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In a decision that keeps the Affordable Care Act intact, the U.S. Supreme Court has upheld the use of federal subsidies under the health law in states that have not created state-run marketplaces.
With a 6-3 vote in favor of the Obama administration, justices ruled that residents in states that rely on the federal marketplace are eligible for tax credits to purchase insurance, based on the high court’s interpretation of ACA language.
In their opinion, justices said the context and structure of the act’s language compel the conclusion that tax credits are available for insurance purchased on any exchange created under the law. The credits are necessary for the federal exchanges to function like their state exchange counterparts, the high court stated, and to avoid calamitous results that Congress intended to avoid.
“When read in context, the phrase ‘an exchange established by the state’ [in the ACA], is properly viewed as ambiguous,” the majority justices said. “The phrase may be limited in its reach to state exchanges. But it could also refer to all exchanges – both state and federal – for purposes of the tax credits. If a state chooses not to follow the directive to establish an exchange, the Act tells [HHS] to establish ‘such exchange.’ By using the words ‘such exchange,’ the Act indicates that state and federal exchanges should be the same.”
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President Obama quickly praised the decision, calling it a win for the nation and a testament to the law’s value.
“The Court upheld a critical part of this law; the part that’s made it easier for Americans to afford health insurance, regardless of where you live,” President Obama said during a press conference. The ruling “is a victory to hardworking Americans all across this country whose lives will continue to become more secure in a changing economy because of this law.”
Supporters for the plaintiff issued sharp criticism of the decision and the ACA itself.
The “ruling is deeply disappointing, but it does not change the fact that Obamacare is a fundamentally flawed law,” House Ways and Means Committee Chair Paul Ryan (R-Wisc.) said in a statement. “It’s increasing health care costs, reducing coverage choices, and weighing down our economy. We need a system that makes coverage more affordable and puts patients – not Washington – in charge of health care decisions.”
Former Arkansas Gov. Mike Huckabee, a 2016 Republican presidential candidate, went a step farther, calling the Supreme Court decision “an out-of-control act of judicial tyranny.”
“Our Founding Fathers didn’t create a “do-over” provision in our Constitution that allows unelected Supreme Court justices the power to circumvent Congress and rewrite bad laws,” Mr. Huckabee said in a statement.
Meanwhile, the American Medial Association and other physician leaders expressed relief at the decision, stressing that millions of patients can now continue to access necessary health care.
“The subsidies upheld today help patients afford health insurance so they can see a doctor when they need one and not have to wait until a small health problem becomes a crisis,” AMA President Steven J. Stack said in a statement. “The subsidies provide patients with peace of mind that they will not risk bankruptcy should they become seriously ill or injured and experience catastrophic health care costs.”
The closely watched case was heard before the Supreme Court on March 4, and analysts had issued mixed predictions about how justices would find. The case centered on a handful of words in the ACA’s language that states tax credits apply to insurance purchased through an exchange “established by the state.” Challengers argued the language did not mention the federal exchange and that subsidies should be available only for purchases through state exchanges.
However, the Supreme Court countered this interpretation, arguing that such a reading would destabilize the individual insurance market in any state with a federal exchange, and likely create the death spirals that Congress designed the law to avoid.
“Under petitioners’ reading … one of the Act’s three major reforms – the tax credits – would not apply. And a second major reform – the coverage requirement – would not apply in a meaningful way, because so many individuals would be exempt from the requirement without the tax credits. If petitioners are right, therefore, only one of the Act’s three major reforms would apply in states with a federal exchange. … It is implausible that Congress meant the Act to operate in this manner,” the majority justices wrote in their decision.
Justice Antonin Scalia, Justice Clarence Thomas, and Justice Samuel Alito Jr. disagreed. The dissenters accused the majority of failing to interpret the ACA and instead rewriting the law as they saw fit.
