In a 6-3 decision, the United States Supreme Court has upheld the tax credit premium assistance (subsidies) provided to individuals who live in states without a state operated health insurance exchange.

The case is King v. Burwell and the issue before the Court was whether the Affordable Care Act’s tax credits are available to people in states that have a federal exchange rather than a state exchange.  The law’s challengers, four people who live in Virginia, did not want the tax credits because without the tax credits the cost of buying insurance would exceed eight percent of their income.  Having their health insurance cost exceed eight percent of their income would exempt them from the Affordable Care Act’s coverage requirement.  Since the Affordable Care Act provides that the amount of the tax credit depends in part on whether the person has enrolled in an insurance plan through “an Exchange established by the State” (language from the Affordable Care Act in question (emphasis added)) and since Virginia does not have an exchange of their own, the plaintiffs do not believe they are entitled to the tax credits.  The IRS’s rules, they argue, allowing them to get the credit contradicted the law passed by Congress.

The Court (opinion by Justice Roberts joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan) concluded that the part of the Affordable Care Act in question allows tax credits for insurance purchased on any exchange created under the Affordable Care Act. The Court acknowledged the ambiguity in the law, but in reviewing the entirety of the Affordable Care Act, determined that Congress intended the tax credits to be available to all qualified taxpayers regardless of their purchase of health insurance on a federal or state operated exchange.   The Court stated:  “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.” and “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.”  Justice Scalia, writing for himself and dissenters Justices Thomas and Alito, sharply criticized the majority decision saying: “We should start calling this law SCOTUScare.”

The ruling puts to rest (some would say, for now) the threat facing 6.4 million people who receive subsidies for health insurance they purchase using the federal health insurance exchange.  If the Court had ruled that the subsidies were not allowed under the law, there would have been a scramble to keep these 6.4 million people from losing health insurance coverage.  Several proposals were discussed to address the fallout from the loss of the subsidies, but none of the proposals had enough support to pass in Congress. Some health care providers had also developed contingency plans and measures to reduce the impact on their patients that would lose coverage.  These plans can be put aside and the health care industry can focus on the challenges remaining in implementation of the Affordable Care Act:  addressing the health needs of those who remain uninsured; managing and improving patient health overall; stabilizing costs; improving efficiency and outcomes; and adjusting to the payment and health care delivery reforms.