility. but, ironically, michael carbon and the petitioners argued that this would be coercive to the state, that it would not respect the state's choice in this matters. congress allowed flexibility for states to have their own exchange or to allow the federal cover -- government to run those exchanges in their stead. we believe of the court follows the plaintext of the law, if they follow their clear precedents on the idea that you read its entirety and it it's on text -- and in its context, it is clear the tax breaks are available to all americans, no matter which state or exchange which entity runs the exchange

in their state. members of congress know what they wrote. we filed a brief indicating to the court that everyone at the time understood that the law allowed for tax credits regardless of who facilitated exchanges. even opponents of the law, congressman paul ryan was on record saying there wasn't any difference between state and federal run exchanges, and what mattered was your income eligibility for the tax credits not to renren the exchanges. not who ran the exchanges. we are confident in the results. >> is this a pickup, mr. verrilli made an important point when he said, these parts of the exact -- the act were not passed in the middle of the night. they had been debated for months, and not a single member of congress adopted or said a word about what these challenges are saying today. this is a novel interpretation

discovered, as justice kagan said, a year and a half after the -- after the law was enacted. congress did not have this in mind at the time of the act. >> justice kennedy's question [inaudible] >> a ghost in the absurd interpretation of the petitioners are asking the court to adopt. it makes no sense that congress would have written a law to coerce the states and trying to give them a choice. also, that they would have tried to coolers the states. nobody understood that. it is not a very good threat if you don't articulate the threat. no one understands that there is a threat being made until a year and a half later. someone comes up with a gotcha litigation strategy. i was heartened by his taking seriously the concern to the imbalance in the state-federal relationship that would result from the interpretation being pushed by the petitioners. >> justice kennedy's question

said, if your interpretation is adopted, want that unconstitutionally cores the states? the combination of justice kennedy's question read against justice kagan's question, which was, if congress is trying to coerce states, why would they do it in the subs here provision -- this of skier provision -- obscure provision. it looks like a gotcha game, with no gotcha at the end of the day. >> [inaudible] >> that is beyond -- i am the lawyer. i'm not going to get into that. >> we have study showing that there will be substantial disruption to the health care market as a whole. economists have noted there would be a death spiral ring -- resulting as mr. verrilli said today, it is not believe that

this congress would do something to fix it. >> what does that mean to the average person? >> the question is regarding the death spiral that would result in the state's idea that costs would rise and people would become uninsured, we have experts filing briefs on this matter. literally, quantifying the number of people who could lose their lives as the result of losing coverage if tax credits were taken away. >> but they wouldn't be taken away. they would -- >> experts who weighed in, everyone who has a stake doctors, patients, nurses, insurance companies, hospitals have filed in support of the government's position in this case and in support of the availability of tax credits. >> i represent the american

hospital association. they filed a brief with the opening line, the health insurance of 9 million americans plus are at stake in this case. all, potentially taken away. these are people who are never had insurance before, many have never had insurance before, for the first time, they have been able to have it under the affordable care act. if this novel interpretation by the supreme court, it is going to be devastating for the consequences to americans in their health. >> we have an expert to can speak shortly about the death spiral consequences. my name is elizabeth, i represent the members of congress and state led -- state legislators who filed a brief in support of the administration. i work for the constitutional accountability center. >> i am dr. emmanuelle.

i am on the brief with the economists. let's explain the death spiral. imagine that you have 11 million people in the exchanges losing their subsidies. and, you have the simultaneous requirement that you cannot exclude people you have to sell insurance to people where pre-existing conditions, more likely to be more expensive. healthy people were getting subsidies who are no longer getting subsidies, will stop buying insurance. the people who are buying insurance, will concentrate as those who are likely to have high medical bills. he will drive up the premium for insurance. more people will exit the market because of premiums being too expensive. you will then raise the premium because he will have very sick people buying insurance. the consequences are an unsustainable market. this is why the insurance industry does not -- opposes

this position. it will kill the insurance market throughout the states without a state-based exchange. it is very destabilizing. it is been established, because no exchange works without subsidies before. we have tried this. they would not work. as correctly put by solicitor general verrilli, the federal exchanges would then be a shell game. they would be a shadow exchange. no one would buy and no one would sell of those exchanges. it would be unaffordable. >> what would be the ripple effect? x >> insurance is done state by state. they would be insulated. you're talking about 34 states and the majority of the u.s. >> this has affected many insurance companies and hospitals. it wouldn't affect [inaudible] >> you can still have insurance in states. a lot of blue cross blue shield

plans are state-based, for example. insurance companies are very nervous about this. it would destabilize the system. let me add one more point, one reason congress cannot solve this problem the way justice scalia suggested there is a big scoring issue. you would have to fight about hundred $50 billion to remedy the problem the with the congressional budget office scores this. there is no way of finding $350 billion to solve the problem. it is a difficult problem not trivial, as justice scalia suggested, they can just pass a law and say the exchange works in the state. there is a huge costs -- cost to that. if the subsidies are not part of the affordable care act, you have to sign -- find the money to pay for the subsidies in a new way. i am is eq -- ezekiel emanuel.

i thought the government did an extraordinary job, i think don verrilli was very forceful and provided a coherent explanation for why the interpretation they are offering is right. thank you very much. >> ezekiel >> you will see what is called a mutt and jeff, nation, or stickball set. washington was a large man. very robust, terrific natural athlete. madison is a skinny, little guy. >> tonight on q&a, founding father james madison the

partnerships he made. >>'s gift -- the gift i like most is his ability to form partnerships. it also is his gift to the country of his talents and what he was able to do to help create the first self-sustaining constitutional republic. >> tonight at 8:00 p.m. eastern in specific on c-span q&a. >> in a week where there has been a lot of discussion about police work i want to invite lori robinson, the cochair of the president's task force on policing. thank you for being our guest this week. we invited her cochair on the task force.