This case came before the Supreme Court on appeal, and constitutes a challenge to one aspect of the Affordable Care Act, specifically regarding whether subsidies can be provided to low-income people buying health insurance through federal exchanges. These subsidies are vital in enabling people to access affordable health care coverage.
On June 25th, 2015, in King v. Burwell, the Supreme Court decided a matter impacting the health care coverage of millions of Americans. The Affordable Care Act (ACA) was enacted by Congress in 2010 to increase the number of Americans covered by health insurance. Under the ACA, people can purchase health insurance through an “exchange” in each state, basically, a marketplace that allows people to compare and purchase insurance plans. Every state can create its own exchange but if the state chooses not to, the federal government then establishes such an exchange. Low-income individuals and families receive subsidies in the form of federal tax credits to help them buy coverage, and towards generally keeping costs of health insurance affordable. The issue before the Supreme Court was whether or not people in the 34 states that utilize a federally-created exchange, rather than a state exchange, are eligible for the tax credits. The statutory language of the ACA provides that the aforementioned tax credits “shall be allowed” for any “applicable taxpayer,” 26 U. S. C. §36B(a), only if the taxpayer has enrolled in an insurance plan through “an Exchange established by the State….” §§36B(b)–(c). The question was whether that language might encompass the federal exchanges. Concluding that the statutory text, especially the phrase, “established by the State,” was ambiguous, the Court determined that it must look to the broader structure of the Act to correctly interpret the statutory language.
Assessing the ACA in its entirety, the Court found that eliminating subsidies for individuals relying on federal exchanges would have far reaching consequences, affecting the access of millions of Americans to affordable health care as well as potentially pushing states’ individual insurance markets into a death spiral with substantial premium increases and sharp declines in individual market enrollment. It was considered implausible that Congress intended the Act to operate in this manner. The Court further asserted that the structure of §36B itself also suggests that tax credits are not limited to state exchanges. Justice Roberts, writing for the majority, concluded that, “…In every case we must respect the role of the Legislature […].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.” The Court thus decided that subsidies through tax credits are available to individuals relying on federal exchanges.
Enforcement is not an issue in this case since the tax credits will simply continue to be provided for both state and federal exchanges.
This case is particularly important because it preserves access to affordable health insurance for millions of middle and low income Americans. The decision allowed more than 6.4 million people (and by some estimates as many as 9.3 million individuals) across 34 states to keep their subsidies, enabling them access to reasonably priced health coverage. In fact, the loss of tax credits would have affected many more than those currently receiving subsidies. Without the support of subsidies, many would not be able to afford insurance, and healthier consumers would simply forego coverage, leaving insurers with a sicker, more expensive pool of customers. This would have inevitably raised prices for everyone. Given the fierce opposition from conservatives to the ACA, this case is also significant because the Supreme Court has so conclusively read the law to allow subsidies that it gives the law robust protection from future challenges based on technical statutory interpretations.
A constitutional right to health care may not exist in the United States, and the Court in the past has been quite conservative in its interpretation of the ACA, nonetheless, the Court’s opinion in King v. Burwell, lends clear support for access to affordable health care for Americans.
Northeastern Law School Professor Martha Davis, who has followed the litigation in this area, called the decision a pragmatic one for the Court, which respects the boundaries between the Court and Congress. “Congress can amend the law if it wants to cut back on coverage,” said Davis, “and absent such an amendment, if is completely appropriate for the Court to take the underlying purposes of the Act into account in construing specific statutory language. Far from a political decision, this is a decision that takes the Court out of the political fray and applies basic legal analysis in a principled way.”
(Updated December 2015)
Thirty amicus curiae briefs were filed in support of countrywide availability of tax credits that enable millions of Americans to access affordable health care, including by the Harvard Law School Centre for Health Law and Policy Innovation, Families USA, National Health Law Program, National Education Association, National Women’s Law Center, Services and advocacy for GLBT Elders, National Council on Aging, American Federation of Labor and Congress of Industrial Organizations, Service Employees International Union, Asian and Pacific Islander Coalition on HIV/AIDs, Black AIDS Institute, Gay & Lesbian Advocates Advancing LGBT Equality, HIV Prevention Justice Alliance, National AIDS & Education Services for Minorities, National Black Justice Coalition, National Minority AIDS Council and so on. (For the full list, please see http://theusconstitution.org/sites/default/files/briefs/CAC-King-Brief%20Summaries-Govt-Side.pdf)
