SCOTUS Upholds ACA Subsidies on in King v. Burwell


In a triumphant win for President Obama's Affordable Care Act and millions of Americans, the Supreme Court of the United States ruled against the plaintiffs in the case King v. Burwell and upheld the availability of subsidies for individuals on the federally facilitated marketplace.

In a triumphant win for President Obama’s Affordable Care Act (ACA) and millions of Americans, the Supreme Court of the United States ruled against the plaintiffs in the case King v. Burwell and upheld the availability of subsidies for individuals on the federally facilitated marketplace.

The justices voted 6-3 in favor of upholding the subsidies with the decision written by Chief Justice John Roberts. The 6 justices who affirmed the ruling of the Fourth Circuit were the Chief Justice and Justices Anthony Kennedy, Ruth Bader Ginsburg, Steven Breyer, Sonia Sotomayor, and Elena Kagan. Read the full opinion. The dissent was written by Justice Antonin Scalia, who was joined by Justices Clarence Thomas and Samuel Alito.

The case hinged upon the interpretation of 6 words present in the ACA legislation: “an Exchange established by the State.” The plaintiffs argued that a plain reading of the ACA means that subsidies should only be available to consumers who live in states that set up their own exchanges.

According to Kennedy, the law provides, in Section 18041 that the Secretary "shall ... establish and operate such Exchange within the State." The court ruled that this phrase means state and federal exchanges are "equivalent."

"Although State and Federal Exchanges are established by different sovereigns, Sections 18031 and 18041 do not suggest that they differ in any meaningful way. A Federal Exchange therefore counts as 'an Exchange' under Section 36B," wrote Kennedy.

In conclusion, the claim that the phrase "an Exchange established by the State" is ambiguous is supported by the legislation. Furthermore, the Chief Justice does not believe that only having subsidies on the state-based exchange and not on the federal exchange makes sense when reading the entire legislation.

Supporters of leaving the subsidies intact, including Republicans and Democrats involved in the drafting of the legislation, have maintained that the phrase in question was a drafting error. Former Republican Senator Olympia J. Snowe of Maine was quoted in The New York Times as saying there had never been any distinction made between federal and state exchanges in terms of subsidies, while former New Mexico Senator Jeff Bingaman, a Democrat, expressed surprise that the case had ever reached the Supreme Court.

However, Scalia pointed out in his dissent that other parts of the legislation distinguishes between exchanges established by the state and exchanges established by the federal government. As such, there should be no pretense that a federal exchange is also established by the state.

"So saying that an Exchange established by the Federal Government is 'established by the State' goes beyond giving words bizarre meanings; it leaves the limiting phrase 'by the State' with no operative effect at all," he wrote.

Scalia even refers to the Court's opinion as "interpretive jiggery-pokery" and added that the provisions the Court refers to in the decision to uphold the opinion of the lower court are consistent with limiting tax credits to the state exchanges. In fact, he believed that the Court essentially rewrote the law so that it should be called "SCOTUScare."

"The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral," Kennedy wrote. He cites a study that predicts removing subsidies from would increase premiums by 47% and decrease enrollment by 70%. Later he wrote, "It is implausible that Congress meant the Act to operate in this manner."

The effect if the Supreme Court had ruled in favor of the plaintiffs could have been catastrophic. With no backup plans in place, experts predicted that enrollees unable or unwilling to pay for their insurance premiums in whole could lose coverage within 30 days, which could result in $12 billion worth of uncompensated care in 2016, an increase in the uninsured by 8.2 million, and premiums rising as much as 47%.

President Obama praised the Supreme Court's ruling and lauded the accomplishments of the healthcare law in the last 5 years. Although there have been setbacks, he said that there can be no doubt that the law is working and in the process has changed and saved American lives.

"Today … after multiple challenges before the Supreme Court the Affordable Care Act is here to stay," he said.

The American Medical Association (AMA) was quick to express relief in the Supreme Court's decision to allow patients on the federal marketplace to have access to subsidies.

“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," Steven J. Stack, MD, president of the AMA, 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. With this case now behind us, we hope our country can move forward and continue strengthening our nation’s health care system.”

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