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Justices split in hearing on Obamacare that could affect Arizona, other states

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WASHINGTON – The Supreme Court appeared split Wednesday in the most recent challenge to Obamacare, a lawsuit that says the federal government should not be allowed to offer financial help to some insurance customers.

The case, King v. Burwell, is being closely watched by advocates who say loss of that federal subsidy could affect millions nationally and more than 155,000 Arizonans who currently have insurance, in part because of the benefit.

That did not appear to be lost on the justices, with Justice Sonia Sotomayor noting that the consequences of getting rid of subsidies for people in affected states would lead to “the death spiral that this system was created to avoid.”

Among the many provisions of the Affordable Care Act – better known as Obamacare – is federal assistance, in the form of tax credits, for low- to middle-income individuals who enroll in coverage “through an exchange established by the state.”

Thirty-four states, including Arizona, never set up a health insurance exchange, instead relying on the Department of Health and Human Services and the federally facilitated marketplace,, for individuals in those states.

The challengers’ attorney, Michael Carvin, argued that those four words – “established by the state” – make it clear that residents of those 34 states without their own exchanges do not qualify for financial assistance.

Justice Elena Kagan was quick to jump on that reasoning with an example using her clerks, Will, Elizabeth and Amanda. If she asked Will to write a memo and Elizabeth to edit it – but also told Amanda to write the memo if Will was too busy – who would edit Amanda’s memo?

“Should Elizabeth edit the memo?” Kagan asked Carvin, explaining that Amanda was a substitution for Will – likening it to the fact that the federal marketplace is a substitution for a state marketplace.

Justice Anthony Kennedy, a potential swing vote on the case, questioned whether limiting subsidies to those states that have marketplaces would coerce states into setting up exchanges.

Kennedy told Carvin that “there’s a serious constitutional problem if we adopt your argument.”

But Justices Samuel Alito and Antonin Scalia were just as vigorous in their questioning of Solicitor General Donald Verrilli Jr., who represented HHS Secretary Sylvia Burwell.

Verrilli said Carvin’s interpretation of the law “cannot be the statute that Congress intended.”

“Of course it could be,” Scalia retorted. While it might not be what Congress intended, Scalia said, the real question is whether it was what lawmakers wrote.

Verrilli also argued that if Congress had intended for the subsidies to be available only when coupled with a state marketplace, that would have been noted in “neon lights,” not stuck in a “subclause in section 36B.”

But again, Scalia was quick to point out the haste in which Obamacare was passed.

“This is not the most elegantly drafted statute,” Scalia said, who went on to wonder if this could be another “imperfection” of the law.

Supporters on both sides said after the hearing that they are optimistic. The justices are expected to release their decision sometime before their summer recess begins at the end of June.