Lots of people are predicting that the Government's position, that the IRS can rewrite the law at whim, will win based on the oral argument on Wednesday.
I am not sure. Here's what happened:
This case is the case arguing that the IRS's interpretation that "established by the State under Section 1311" means "established by the State under Section 1311 or HHS under Section 1321" is invalid, and therefore subsidies only legally flow to people who purchase health insurance in the minority of states that set up exchanges themselves.
Justice Ginsburg (who will vote for the government without question), immediately interrupted the challenger's counsel, to challenge whether they even had standing to challenge the law. She even suggested that the case should be sent back down to the District Court to review the standings issue (and evade the question.) That suggests to me that Justice Ginsburg is worried about the outcome of the case on the merits, at least in a small way. Otherwise her move here is simply bizarre.
Note that interruptions are standard practice and always happen.
Justice Breyer (who will also vote for the government without question) then pushed on the merits regarding the technical definition of the word "exchange", arguing that because the statute defines an exchange through Section 1311, all references to an "exchange" fall under 1311 and count as qualifying for the subsidies. This was largely lifted from the Government's brief.
Justice Kagan (Also for the government) offers a metaphor about writing memos, primarily focused on establishing ambiguity under the Statute (given the Court room to interpret). At first, it seems sensible, but it fell apart under a response from Mr. Carvin and questioning from Justice Alito, arguing that the metaphor only works because Justice Kagan did not care about the authorship of the memo for purposes of her instruction, but that Congress did care who set it up, and conditioned Exchange Subsidies on that basis.
Justice Kagan used that response to suggest that the entire Act needs to be read in order to understand phrases at issue. Mr. Carvin pointed out that several other areas of the Statute expressly include other areas, like territories. while this section leaves out everything save States (and DC, which is defined as one in the law)
Justice Breyer tried to eliminate the line between "for the State" and "By the State" and argue that the outcomes of the challenger's reading would be disastrous. Mr. Carvin argued that the language of the rest of the statute made clear the necessary reading.
Justice Sotomayor (For the government) argued that the reading was precluded by Federalism concerns, which Justice Kennedy then picked up on.
And that was the core concern of Justice Kennedy (For ???) - That the deal offered by the Plaintiff's reading was so coercive on the States that it would be unconstitutional. He's often been concerned about the interplay between the States and the Federal Government, and always skittish about expanding Federal power at State Expense.
Justice Scalia (For the challengers) made the point repeatedly that the Court has not used Constitutionality to rewrite statutes ever.
For the rest of the Challenger's argument, Mr. Carvin made the argument that deals of this nature were perfectly Constitutional in the past, and that the Exchanges set up by the Federal Government would still function as intended because of their natural advantages. Justice Kagan pushed the "Elephants in mouseholes" concept, that Congress doesn't put huge things into sections of law covering technical details in implementation law.
Argument was extended by 10 minutes for each side because of the aggressive questioning and constant interrupting by the Progressive wing of the Court.
Now, this doesn't make much sense to me. The four Progressive Justices, on issues of political controversy, vote on the basis of politics and policy, not on the law. Justice Ginsburg's general disregard for the law is perhaps the most obvious from her questioning on political issues. Justice Breyer may ask good questions, but he doesn't actually use the answers. So why would they so aggressively question the Challenger's to the law?
The questioning was aggressive, not angry or heated, so I don't think the 4 were outraged at the challenge or acting on the basis of anger. (I think Justice Breyer may have been a little cranky, but he didn't lead the questioning, and he sounds cranky sometimes anyway) I think the core of the argument had one reason:
Impress Justice Kennedy.
I suspect that Justice Kennedy may very well feel stuck on the clear language of the law, despite the predicted misfortunes of the outcome. I think that the arguments of the Progressive Justices are aimed to convince Justice Kennedy that there is just enough wiggle room to swing over to their side of the reading, and avoid those disastrous outcomes. Certainly that was the focus of Justice Kennedy's few questions, and for awhile those questions seemed to refocus Justice Kagan's (who led questioning throughout) questions on the potential disasters. And there's really no other reason for Justice Ginsburg's standing inquiry, because literally no one else cared. Not in the lower courts, not any of the other Justices, not even the Government really cared.
So Justice Kennedy may actually lean in favor of the challengers to the Government. There's reason to hope, anyway.