Supreme Court upholds ACA subsidies

June 26, 2015
Area(s) of Interest: Advocacy Health Care Reform 

In a major victory for the Obama administration, the U.S. Supreme Court upheld a key provision of the Affordable Care Act (ACA), reaffirming that 6.4 million people in 34 states can continue to receive subsidies to purchase health care insurance.

The question in the case, King v. Burwell, was what to make of a phrase in the law that seems to say the subsidies are available only to people buying insurance on “an exchange established by the state.”

Chief Justice John Roberts and Justice Anthony Kennedy joined the court’s four Democratic appointees in the majority,  affirming that Congress’ intent was to allow tax credits in all 50 states, not just the 16 that have authorized their own online insurance exchanges.

Plaintiffs in the case said that that the language in the law forbids the federal government from providing subsidies to states that did not set up an exchange. Lawyers for the Obama administration said the balance of the law showed that Congress did not intend to limit subsidies.

“Had Congress meant to limit tax credits to state exchanges, it likely would have done so in the definition of an ‘applicable taxpayer’ or in some other prominent manner,” Chief Justice Roberts wrote. “It would not have used such a winding path of connect-the-dots provisions about the amount of the credit.”

"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," Chief Justice Roberts also wrote.

The case arrived at the Supreme Court after a 4th U.S. Circuit Court of Appeals panel in Virginia in July 2014 unanimously ruled in favor of the administration, saying subsidies should be allowed in all 50 states. This case marks the law’s third trip to the high court. In 2012, Chief Justice Roberts joined the four more liberal justices to uphold the constitutionality of the ACA, with four conservative justices dissenting. Earlier, Chief Justice Roberts and the four conservative justices carved out an exception to providing contraceptive coverage for employers who object on religious grounds.

The case does not directly affect California, as it is among the 16 states that established its own insurance exchange.  However, the Court’s affirmation of the ACA serves to bolster California efforts to fully implement federal health care reform.  The landmark decision also affirms CMA’s policy and actions generally to stand behind the ACA while recognizing the law is not perfect and working towards fixing problems.


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