The case against King, by Scalia, Kennedy et al

The plaintiffs in King v. Burwell claim that the ACA's creators intended to coerce states into setting up their own exchanges by authorizing state-established exchanges alone to credit subsidies to buyers -- denying that power to the backup federal exchange.

In response to this manifestly absurd assertion of intent, the law's supporters have pointed out that no one involved in the law's design, passage or implementation understood such coercion to exist; that laws that make federal grants to the states conditional on specific state action invariably spell out the consequences of non-participation; that the ACA's clear intent is to provide near-universal coverage; and that the ACA's core provisions were designed to be interdependent, so that denying subsidies to residents of some states would render the law inoperable.

On  all of these points, no participant has been so eloquent as the four dissenting Supreme Court justices in NFIB v. Sebelius, the suit challenging the law's constitutionality, who asserted that the entire law should be struck down.

In their dissent, Justices Scalia, Kennedy, Thomas and Alito argued repeatedly that to strike down any core provision -- e.g., the individual mandate or the Medicaid expansion -- was to thwart the intent of the law's creators and render the remaining parts of the law unworkable -- hence the imperative to strike down the whole law.

Abbe Gluck has highlighted the dissenters' most direct assertions of interdependence of parts, laying particular stress on their observation that the law's "system of incentives collapses if the federal subsidies are invalidated" because without the subsidies, "the exchanges would not operate as Congress intended and may not operate at all" (dissent, p. 60).

Equally striking is the dissenters' argument that making the Medicaid expansion fully voluntary, as the Court majority did, would also thwart Congress's manifest intent to provide universal coverage and would thus render the entire scheme unworkable.

In making this case, the NFIB dissent characterizes the Medicaid expansion as coercive, whether or not the states can reject it without forfeiting federal aid for their existing Medicaid programs, as the Court majority decreed. By declining to make the same kind of argument about the exchange subsidies, the dissent validates an argument in defense of the subsidies advanced in an amicus brief by Gluck and fellow law professors Thomas Merrill, Gillian Metzger and Nicholas Bagley. Gluck et al argue that when Congress makes a "conditional" grant to the states, it's not coy about the consequences of state inaction. The ACA provision establishing the federal exchange does not do this; it rather follows the form of a "cooperative regulatory scheme" in which the federal government simply acts for the state if the state declines to act on its own. The dissenting NFIB justices' complaints about the coercive nature of the Medicaid expansion betray a corresponding assumption that there was no such coercion in the provisions establishing state exchanges and a federal backup.

The dissenting justices in NFIB clearly identified the Medicaid expansion as a "conditional" grant -- the type Gluck and all assert that the exchange subsidies do not conform to:

Recognizing this potential for abuse, our cases have long held that the power to attach conditions to grants to the States has limits. See, e.g., Dole, supra, at 207–208; id., at 207 (spending power is “subject to several general restrictions articulated in our cases”). For one thing, any such conditions must be unambiguous so that a State at least knows what it is getting into (32-33, my emphasis).

As Gluck et al asserted in their King brief, if premium subsidies are imagined to have been conditioned on a state setting up its own exchange, that condition was so ambiguous as to have been recognized by no one,  That "no one" includes several governors and state officials cited in an amicus* submitted in support of the government by states that relied on the federal exchange, which argues that the states were given no warning of the alleged consequence of declining to build their own exchanges. The cited officials all expressed the belief or simply betrayed the assumption that subsidies would flow through the federal exchange.

That assumption was plainly shared by the dissenting justices in NFIB, who went so far as to cite the backup federal exchange as a salutary contrast to the deal-you-can't-refuse structure of the Medicaid expansion:

If Congress had thought that States might actually refuse to go along with the expansion of Medicaid, Congress would surely have devised a backup scheme so that the most vulnerable groups in our society, those previously eligible for Medicaid, would not be left out in the cold. But nowhere in the over 900-page Act is such a scheme to be found. By contrast, because Congress thought that some States might decline federal funding for the operation of a “health benefit exchange,” Congress provided a backup scheme; if a State declines to participate in the operation of an exchange, the Federal Government will step in and operate an exchange in that State (pp. 43-44). 

Finally, the dissenters complained that the voluntary Medicaid expansion created by the Court majority was itself coercive because it forced non-expanding states to fund the expansion in states that accepted the federal funds.  They specifically upbraided the Court for creating that alleged inequity:

Worse, the Government’s proposed remedy introduces a new dynamic: States must choose between expanding Medicaid or paying huge tax sums to the federal fisc for the sole benefit of expanding Medicaid in other States. If this divisive dynamic between and among States can be introduced at all, it should be by conscious congressional choice, not by Court-invented interpretation (p. 47).

The irony of the dissenters' position as they turn to King would be exquisite if their hostility to the law were not so intensely manifest throughout the dissent. Now they are the ones who may create a "divisive dynamic" among states in direct defiance of Congressional intent as they themselves characterized it in NFIB.

--
* Brian Beutler highlighted the states' brief, suggesting that it's attuned to Roberts' disapproval of the federal government coercing the states as expressed in his NFIB opinion.