In ACA Case, Context is Key

In the ACA case, the text must be read in the context of other provisions that would be rendered absurd if subsidies were limited to state-operated exchanges.

To take one example: No one could buy insurance on federal exchanges because the statute defines an individual "qualified" to purchase as one who "resides in the state that established the exchange."

So under the challengers' reading, Congress would have taken the trouble to establish exchanges not only doomed to fail, because of the unavailability of subsidies, but that would have no customers at all.

A second rule of statutory construction is that Congress "does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions -- it does not, one might say, hide elephants in mouseholes." That comes from a 2001 Scalia opinion, joined by Kennedy and Thomas.

In this case, according to the challengers, Congress hid quite an elephant -- a provision that even they agree would gut the law -- in a five-word mousehole.

Which brings me to the states' rights issue that, for conservatives, should be even more compelling. The ACA created federal exchanges as the states' backup plan, respecting states' rights to choose.

Under the challengers' reading, this federalist flexibility would be transformed into federal punishment: Citizens of states that failed to establish exchanges would be deprived of subsidies, sending the federal exchanges into a death spiral. Individual insurance markets in those states would collapse, too, because other provisions in the law -- such as requiring insurers to cover pre-existing conditions -- would still apply, driving sicker people into those markets and premium costs up.

All without any advance warning to states that these consequences were coming. The prospect that subsidies would not be available on state exchanges never arose during congressional debate. If Congress really intended to hammer states that failed to set up exchanges, would it have hidden its threat in an obscure subsection?

It's indisputable that states were blindsided by this possibility. "Regardless of who runs the exchange, the end product is the same," said Ohio Gov. John Kasich, a Republican. By "refusing to implement state-based exchanges, the state is ceding nothing," said South Carolina Gov. Nikki Haley, also a Republican.

Interpreting the law to bar subsidies would embody the judicial activism the conservatives repeatedly disavow, elevating policy antipathy to the health care law over settled legal principles.

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Ruth Marcus' email address is ruthmarcus@washpost.com.