In parsing Justice Kennedy’s comments about federalism from the King oral argument, it’s important to notice that federalism principles could affect the outcome in two very different ways.
Most of Kennedy’s comments suggested that threatening the states with the loss of tax credits and the destruction of their individual insurance markets would be unconstitutionally coercive. That view would jibe with the strong position on coercion that Kennedy marked out in the joint dissent in NFIB v. Sebelius.
Kennedy seems attracted to an interpretation of the ACA that would avoid those concerns. The avoidance argument is advanced most capably in the Virginia amicus brief and in a brief drafted by Abby Moncrieff; the Solicitor General also halfheartedly endorsed avoidance during the argument.
But Kennedy doesn’t need to pull out the big constitutional guns in order to assure that the states had a “rational choice … to make.” Over the years, the Court has embraced principles of statutory construction that aim to preserve the federal-state balance and to assure that the states have notice of any conditions that attach to the receipt of federal funds.
As I’ve explained before, these principles—articulated in cases like Pennhurst, Bond, and Gregory—offer a clean, straightforward way to honor the federalism concerns implicated in King. I joined an amicus brief that spelled out the approach in detail; the gist of the argument is that the Court should be reluctant to read the ACA to have leveled a massive threat at the states without clearly spelling out that threat.
This isn’t an avoidance argument; it’s an argument about the proper way to go about making sense of the words that Congress chose. Indeed, in other cases that are cited but not discussed in the brief, the Court has adopted an interpretive approach that aims—not to avoid constitutional concerns—but to preserve genuine state choice.
That approach is prominent in cases where the Court is trying to make sense of schemes, like the ACA, where the states cooperate with the federal government to carry out federal programs. In Wisconsin Department of Health and Family Services v. Blumer, for example, the Court read the Medicaid statute “to advance cooperative federalism” by “leav[ing] a range of permissible choices to the States.” Similarly, in Batterton v. Francis, the Court rejected an interpretation of a joint federal-state welfare program that would have deprived states of administrative flexibility.
These cases are tailor-made for King: they supply a settled interpretive principle that favors affording states the latitude to choose whether to establish their own exchanges. What’s more, to use Blumer’s language, “such latitude is consistent with the statute’s aims.” It prevents the collapse of the states’ individual insurance markets, avoids the wrenching withdrawal of tax credits from millions of people, and enables the ACA to expand coverage to all Americans.
In other words, established interpretive principles would allow the Court to protect federalism values without wading into uncertain and contested constitutional terrain. The Court has plenty of tools to avoid the avoidance doctrine—and the constitutional baggage that comes along with it.