was rightfully noted as the lie of the year as millions of americans lost their doctors. now this row of justices are complicit in that lie. setting aside their oath of office to lie to the american people. after today's ruling, obamacare will now be responsible for imposing illegal taxes on more than 11 million individuals. and for burdening hundreds of thousands of businesses with illegal penalties on their workers, killing jobs and further slowing economic growth. you are a young person right now. you come out of school. you have student loans up to your eyeballs. you are struggling. you do not know if you are going to get a job. the dismal economy means your future is bleak. you have no hope for optimism about beginning a career, gaining skills, moving toward

the american dream. today, the united states supreme court has joined armed and on with president obama and the irs in illegally imposing taxes on you. you are a young person struggling to make your student loan payments, working as a part-time employee making coffee does not pay those payments. yet you are stuck with the individual mandate, which is a tax. so the supreme court told us. so the justice department argued right after president obama told the american people it was not a tax. the obama justice department said yes, it is a tax. the supreme court agreed that you, the young person, the single mom trying to feed your kids, are paying an illegal tax because of the lies emanating from washington, d c. you, as a teenage immigrant, as my father was 50 years ago washing dishes -- he could not

speak english, but he was filled with hopes and dreams. he was filled with an aspiration for the american dream. ours is the greatest nation in the history of the world because people can start with nothing and achieve anything. that is the promise of america. obamacare is strangling that promise. you, the teenage immigrant washing dishes, are paying illegal taxes today because of president obama's deception, because of the irs' lawlessnes, and the supreme court to judicial activism, violating their oath of office. mr. president, i remain fully committed to repealing every single word of obamacare. mark my words -- following the election in 2016, the referendum that we will have in 2017 --

this chamber will return and we will repeal every word of obamacare. we will bring back economic growth. then we will pass health care reform that makes health insurance personal and affordable and gives the government from getting between us and our doctors. we will recognize that is horrible experiment has failed. when millions of americans lose their doctors and see their premiums skyrocket, incumbent on members of this body, it is incumbent on the federal government to fix the wreckage they have caused. to fix the wreckage that the supreme court has now embraced flawlessly -- lawlessly.

we will repeal obamacare. i will fight with every breath in my body to make sure that happens in 2017. mr. president, i yield the floor. senator hatch: earlier today the supreme court issued a ruling in king versus burwell. as we all now know the court has once again decided to rule against common sense in order to uphold the affordable care act which, by the way, justice roberts says has a lot of ambiguity. even worse with today's decision, it failed to hold the obama administration accountable for the reckless execution of its own law. subsidies were authorized only through state exchanges, not the federal exchange. this decision will allow the administration to continue

ignoring the law and order to implement its own preferred policies. as justice scalia said in his dissent, we should start calling this law scotus-care. only justice scalia would come up with something like that, which i find extremely humorous. justice scalia continued saying "perhaps the protection in the affordable care act will attain the enduring status -- this court's decision on the act will surely be remembered through the years. the somersaults of statutory interpretation that they have performed will be cited to the confusion. the discouraging truth that the supreme court of the united states favors some laws over others and is prepared to do whatever it takes to uphold its favorites. i could not have said it any better myself. needless to say, i am

disappointed with this decision as i know many throughout the country are. at the same time, i am undeterred. obamacare has been nothing but a long series of broken romances that includes skyrocketing costs, reduced access to care and more government mandates hanging over our health care system. today's ruling changes none of that. just because the court has decided to misinterpret the statute does not mean that the law suddenly works and all is now right with the world. for the good of our health care system and the hard-working taxpayers throughout our country, we still need to chart a new course on health care policy. unfortunately, with the current argument of the white house, those cuts and reforms are not currently possible. make no mistake, madam president. republicans in congress have a plan to help the american people by repealing obamacare and replacing it with reforms.

i am co-author of a legislative proposal that would replace obamacare with real reforms that would reduce health costs without all the burdens and mandates that have been parceled with the so-called affordable care act, which are anything but affordable. the co-authors of this proposal, senator burr and chairman upton over in the house, will continue to seek input from experts and stakeholders and use every opportunity to give states more freedom and flexibility. once again any workable reform must lower costs. that is the only way we win. and help people move past obamacare. republicans in congress are

united to make sure we do better on health care reform in the future. i suspected this is the way the court would decide because it is a big enough bill that really clever judges can find some way of tying in and justify the decision that they made today. very few justices as clever as they distinguish the chief justice of the united states, a man who i have tremendous respect for and who i see use his tremendous legal talents to be able to uphold obamacare, something i thought they might do. on the other hand, the law is unambiguous, in my opinion. to define ambiguity where none exists is something that troubles me greatly. however, he did it with aplomb. he did it with a great deal of legal skill.

i have had colleagues talk about his vote in the original case, which was the deciding vote and literally made the decision a 7-2 decision. i felt like he was more interested in not having a 5-4 decision across the board and seized the opportunity to go 7-2. by doing so, did something that the left probably would have undertaken. he rejected something that probably the left would have undertaken. that is the scheme that then -- i would say all of the

subtleties under medicaid would have been defunct for the states that did not go along with what they were saying. all i can say is that the chief justice is a remarkable judge. he is a tremendous human being. i have tremendous confidence in him. and i believe in him. i differ with him on this opinion. on the other hand, it is a very clever opinion. and i have to say, only a very clever judge could have written it. as well as those others who are in the 6-3 majority. i am very concerned because it does not solve any problems. we are going to continue to have this tremendous spiral of huge cost and problems eat us alive

until our friends on the other side get what they really want, and that is a single-payer system. in other words, socialized medicine. they will throw their hands in the air and say, well, this is not working, especially when all of these costs are coming in 2017 and 2018. this is not working. we are just going to have to go to a one-size-fits-all government-sponsored health care in this country, where the government will determine everything. that is what they are headed for. somehow, we have got to stop that or we are going to find ourselves in a socialist position where we will not be able to stop things in the future. i hope that maybe the court would propel us on a better course here. on the other hand, i do understand what they have written and i even predicted some of it. clever judges can define

ambiguities where none exist. clever judges can find ambiguities in other parts of the text. clever judges can find and begin it is -- ambiguities that others are not able to find. if we can live with this, we are going to have to repeal obamacare and replace it with something much better. i think the care act that i have been talking about would be so much better. it would be so much less cost and so much better for the people who need health care in this country than what we have today. with that, madam president, i yield the floor. >> the supreme court upheld the federal insurance subsidies in the affordable care act. on the next "washington journal," we will look at the decision. david savage will join us. we will also take your foot -- your calls, facebook comments, and tweets on the decision.

live every morning at 7:00 a.m. eastern on c-span. >> the supreme court ruled 6-3 that subsidies can go to individuals and states that have health care changes run by the federal government. preserving subsidies in the 34 states that use the federal marketplace for health insurance. chief justice john roberts wrote the decision for king versus burwell, which the court heard in march. >> your argument this morning king versus birdwell. -- well. -- burwell. >> this is a statutory case. justice ginsburg: could you please back up?

you know this one plaintiff has a concrete state in these questions. we cannot put them in ideological questions. there is a declaration stating "i am not eligible for health insurance by the government." mr. carvin: one of those is mr. hearst. i would refer you to page 42 where they make it clear that mr. hearst would have to spend $750 of his own money because of the irs rule. mr. hearst was a veteran for 10 months in 1970. he is not eligible for any veterans service because he served -- health services. justice ginsburg : the

opposition to look into it -- mr. carvin: that is true. justice ginsburg: i do not think it was ever brought up. mr. carvin: if i could make one further point on this -- even if he were technically held -- eligible, which he is not, there is an irs rule which says -- the usual clarity with the irs code -- [laughter] makes it clear that you are only disabled from receiving subsidies if you have enrolled in a federal health service. justice ginsburg: and then there are the two women. i think one of them was going to turn 65, which would make her medicaid eligible. mr. carvin: she would turn 65 in

late june. she is subject to the individual mandate well in advance of that. she would have to spend $1800 per year for health insurance. justice ginsburg: you said she would turn 65 and june. that takes care of 2015. mr. carvin: no. right now, she is obliged under the individual mandate to have insurance. you have to have insurance for nine months of the year. as of april 1, she would be subject to the penalty which would be alleviated only by -- justice ginsburg: i will ask the government if they agree with you on that. the fourth plaintiff, the question for whether she would qualify for a hard exception even if she qualified. mr. carvin: that was the government's argument.

we do not want to get into a factual dispute about it because we have such clear standing. justice ginsburg: you have to establish a standing through the standing if she gets beyond the opening door. mr. carvin: fair enough, your honor. only one plaintiff needs standing. justice ginsburg: i do not want to detain you on this anymore, but i will ask the government what their position is on the statue. mr. carvin: thank you. the only provision in the act which authorizes or limits subsidies says in plain english that the subsidies are only available through an exchange established under section 1311. justice breyer: i would appreciate, in your elaboration on that -- this statute is more

like the tax code more than it is like the constitution. they are going to find terms and the words you just used concern a defined term. as i read the definition -- there is a section "definitions." it says "the long-term exchange needs an exchange established under 1311." 1311 says an exchange should be a government agency. that is established by the state. those are the definitions. then you look at 1321. 1321 says if a state does not set up that exchange, then the federal "secretary shall establish and operate such exchange."

so it says the secretary is to establish and operate such exchange. the only kind of exchange to which the act refers. which is "an exchange established the state under 1311." that is the definition. the statute tells the secretary set up such exchange. mainly a 1311 state exchange. there is nothing else in this statute. that is throughout what they are talking about. what is the problem? mr. carvin: as your honor just said, it tells the secretary to establish such exchange. what 36 b turns on his -- justice breyer: it is the same terminology used 15 times in this statute. the terminology in the definition is "an exchange established by a state."

that is the phrase. mr. carvin: 1311, that is the phrase. the definition grants some ambiguity as to whether hhs was establishing a 1311 or 1321 exchange. 36 be ♪ does not say all subsidies -- exchanges get subsidies. it says those established by the state and not established under hhs. it eliminates any potential ambiguity. justice kagan: i think a daily life example which is equivalent to what the examples say which justice breyer was talking about, i have three clerks. their names are will and elizabeth and amanda. i first clerk, i said, well, i would like you to write me a memo. i say, elizabeth, i want you to edit wills memo -- will's memo.

amanda, if will is too busy to write the memo, i want you to write such memo. if will is too busy to write a memo and amanda has to write such memo, should elizabeth edit the memo? [laughter] mr. carvin: if you are going to create moneys to will for writing the memo and amanda writes the memo. it will writes the memo, in plain english, no. justice kagan: you run a different shop than i do. [laughter] in my chambers, if elizabeth did not edit the memo, she would not be performing her function. in other words there is a substitute. i have set up a substitute and given instructions. elizabeth, you edit will's memo.

of course, if amanda writes the memo, the instructions carry over. elizabeth knows what she is supposed to do. she is supposed to edit amanda's memo, too. mr. carvin: in your chambers, you are agnostic as to whether will or amanda writes. in section 1311, congress was not agnostic. justice alito: if i had those clerks, the same clerks -- [laughter] -- amanda wrote the memo and i received it and i said, this is a great memo. who wrote it? with the answer b it was written by will? because amanda stepped into wills shoes? mr. carvin: that was my first answer. [laughter] the second answer was that you were agnostic between will and

amanda. justice kagan: that is an important point, i think. you are saying the answer to the question depends on context and an understanding of the law as a whole and whether they were agnostic. i agree with that. so it is not the simple four or five words. the four or five words in my example, it is obvious that elizabeth should edit the memo. it is the whole structure and context of the provision that suggests whether those carry over to the substitute. mr. carvin: we examined these words in the context of the act as a whole because our argument becomes stronger for five reasons. to respond to justice breyer's point, he said such exchange could note that it was the same person doing it. look at territorial exchanges. it says territories and established such exchanges and then it says it should be

treated as a state. justice breyer: it is not a question of connotation. it is a question of denotation. what does that mean? it means the federal government, the secretary, is establishing a thing for the state. what is the thing? the thing that it is establishing for the state is defined as an exchange established by the state. that person from mars, who is literal, which i usually am not but a literalist would have to read it that way. if you are not a literalist well, at least you could read it that way. if you want to go into the context, at that point, it seems to me your argument is weaker. the exchanges fall apart.

nobody can buy anything on them. you know the arguments. there will be no customers. employers do not have to pay penalties as long as they use just people from virginia. but one maryland person comes -- you know all those arguments. how does the context support you? mr. carvin: saying that hhs would establish such a change -- the state would establish such a change. they use precisely the same language and they said, "and should be treated as a state," language that is omitted in 1321. you interpret the same phrases the same way and it shows that congress knew how to create equivalent if and when it wanted to. justice sotomayor: i am a

little concerned with how you envision this provision. you are saying that the hhs exchange cannot be for the state so that it is established by the choice of the state. the choice the state has establish your own exchange or let the federal government establish it for you. that is the choice. if we read it the way you are saying, we're going to read the statute as intruding on the federal state relationship because then the states are going to become worst into establishing their own exchanges. then you say, oh no, they cannot be coerced. going back to what justice breyer was talking about, in those states that citizens do

not receive subsidies, we are to have a death spiral that this system was created to avoid. states are obligated -- insurers are obligated to make sure that in their state, whether they are part of this program or not, that they have guarantee coverage -- guaranteed coverage. that children are covered until 26. and that they base their costs on community ratings. if we have to that, costs are going to arise on every insurance plan offered in the country in those 34 states. nine of your states will have tightened their medicaid eligibility requirements in contravention of the act.

they are taking money by breaking their contacts -- contracts. they would have to lose all of their medicaid money. tell me how that is not course of in an unconstitutional way. and if it is coercive in an unconstitutional way i think it was last term, we said that that is a primary statutory command that we need a statute in a way where we don't impinge on the basic federal-state relationship. mr. carvin: this court has never suggested outside the unusual coercion method that funding somehow invades a state-police power. justice sotomayor: we said it last year. mr. carvin: you want billions of

free federal dollars. it is the kind of routine funding condition that this court has upheld countless times. justice kennedy: it does seem to me that there is something very powerful to the point that if your argument is accepted, the states are being told, you know, create your own exchange or we will send your insurance market into a death spiral. we will have people pay mandated taxes, which will not get any credit on the subsidy. this is not co-version. it seems to me that, under your argument, there is a serious constitutional problem. mr. carvin: the government has never made that argument. justice kennedy:

>> i certainly hope you do in this case. but not on this question. what i'm trying to, quite seriously, justice kennedy convey is if this was unconstitutional, then the medicaid statute that this court approved in nfib would be unconstitutional. justice kennedy: what would the consequence of unconstitutionality be? very often you have an ambiguous provision, could be interpreted one way or another way. if interpreting it one way is unconstitutional, you interpret it the other way. >> correct. justice scalia: but do we have any case which says that when there is a clear provision, if it is unconstitutional, we can rewrite it? is there any case that we have that says that? >> no, your honor. and that was really my point justice kennedy. think about the consequences when of the medicaid deal as being coercive. 22 states have said no to the medicaid deal. that has created a bizarre anomaly in the law. that if people making less than the poverty line are not

available to any federal funds to help them with health insurance. >> i fully understand that, but i think the court and the counsel for both sides should confront the proposition that your argument raises a serious constitutional question. now, i'm not sure that the government would agree with that, but it is in the background of how we interpret this statute. >> it may well be that you're correct as to these words, and there's nothing we can do. i understand that. >> a, there's no savings construction to echo justice scalia's point, but, b, the point i want to make on the straight-up constitutionality is, if this is unconstitutional, then all of the provisions in the u.s. code that say to states if you do something for no child left behind, we will >> in south carolina v. dole where the matter of funding for the highway, suppose congress said, and if you don't build the highways, you have to go 35 miles an hour all over the state. we wouldn't allow that.

>> no. well, there, of course, you would be interfering with a basic state prerogative as to establish their limit, and they are the condition is not related to that. here the condition is perfectly related to it. >> mr. carvin -- >> mr. carvin, here's a -- you refer to the medicaid example. that's a familiar -- a grant in aid says to the state, here's the federal money and here's the conditions, take it or leave it. that's one pattern. but this pattern that we have says flexible state. you can you can have your program if you want it, and if you don't, there's a fallback. there's the federal program. i mean, that's a typical pattern. it's the pattern of the clean air act. you can have a state implementation plan, but state if you don't get up your plan there's a federal implementation plan. i have never seen anything like this where it's if you take what

the statute says you can have in 1321, then you get these disastrous consequences. >> that's why this is much less risky a deal for congress. and what distinguishes it from medicaid as the dissenting opinion in nfib pointed out. in medicaid, congress is playing all in, take it or leave it. if they turn down the deal, then medicaid is completely thwarted. here, if they turn down the subsidy deal, they still get the valuable benefits of an exchange and there's not a scintilla of -- >> what are those benefits? what are the customers that can buy on it? what are the insurers that will sell on it? mr. carvin: well, three points. one is we know textually that they thought exchanges without subsidies work, because again, they have territorial exchanges, but the government concedes no subsidies. >> mr. carvin, that's not what you said previously when you were here last time in this never-ending

saga. you said without the subsidies driving demand within the exchanges, insurance companies would have absolutely no reason to offer their products through exchanges. and then you said the insurance exchanges cannot operate as intended by congress absent the subsidies. >> that is entirely true. they wouldn't have operated as intended because congress intended all 50 states to take this deal. so eliminating -- >> so why create 1326 at all? obviously, they thought that some states wouldn't. >> well, they thought it was possible and -- >> because they set up a mechanism for that to happen. >> and then they what happens? you still get the exchange. it's not like medicaid where the entire federal program is thwarted. you get the benefits that were lauded. >> but nobody no one's going to visit the program if there are no subsidies because not enough people will buy the programs to stay in the exchanges. >> that is demonstrably untrue and not reflected anywhere in the legislative history.

the legislative history quite clearly contradicts that. many senators got up and said there are very valuable benefits to the exchange, one-stop shopping, amazon, as president obama has said. the government came in the last case and told you these two things operate quite independently. we don't need exchange without subsidies. in contrast, there's not a scintilla of legislative history suggesting that without subsidies, there will be a death spiral. not a word. >> wait a minute. that was the whole purpose that drove this bill because states had experimented with this, and those that didn't have subsidies or other provisions of the act didn't survive. >> they didn't have -- >> you said it yourself in the prior case. mr. carvin: no. the prior case was about the individual mandate. the government came in and said the individual mandate is necessary to affect death spirals. no one, in the findings in congress or anywhere else, suggested that subsidies were available.

will subsidies reduce the number of people available on the individual -- justice sotomayor: my problem my problem is that the reverse. you're talking about congress, how hiding, borrowing the phrase of one of my colleagues, a huge thing in a mousetrap. ok? because do you really believe that states fully understood that they were not going to get , their citizens were not going to get subsidies if they let the federal government? what senator said that during the hearings? mr. carvin: the same amount of senators who said that subsidies were available on hhs exchanges, which is none. they didn't deal with it in the legislative history just as they didn't deal with medicaid because the statute was quite clear. let's talk about it in context again, justice sotomayor. the context is the only provisions in the act establishing any limit on the subsidies is found in 36b. so it's not a mouse hole. it's the place you'd expect to find it. it's the only place in the act that limits subsidies to

purchases made on exchange. >> justice ginsburg. justice ginsburg. it's a tax code provision that's an implementation provision. it tells you how you compute the individual amount. it it's not in the body of the legislation where you would expect to find this. mr. carvin: no. your honor, if that's true -- justice ginsburg: what justice kagan just read to you, you had the idea that the subsidies were essential to have the thing work. that's what you told us last time. mr. carvin: what i told you was it wouldn't work as expected and that's because they thought this deal would work just like the medicaid deal where all 50 states would say yes, so you would have both of congressional purposes. justice ginsburg: then why in the world would they set up this whole extra thing if they didn't think anybody was going to take it? mr. carvin: well, that was my response to justice sotomayor. that is completely unsupported empirical observation made post hoc by amicus.

there's no reflection of that in the legislative history. indeed, the legislative history refutes it. >> mr. carvin, we've heard talk about this other case. did you win that other case? [laughter] justice roberts: so maybe it makes sense that you have a different story today? mr. carvin: i'm really glad your honor said that. >> i mean i'm sorry, mr. carvin. please. mr. carvin: just very briefly justice kagan. very much appreciate it. to respond, we've already talked about context. section 1311 is a key part of this context. it says in the strongest possible terms we want states to run these exchanges. if you give unconditional subsidies, then, of course there is absolutely no incentive for states to do it, and you have fundamentally undermined that distinct statutory purpose. whereas if you condition subsidies, congress accomplishes both of its goals. widespread subsidies, plus state-run exchanges. in terms of terms of art, again, there is language in the statute which says "exchanges," "exchanges under the act."

those phrases naturally encompass both hhs exchanges and state-established exchanges. and, yet, the solicitor general is coming here to tell you that a rational, english-speaking person intending to convey subsidies available on hhs exchanges use the phrase "exchanges established by the state." he cannot provide to you any rational reason why somebody trying to convey the former would use the latter formulation. >> mr. carvin, why don't you take an extra ten minutes and maybe we'll give you a little bit more of a chance to talk. mr. carvin: ok. fine. >> well, then, i'll ask a question. mr. carvin: well, if you're going to ruin my 10 minutes. >> no. i mean, let's go back to this question of where congress put this thing because putting aside constitutional issues, i mean, there's at least a presumption as we interpret statutes, that congress does not mean to impose heavy burdens and draconian choices on states unless it says so awfully clearly.

and here and this goes back to what justice ginsburg was saying there's really nothing clear about this. i mean, this took a year and a half for anybody to even notice this language. and as justice ginsburg said it's put in not in the place that you would expect it to be put in, which is where it says to the states, here is the choice you have. it's not even put in where the statute defines who a qualified individual is or who is entitled to get the subsidies. rather, it comes in this technical formula that's directed to the department of the treasury saying how much the amount of the subsidy should be. makes no sense from congress's point of view, and in terms of our own point of view, in terms of interpreting statutes, that's not the clarity with which we require the government to speak when it's upsetting

federal-state relations like this. >> i must respectfully disagree for three reasons, justice kagan. in the first place, of course, you where else would you expect a tax credit except in the tax code? that's where this was. you wouldn't put it in 42 u.s.c., which has nothing to do with taxes. it's the only place where exchange is limitations placed. you have three audiences here, not just states. you have to tell taxpayers what they're entitled to. you have to tell insurance companies when these subsidies are available. and you have states. so you have to put it in 36b. so the argument, i guess, the government is making is what you should have done is put half of it in 36b and half it in 1321 which, of course, would have confused everybody. 36b would say, exchanges period. then you'd go to 1321 and say when we said exchanges in 36b we meant established by the state. >> mr. carvin, if i were a state official and i was trying to decide whether my state should

establish an exchange, and i wanted to know whether individuals who enrolled in a plan on my possible state-established exchange would get a credit, where would i look? >> exactly. the basic thesis here is these exchanges don't work without subsidies. you've read 1311. you've read 1321. now you're going to go find out where the subsidies are. that's 36b. they're hypothesizing state -- >> i think not, mr. carvin. i mean, i think the place i would look to find out about my choices is in the provision of the statute that talks about my choices. i think the last place i would look is a provision of the statute that talks about what is it coverage months for purposes of this subsection, which, by the way, isn't even the right subsection, but whatever. [laughter] that's where i would look, is in where it talks about what a coverage month is?

>> but, your honor, i've already described the difficulties of putting it part of it in 1321, right? because then you would create this bizarre tax credit provision which is only half true, and you wouldn't tell taxpayers and insurance companies. so i believe that's the complete answer. but the other practical point i'd like to make is they had three years to implement this. and no one thought the states were going to have to make a decision overnight. if the irs had done its job, every state would have been fully informed of the consequences because presumably they've read 36b, and then they would make an intelligent decision well in advance of the two 2013 deadline. so there's a bizarre notion that states were somehow unable to read a statute or to or to read a regulation is simply -- >> i really want i really want to hear what you're going to say in your two minutes. -- 5 to 10 minutes.

and if you want, only if you want, i would be interested in your responses to the government's brief, that if you read the words "established by the state" without reference to the technical definition as you wish, this isn't just about the taxes. it means employers in virginia don't have to make policy, don't have to don't have to give policies, but if they have one maryland worker they do. it means that they never can tighten up their medicaid regulations, never, in 34 states but, of course, in the others they can. it means that there's no qualified person ever to buy anything on a an exchange established by the secretary for the state, and they have two or three other anomalies that have nothing to do with taxes, all of which supports their argument that you have to read this phrase technically according to the definition. now, that's their basic point. i've tried to summarize it. do it as you wish you. i just want you to have 5 or 10 minutes to answer it. >> thank you. and the first point is there are no anomalies. >> i'm going to clock that, see if see if you get 5 minutes. >> there are no the first point

i'd like to make is there are no anomalies stemming from our interpretation of 36b. the government agrees with that. their biggest anomaly is this qualified individuals point about how there would be nobody on hhs exchanges. the solicitor general is not going to stand up here and tell you that if we prevail in our interpretation of 36b, they would be obliged by the logic of that opinion to empty out hhs exchanges. so we all agree that there's no connection between 36b and the qualified individual. that's point one. point two is, if you want anomalies, their interpretation of the statute requires 34 states today to lose all medicaid coverage. why is that? because of the provisions on 64a through 66a of the government's brief, there are various requirements that the state, on pain of losing all of its medicaid funds, must coordinate between the state-established exchange, the state agency for chip, and the state agency for

medicaid in terms of secure interface and enrollment. now that makes perfect sense if "exchange established by the state" means what it says, but they think it encompasses hhs exchanges. well, the state cannot ensure coordination between hhs exchanges and the state agencies, and none of the 34 are doing it today. so under their atextual reading of the statute, 34 states will suffer the penalty that this court found in nfib as unconstitutionally coercive. as to this medicaid maintenance anomaly, the government agrees that the purpose of this provision was to freeze medicaid payments until you had an exchange with subsidies, which makes sense, right? you want to coordinate the two. and that's exactly what this provision means under our interpretation. until you have an exchange with subsidies, the states will be frozen. the government says, that thing ended on january 1, 2014. that's a figment of their imagination. it's nowhere in the statute. plus which it makes no sense. before 2014, the states were

powerless to have an exchange with subsidies right? they couldn't do it. so there was a 3year freeze on medicaid that they were powerless to get out of. after 2014, if they don't want to have their medicaid frozen, all they have to do is establish an exchange. so it's a less harsh restriction on states, plus which it gives them another incentive in addition to the subsidies to create the state exchange, which is the purpose enunciated in 1311. i don't know oh, as to, yeah maybe somebody would from another if you had an employee that let lived in other state, maybe he would be subject to the employer mandate. why is that an anomaly? congress likes the employer mandate. of course they wanted to expand it. they also never thought it would really happen because, again, what they thought was going to happen was there wouldn't be neighboring states without it because nobody was going to turn down this extraordinarily generous deal. i don't know if my 5 minutes are up, but that's my response to these anomalies.

i think that you >> as i understand it -- >> i think if i could -- >> wow. you've been talking a long time. >> yes. yes. sorry. >> you have two more sentences. >> even if there were anomalies in these other sections, you don't transport them to 36b which is concededly neither absurd and furthers the purposes of the act, just like in utility air, because the word pollutants didn't work with one section, you don't spread it like a virus throughout the rest of the act. you cure it in that provision -- >> those were two long sentences -- [laughter] >> if and when there's any litigation. >> i think i think -- >> oh, it was a long sentence. >> yes. i think i'm right that justice breyer's question about anomalies, which are replete in the act, under your interpretation, did not talk about what i think is one of the most glaring ones, which is this qualified individualist thing, that you're essentially setting up a system in which these

federal exchanges, that there will be no customers and, in fact, there will be no products, because section 1311 says that the exchange shall make health plans available to qualified individuals, and then the next section says that qualified individual means an individual who resides in the state that established the exchange. so under your theory, if federal exchanges don't qualify as exchanges established by the state, that means federal exchanges have no customers. >> which, of course, is not the reading that the government's giving to it because they're not going to tell you -- >> well, that's because they don't share your theory. >> no, no. >> under your theory -- >> no. >> that's the result. >> well, no. let me be as clear as i can. if we prevail in this case, they are not going to empty out the hhs exchanges because they understand that there are numerous defenses even if you interpret "established by the state" literally in the qualified individuals provision. number one defense that they will use is, it says you have to be a qualified individual with respect to an exchange.

as justice breyer pointed out, the statutory definition of exchange is a 1311 exchange. so they're only talking about state exchanges, not these hhs exchanges, and it is in section 1312, which immediately follows 1311, before 1321. number two, "qualified individual" doesn't mean that means you're guaranteed access. it doesn't mean if you're not qualified, you're absolutely denied access. we know that from the illegal alien provision, which says illegal aliens are neither qualified individuals nor eligible for subsidies. >> ah, but look at the look at the prisoner provision, which says prisoners shouldn't be treated as qualified individuals. so under your theory, this statute effectively said that prisoners should be able to enroll on federal exchanges? that makes no sense. >> it makes perfect sense to say the states get a choice. think about somebody who's in prison in february, they're getting out in april, they've

got to buy insurance under the go to buy insurance under the individual mandate. so if you said nobody who's incarcerated can buy insurance that means they wouldn't be able to buy insurance during the relevant enrollment period. it makes perfect sense to give states the flexibility to say, as to those incarcerated principles, you can make them available for exchanges, but under illegal aliens we don't want to, which is why we are saying they are neither qualified nor eligible. even if justice even if you don't find that the most pristine logic to be applied to a statute, remember, we are interpreting these statutes to avoid an absurd result. and it's a basic principle of statutory construction that you will give a plausible, if not the most persuasive, reading to a statute to avoid the result. >> but we are interpreting a statute generally to make it make sense as a whole, right? we look at the whole text. we don't look at four words. we look at the whole text, the particular context, the more general context, try to make everything harmonious with everything else. i think you said, even at the very beginning of this argument as we were going back and forth about my hypothetical, that, of

course, context matters and context might make all the difference with respect to what those five words mean. and i think what we're suggesting is that, if you look at the entire text, it's pretty clear that you oughtn't to treat those five words in the way you are. >> i've given you the contextual points before. i think the key one that i'd like to convey to you, justice kagan, is section 1311. you say the statute must work harmoniously. if you provide a subsidies to hhs exchanges, you have essentially gutted section 1311's strong preference for state exchanges. what will happen is precisely what did happen under the irs rule, 2/3 of the states are saying no, we're not going to undertake this thankless task of running these exchanges with no incentives to do so. so yes, it what i have here in terms of what the statute means is 36b quite clearly saying exchanges are available only on

states. i have 1311 explaining why they limited subsidies to that. and there is no contrary legislative history at all. what do they have, an atextual reading of 36b, which they can't explain why anybody would have used those words if they wanted to convey exchanges, a rule that completely undermines the purposes of 1311 and no supporting legislative history. so under all the legal materials that this court normally used to discern what statute means, we clearly prevail. >> thank you, counsel. general verrilli, you'll have extra 10 minutes as well. >> thank you, mr. chief justice, and may it please the court, standing has been raised, so let me start by telling you where we stand on standing and then i'd appreciate the opportunity after that to summarize what i think are the two key points in this case.

now, with respect to standing, the question the case or controversy question turns on whether any of the four petitioners is liable for the tax penalty for 2014. now, this case was litigated in the district court in 2013 based on projections on the part of each of the four petitioners that they would earn a certain income in 2014. they filed declarations saying that. with respect to 2 of the 4, the projections were of their income were such that they would qualify for the unaffordability exception and they wouldn't have standing. with respect to the other two, their projections were such that they wouldn't qualify for the unaffordability exception and they would have standing. but those were projections in 2013 about their income in 2014. 2014 has now come and gone, and we know we don't know, but petitioners know whether any of the 4 have, in fact are, in fact, liable for the tax penalty and that will depend on whether their actual income in 2014 matched their projections. now, mr. carvin said there was fact-finding about this.

i'm afraid that's not correct. the petitioners the petitioners did file a motion for summary judgment, but the case was decided on the basis of the government's motion to dismiss before discovery and without any fact-finding. i'm assuming because mr. carvin has not said anything about the absence of a tax penalty, that at least, 1 of the 4 has and is, in fact, liable for a tax penalty, but that's the key standing question. now, with respect to the veterans point, your honor, if it is the case, as mr. carvin tells us, that mr. hurst was a veteran for only 10 months, then i think he's correct, he would not qualify for va health care because you generally have to serve two years. so that's where we are on standing. now, if i could turn to the merits. >> so are you saying one person does have standing? >> no, no. it will depend on whether as a factual matter 1 of the 4 has and is, in fact, liable for the tax penalty for 2014. and that's information that is not in the government's possession. it is in the possession of petitioners' counsel. and i should make one more point, with respect to 2015,

there were no projections, there's nothing in the record about the possible income of any of the petitioners for 2015, so there's really nothing that would establish a case of controversy for 2014. >> well, you're surely not raising a standing question with us here for the first time at oral argument, are you? >> well, mr. chief justice, as i said, that based on the projections, it was our understanding that at least 1 of the 4 would be liable for a tax penalty. the question of standing has been raised and i've tried to identify for the court what i think is the relevant question which is whether any one of the 4 has, in fact is, in fact, liable for a tax penalty because -- >> this is this is on a motion to dismiss, right? >> well, that's correct, your honor, but it does also go to this court's jurisdiction. because if none of the four is liable for a tax penalty for 2014, there just isn't the case or controversy. none of them is liable, there's

no there's no injury. and so i do think that's ultimately the relevant question here and with respect to standing. i don't think there's a question about veteran status, but i do think that's the relevant question. >> isn't the question before us as to standing whether the district court correctly held in the motion to dismiss context that there was standing? that may not be the end of the matter, but don't we have to isn't that what's before us? >> well, that may be yes. but then you and you might alternatively think about this as a question of mootness, i guess, in that, you know, based on the projection, there was a case or controversy, but if the projection didn't come to pass and none of the plaintiffs is liable for a tax penalty, then the case or controversy no longer exists. >> well, what are you suggesting? should we have a should we have a trial here? >> no, i'm not suggesting anything of the kinds. >> on this issue and find -- what the facts are? >> justice alito, i did not raise standing affirmatively the court raised it. and i'm just doing my best to let the court know what our position is on standing. >> well, you would you send it back then to the district court? >> well, i guess no. i guess what i've said is that mr. carvin hasn't suggested that there's no plaintiff liable for a tax penalty. based on that, i'm inferring

that at least one of the petitioners -- >> representation by him? >> and i'm not -- >> would you -- has standing. why wouldn't we accept a there's no reason not to if he if he makes a representation that at least one of the four is has was liable in 2014 and is liable in 2000 or will be liable in 2015 -- >> so i guess what i'm saying -- >> i mean, we know at least one of them won't because that's -- >> what i'm saying about that is i'm actually going to step further than that, justice sotomayor, given that there hasn't been i'm willing to accept the absence of a representation as an indication that there is a case or controversy here, and so that's why, mr. chief justice, we haven't raised standing and that's what it but i do think that the key question is whether one of the four is liable for a tax penalty. you have to have that to have a case or controversy in the case. if i could now, let me please turn to the merits that summarize what i think are the two key points. first, our reading follows directly from the text of the act's applicable provisions and it's really the only way to make

sense of section 36b and the rest of the act. textually, their reading produces an incoherent statute that doesn't work. and second, our reading is compelled by the act's structure and design. their reading forces hhs to establish rump exchanges that are doomed to fail. it makes a mockery of the statute's express status express textual promise of state flexibility. it precipitates the insurance market death spirals that the statutory findings specifically say the statute was designed to avoid, and of course it revokes the promise of affordable care for millions of americans. that cannot be the statute that congress intended. >> of course it could be. i mean it may not be the statute they intended. the question is whether it's the statute that they wrote. i mean, you know, there are no provisions in the statute that turn out to be ill 11 ill considered and ill conceived. >> so it's not the statute that they wrote, and the reason it's

not the statute that they wrote, i think i want to actually start, if i could, picking up i think on a variation of the hypothetical that justice kagan ask asked. in petitioners' brief they throw down the gauntlet with respect to a hypothetical about airports, and that a statute requires a state to construct an airport, it says the federal government shall construct such airport if the state doesn't, and no one would think that the federal government's airport was an airport constructed by the state. well, what i would say to that is that if those statutory provisions were conjoined with a provision that said airplanes may only land at airports constructed by the state, then you would conclude immediately that what that federally constructed airport qualifies as an airport constructed by the state, and the because otherwise the statute would make no sense. and the same exact thing is true here. >> there are no statutes that make no sense. >> this one makes sense. >> if that is the case, every statute must make sense and we will we will twist the words as necessary to make it make that can't be the rule.

>> that isn't the rule. but the rule -- >> of course not. >> is that you read -- that you don't read statutory provisions in isolation. you read them in context. the rule is that you read them in order to ensure that the statute operates as a harmonious whole. you read them so that you don't render the statutory provisions ineffective. you read them to promote -- >> where is that possible. >> you read -- >> i mean, you acknowledge that all of what you're saying only applies where there are alternative readings that are reasonable. you pick the one that will do all the things that you say. >> and there is there is -- >> but, but if it can only reasonably mean one thing, it will continue to mean that one thing even if it has untoward consequences for the rest of the statute. no? >> with respect to this statute, first, let me i want to make two points. first -- >> answer me in principle. i mean, is it not the case that if the only reasonable interpretation of a particular provision produces disastrous consequences in the rest of the statute, it nonetheless means what it says. is that true or not?

>> i think there are a couple of limitations on that principle. the first is if what you have is a situation in which the that creates conflict within a statutory scheme, then the court's got to do its best to try to harmonize and reconcile the provisions. and, secondly -- >> well, i disagree with that. you have a single case in which we have said the provision is not ambiguous, it means this thing, but, lord, that would make a terrible statute, so we will interpret it to mean something else. do you have one case where we've ever said that? >> i think i think brown & williamson is a good example of that. in brown & williamson, the court said, look, the definition of drug and drug delivery device would actually seem unambiguously to cover tobacco but when you read that provision in context, and considering the full scope of the regulatory regime, it can't possibly mean that. but let me let me actually work through the text here, because i do think i can show you that there's a quite reasonable reading of this statutory text that allows you to affirm and

requires you to affirm the government's position. >> but, general verrilli, before we get too immersed in a number of provisions of this, could you respond to a question that was asked during mr. carvin's argument. if we adopt petitioners' interpretation of this act, is it unconstitutionally coercive? >> so the here's what i would say about that, justice alito. i think that it would be certainly be a novel constitutional question, and i think that i'm not prepared to say to the court today that it is unconstitutional. it would be my duty to defend the statute and on the authority of new york v. united states, i think we would do so. but i don't think there's any doubt that it's a novel question, and if the court believes it's a serious question -- >> is it a i was going to say does novel mean difficult? >> because it does seem to me that if petitioners' argument is correct, this is just not a rational choice for the states to make and that they're being coerced. >> so what i --

>> and that you then have to invoke the standard of constitutional avoidance. >> well, what i was going to say, justice kennedy, is to the extent the court believes that this is a serious constitutional question and this does rise to the level of something approaching coercion, then i do think the doctrine of constitutional avoidance becomes another very powerful reason to read the statutory text our way. because i do think and i do think with respect to the point that your honor's making remember, it's not just it's not just a situation in which there is onerous conditions, onerous consequences for state residents. it's also a profound problem of notice here, that, you know, if you read petitioners' if you take petitioners' reading of the statute, then the idea that states were given added -- you can't possibly justify this as adequate notice to the states. >> well, mr. general verrilli, let me ask you this about notice. we get lots and lots of amicus briefs from states.

and we got two amicus briefs from states here. 34 states, i think, is -- that's the number of states that declined to or failed to establish a state exchange? >> correct. >> now, if they were all caught off guard and they were upset about this, you would expect them to file an amicus brief telling us that. but actually, of the 34, only 6 of them signed the brief that was submitted by a number of states making that argument. 23 states, 23 jurisdictions submitted that brief. 17 of them are states that established state exchanges. only 6 of the states that didn't establish state exchanges signed that brief, how do you account for that? >> so, i guess i'd make two points about that, justice alito. first, you've got states there, states in both camps, all of whom told you that they didn't understand the statute that way. now, with respect to the other 8 states that filed the amicus brief on the other side, i actually think there's quite an

important point that goes to their understanding of what this act did. remember, this is an irs rule that we're talking about here, and the irs put out a notice of proposed rulemaking saying this is what we intend to do, and several of these states oklahoma, indiana, nebraska they filed rulemaking comments in that in that proceeding. and if you look at those rulemaking comments you will see that they address a number of issues, and they say nothing, nothing about the issue that's before the court now. so if they really understood the statute as denying subsidies in states that did not set up their own exchanges, that would have front and center in their rulemaking comments, but they said nothing about it and i think that tells you a good deal about where -- what everybody understood that this statute was -- >> well, there's another point on notice on this pennhurst argument that seems curious to me. usually when this argument comes up, a state has signed up for a federal program and then they say, oh, my gosh, we didn't realize what we had gotten ourselves into. but here, it's not too late for a state to establish an exchange

if we were to adopt petitioners' interpretation of the statute. so going forward, there would be no harm. >> well, let me address that directly, and then i'd like to make a broader point about statutory context in response. now directly, of course, i don't i don't think it's possible to say there would be no harm. the tax credits will be cut off immediately and you will have very significant, very adverse effects immediately for millions of people in many states in their insurance markets -- >> well, i said i've said going forward. >> and then -- >> after the current tax year. >> and then going -- >> would it not be possible if we were to adopt petitioners' interpretation of the statute to stay the mandate until the end of this tax year as we have done in other cases where we have adopted an interpretation of the constitutional or a statute that would have very disruptive

consequences such as the northern pipeline case. >> sure. northern pipeline is an example of doing that, and it will be up to the court to decide whether it has the authority to do that. i will say, this does seem different than northern pipeline to me, because this is about money going out of the federal treasury, which is a different scenario. but if the court obviously, if that's where the court is going and that's what the court thinks the proper disposition is, that would reduce the disruption. but what i think is another important point to make here just as a practical matter, the idea that a number of states all of these states or a significant number are going to be able to in the 6 months between when a decision in the this case would come out and when the new the new year for insurance purposes will begin we'll be able to set up exchanges, get them up, up and running and get all the approvals done i think is completely unrealistic. >> how long has it taken -- >> well, for just to give you an example of the current time line, justice ginsburg, the in order to be in order to have an exchange approved and insurance policies on the exchange ready for the 2016 year, those approvals have to occur by may of 2015. ok. so that gives you a sense of the of the time line that hhs is operating under.

>> what about what about congress? you really think congress is just going to sit there while all of these disastrous consequences ensue. i mean, how often have we come out with a decision such as the you know, the bankruptcy court decision? congress adjusts, enacts a statute that 16 that takes care of the problem. it happens all the time. why is that not going to happen here? >> well, this congress, your honor, i >> you know, i mean, of course theoretically of course, theoretically they could. >> i don't care what congress you're talking about. if the consequences are as disastrous as you say, so many million people without insurance and whatnot, yes, i think this congress would act. >> and but the relevant question and then i'm going to try to get back to the point i was trying to make in response to justice alito's question. 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 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 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 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. we 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 i do 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 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 says 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 that 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 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 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 that's that 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 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. and that 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 that wouldn't be any doubt in anyone's mind that the 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. and that is 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 satisfy 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 needs 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 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 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? >> they 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? >> so let the 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? >> well, i what they 20 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 whole 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 they're 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. so it just doesn't it just you just run into a textual brick

wall. >> i understand your argument is that it's a 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. >> it's 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 it 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 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. and but to really, 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 16

>> 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. >> 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 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. but so is 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 and 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 their 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. >> we will also take your calls, facebook comments, and tweets on the decision. "washington journal" on c-span. >> here are some of our featured programs on c-span area saturday

night at eight eastern on issue spotlight, we will look at the government and culture of iran and its nuclear ambitions. at sunday night at 6:35, kentucky senator rand paul and vermont independent senator bernie sanders. on book tv at c-span2, author nelson denis on puerto rico and the net estate. at 7:45, historian mr. brands talks ronald reagan. on american history tv on c-span3 saturday night commemorating the 800th anniversary of the magna carta. on how the document influenced both countries, the limits on executive power.

on american artifacts, the first sailing ship in 1780. we were in yorktown to cover the replica of the lafayette. our complete schedule is available at www.c-span.org. >> here is some of the reaction from outside the core, after the decision was announced. >> today is a great day for the aca. >> people who purchased coverage using the federal exchanges will be able to use the exchanges. chief justice roberts wrote the

decision for the majority. >> today is a great day for the aca. [cheering] >> today is a great day for the aca. >> today is a great day for the aca.

>> up next, more reaction from outside the supreme court. the more reaction from outside the supreme court. after that, remarks from harry reid. then, majority leader mitch mcconnell. and then the supreme court arguments for the case in king versus burwell. president obama reacted to the ruling on the health care law. he was joined by the vice president in the white house rose garden.

president obama: good morning, everybody. have a seat. five years ago, after nearly a century of talk, decades of trying, a year of bipartisan debate, we finally declared that in america, health care is not a privilege for a few but a right for all. over those five years, as we've worked to implement the affordable care act, there have been successes and setbacks. the setbacks, i remember clearly. [laughter] but as the dust has settled, there can be no doubt that this law is working. it has changed and in some cases saved american lives. it's set this country on a smarter, stronger course.

and today, after more than 50 votes in congress to repeal or weaken this law, after a presidential election based in part on preserving or repealing this law, after multiple challenges to this law before the supreme court, the affordable care act is here to stay. this morning, the court upheld a critical part of this law. the part that made it easier for americans to afford health insurance regardless of where you live. if the partisan challenge to this law had succeeded, millions of americans would have had thousands of dollars' worth of tax credits taken from them. for many, insurance would have become unaffordable again. many would have become uninsured again. ultimately, everyone's premiums could have gone up. america would have gone backwards. that's not what we do. that's not what america does. we move forward.

so, today is a victory for hardworking americans all across this country whose lives will continue to become more secure in the changing economy because of this law. if you're a parent, you can keep your kids on your plan until they turn 26. something that has covered millions of young people so far. that's because of this law. if you're a senior, or an american with a disability, this law gives you discounts on your prescriptions. something that's saved nine million americans an average of $1,600 so far. if you're a woman, you can't be charged more than anybody else even if you've had cancer or if your husband had heart disease or just because you're a woman. your insurer has to offer free preventive services like mammograms. they can't place annual or lifetime caps on your care because of this law. because of this law and because

of today's decision, millions of americans who i hear from every single day will continue to receive the tax credits that have given about eight in 10 people who buy insurance on the new marketplaces the choice of health care plans that cost less than $100 a month. and when it comes to pre-existing conditions, someday our grandkids will ask us, if there was really a time when america discriminated against people who get sick, because that is something this law has ended for good. that affects everybody with health insurance, not just folks who got insurance through the affordable care act. all of america has protection it didn't have before. as the law's provisions have gradually taken effect, more than 16 million uninsured americans have gained coverage so far. nearly one in three americans who was uninsured a few years ago is insured today. the uninsured rate in america is

the lowest since we began to keep records. that is something we can all be proud of. meanwhile, the law has helped hold the price of health care to its slowest growth in 50 years. if your family gets insurance through your job, or you're not using the affordable care act, you're still paying about $1,800 less per year on average than you would be if we hadn't done anything. by one leading measure, what business owners pay out in wages and salaries is now, finally growing faster than what they spend on health insurance. that hasn't happened in 17 years. and that's good for the workers. and it's good for the economy. the point is, this is not an abstract thing anymore. this is not a set of political talking points. this is reality. we can see how it is working

this law is working exactly as it's supposed to. in many ways this law is working better than we expected it to. for all the misinformation campaigns, all the doomsday predictions, all the talk of death panels and job disruption, for all the repeal attempts, this law is now helping tens of millions of americans, and they've told me that it has changed their lives for the better. i've had moms come up and say my son was able to see a doctor and get diagnosed and catch a tumor early and he's alive today because of this law. this law is working. and it's going to keep doing just that.

five years in, this is no longer about a law. this is not about the affordable care act. legislation or obamacare as a political football. this is health care in america. and unlike social security or medicare, a lot of americans still don't know what obamacare is beyond all the political noise in washington. across the country, there remain people who are directly benefiting from the law but don't even know it. and that's ok. there's no card that says obamacare when you enroll. but that is by design. for this has never been a government takeover of health care, despite cries to the contrary. this reform remains what it's always been a set of fair rule -- fairer rules and tougher protections that have made health care in america more affordable, more obtainable and

more about you. the consumer. the american people. it's working. with this case behind us, let's be clear. we've still got work to do to make health care in america even better. we'll keep working to provide consumers with all the tools you need to make informed choices about your care, and keep working to increase the use of preventive care that avoids bigger problems down the road. we'll keep working to boost the steadily improving quality of care in hospitals. bring down costs even lower. make the system work even better. already we've seen reductions for example, in the number of readmissions in hospitals. that saves our society money, it saves families money, it makes people healthier. we're making progress. we've got to keep working to get more people covered.

i'm going to work as hard as i can to convince more governors at state legislatures to take advantage of the law, put politics aside, expand medicare and cover their citizens. we've still got states out there that for political reasons are not covering millions of people that they could be covering, despite the fact that the federal government's picking up the tab. so, we've got more work to do. what we're not going to do is unravel what's been woven into the fabric of america. my greatest hope is that rather than keep refighting battles that have been settled again and again and again, i can work with republicans and democrats to move forward. let's join together and make health care in america even better.

three generations ago we chose to end an era when seniors were left to languish in poverty. we passed social security and slowly it was woven into this fabric of america and made a difference in the lives of millions of people. two generations ago, we chose to end an age when americans in their golden years didn't have the guarantee of health care. medicare was passed. and it helped millions of people. this generation of americans chose to finish the job. to turn the page on the past when our citizens could be denied coverage just for being sick. to close the books on a history where americans had no hope of finding decent health care and had to hang their chances on faith.

we chose to write a new chapter where in a new economy americans are free to change their jobs or start a business chase a new idea, raise a family, free from fear. secure in the knowledge that affordable health care is there for us and always will be. and that if we get sick, we're not going to lose our home. that if we get sick, that we're going to be able to still look after our families. that's what america is, we look out for one another, we root for one another's success. when we strive to do better and to be better than the generation that came before us and try to build something better for generations to come. that's why we do what we do. that's the whole point of public

service. so, this was a good day for america. let's get back to work. [applause] >> next, reaction from outside the supreme court. after the 6-3 decision was announced, we will hear from proponents of the health care law, including the acting solicitor general.

ron: my name is ron pollack, and i am the executive director of families usa. which is a national organization for health care consumers. and with me, is gwen jackson from texas. who is one of the millions of people who are receiving the subsidies that were upheld today by the supreme court. make no mistake about this today's decision has monumental significance. it means that the affordable care act is not just the law of the land, it will remain the law of the land. gwen: yes! ron: it means that the millions of people who have been receiving subsidies that make all the difference in terms of whether health insurance is affordable, people will continue to receive those subsidies, and they will continue to have health insurance.

so, this is a big sigh of relief for millions of people across the country who previously were uninsured, who previously couldn't afford health insurance, but who today can afford insurance because they are receiving subsidies. and today, the court by a 6-3 margin upheld the provision of those subsidies. so, at this juncture, hopefully, now that the affordable care act is clearly a stable part of america's health care system hopefully, we can move on. hopefully, we can have bipartisan efforts to try to make even further improvements with respect to america's health care system, making sure everyone has high-quality health care and at an affordable price. but most importantly, the affordable care act has produced enormous progress. more than one out of three

people who were previously uninsured have now received health coverage. and now that progress will continue. we will not go backwards. and more and more people will be able to get the health coverage they need to protect their families. so, i want to introduce gwen jackson. gwen is from sugarland, texas. and gwen is one of the millions of people who are receiving the subsidies and whose subsidies will be protected. gwen: yes. so, thank you, ron. so, i am excited today. i'm excited. my husband and i are self-employed, both self-employed. and my husband had a severe tumor that required surgery, and we were uninsured. i but through the marketplace, my husband was able to get an

extensive surgery, subsequently to get additional surgeries and may continue to have to have surgeries as a result of this. this was an aggressive bone disease of his jaw, and it impacted us greatly, but we are thankful today that the courts upheld this and realize that affordable care is not just for -- i don't know. it's for everybody, and it should be. it would have impacted over 6 million people, had they not agreed to this. but now, we don't have to worry about this anymore, and i just thank everyone that supported the act. gwen jackson. ron: gwen jackson from sugarland, texas. gwen: g-w-e-n jackson. ron: ron, r-o-n, pollack, p like like peter o-l-l-a-c-k, with the national

organization for health care consumers. i just want to say one additional thing. we have seen just extraordinary progress as a result of the affordable care act over the past two years. over 16 million people who were previously uninsured have gotten health coverage as a result of the affordable care act. and most of the people who have signed up in these marketplaces have done so as a result of subsidies, and these subsidies involve thousands of dollars in terms of relief, in terms of premium costs. today, the supreme court clearly held by a 6-3 margin that those subsidyies will continue. the people having health insurance will be able to continue getting health insurance, and we will continue to make progress in the years ahead so that, hopefully, at

some point in the not-too-distant future, everyone in america will have health insurance. so, thank you very much. gwen: my final thing is to say aca is here to stay, and i thank god for that. ron: thank you. neil: hello, my name is neil katyal, a partner and former acting solicitor general of the united states. today's decision is a resounding victory for the president and for congress and for the american people. the supreme court by a 6-3 decision overwhelmingly upheld what the president has been saying all along, which is that these health insurance exchanges, whether set up by the state or federal government, provide subsidies to individuals who can't otherwise afford them. i was sitting in the courtroom as the decision came down,