The Supreme Court ruled it is legal for the Obama administration to award insurance subsidies in every state, dismissing the King v. Burwell challenge to Obamacare and delivering a major victory to the president.
In his second decision upholding major parts of the Affordable Care Act, Chief Justice John Roberts sided with the court’s four liberal justices and swing-vote Justice Anthony Kennedy to dismiss the King challenge in a 6-3 decision that left the law’s opponents furious and its advocates sighing with relief.
Because the law’s text is not clear about whether the subsidies can go to residents of every state or just those in states running their own insurance marketplaces, the court had to discern what Congress intended when writing the law, Roberts wrote in the majority opinion.
The court concluded it’s “implausible” Congress intended to hinge the subsidies on states running their own exchanges, as the King challengers had argued. That’s because without the subsidies, the rest of the law doesn’t work as intended.
“Those credits are necessary for the federal exchanges to function like their state exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid,” Roberts wrote.
The King case was the second major legal clash over the Affordable Care Act. The Obama administration has defended its decision to provide the subsidies in all the states, as it has done for the last two years. Supporters of the case, including Republicans, argued that violates the law itself.
In a dissenting opinion, Justice Antonin Scalia blasted the majority ruling, in one part suggesting the healthcare law should now be called “SCOTUScare.”
“Rather than rewriting the law under the pretense of interpreting it, the court should have left it to Congress to decide what to do about the act’s limitation of tax credits to state exchange,” Scalia wrote, joined by conservative justices Clarence Thomas and Samuel Alito.
The King case centered on a few lines of text in the Affordable Care Act allowing the federal government to provide financial assistance to poor and mid-income people buying plans in the new insurance marketplaces.
An estimated 6.3 million low and mid-income Americans stood to lose the subsidies under the King challenge. Only 13 states and D.C. are fully operating their own marketplaces, while the rest rely partially or fully on healthcare.gov, the federal marketplace.
Experts had warned that blocking the subsidies in the states with federal-run marketplaces would cause a so-called “death spiral” in the individual insurance market if it caused many young, healthy people to drop out of plans entirely.
Roberts — who three years ago cast the deciding vote to uphold the healthcare as a whole — gave a nod in his opinion to the King challengers, who had based their argument on how the law’s text is structured. The section that says subsidies can be provided through insurance exchanges refers to “exchanges established by the state” without explicitly mentioning exchanges run by the federal government.
That’s a “strong argument,” Roberts wrote. But he said the law’s overall intent requires the court to uphold the subsidies in the end.
“In this instance, the context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase,” he wrote.
