On Thursday, June 25, in the case of King v. Burwell, the Supreme Court of the United States upheld by a vote of 6–3 a provision in the Affordable Care Act (ACA) that allows individuals in states with federally run health insurance exchanges to receive a tax credit. A challenge to the law had argued that the law stated that tax credits were only available to individuals who purchased insurance through exchanges that were state-run. The ruling means qualified (generally low-income) individuals in all states will continue to receive health care subsidies.
In his weekly address on Saturday, June 27, President Obama said the Supreme Court’s decision on the Affordable Care Act means the law is “here to stay.”
“On Thursday, when the Court upheld a critical part of the Affordable Care Act, it was a victory for hardworking Americans all across this country whose lives are more secure because of this law,” the President said. “With this case behind us, we’re going to keep working to make health care in America even better and more affordable, and to get more people covered. But it is time to stop refighting battles that have been settled again and again. It’s time to move on.”
When the health reform law was established, ACA required each state to create a health insurance exchange, a marketplace that would allow people to compare and buy insurance plans. In states that did not create their own exchanges, the law allowed the federal government to run the exchange. Thirty-four states did not set up their own exchanges, and so are federally run, as reported by the Wall Street Journal.
In King v. Burwell, challengers to ACA argued that the law makes clear that health care subsidies are only available in states that create their own state exchanges, but not in states whose exchanges are federally run. The law, they said, stipulates that an individual is allowed to receive tax credits only if the individual enrolls in an insurance plan through “an Exchange established by the State.”
However, in his majority opinion, Chief Justice John Roberts wrote that the phrase in the law that an exchange must be established by the state is ambiguous, “at least for purposes of the tax credits.”
That said, “the tax credits are among the Act’s key reforms, involving billions of dollars in spending each year and affecting the price of health insurance for millions of people,” Roberts wrote. “Whether those credits are available on Federal Exchanges is thus a question of deep ‘economic and political significance’ that is central to this statutory scheme.”
Roberts continued, “If we give the phrase ‘the State that established the Exchange’ its most natural meaning, there would be no ‘qualified individuals’ on Federal Exchanges. But the Act clearly contemplates that there will be qualified individuals on every Exchange…. The Act requires all Exchanges to ‘make available qualified health plans to qualified individuals’ — something an Exchange could not do if there were no such individuals.” He further noted: “If tax credits were not available on Federal Exchanges, these provisions would make little sense.”
In conclusion, Roberts stressed, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
In a scathing dissent, Justice Antonin Scalia argued that the Court in its 6–3 ruling had overstepped its judicial bounds. “The Court’s decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery,” Scalia said, noting the court should have left it to Congress to decide what to do about tax credits for state Exchanges. “The somersaults of statutory interpretation [the Supreme Court has] performed (‘penalty’ means tax … ‘established by the State’ means not established by the State) will be cited by litigants endlessly, to the confusion of honest jurisprudence” and shows that the Supreme Court “favors some laws over others,” he wrote.