In a 6-3 decision, the United States Supreme Court ruled today that President Barack Obama’s health care law allows the federal government to provide tax subsidies to help poor and middle-income people buy health insurance.
For the second time in three years, the law survived a Supreme Court review. About 6.5 million Americans in 35 states stood to lose tax credits if the Supreme Court had ruled against the administration.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John Roberts wrote in a 21-page opinion.
The Patient Protection and Affordable Care Act includes a series reforms designed to expand coverage in the individual health insurance market. The act bars insurers from taking a person’s health into account when deciding whether to sell health insurance or how much to charge. It also requires each person to maintain insurance coverage or make a payment to the Internal Revenue Service.And the act gives tax credits to certain people to make insurance more affordable.
The act also requires the creation of a health exchange in each state – a marketplace that allows people to compare and purchase insurance plans. The Act gives each state the opportunity to establish its own exchange, but provides that the federal government will establish the exchange if the state does not.
The central question the Supreme Court was asked to consider was whether the Affordable Care Act’s tax credits should be available in states that have a federal exchanges.
“The combination of no tax credits and an ineffective coverage requirement could well push a state’s individual insurance market into a death spiral, wrote Roberts. “One study predicts that premiums would increase by 47 percent and enrollment would decrease by 70 percent.”
The majority argued that the structure of the act suggests that tax credits are not limited to state Exchanges. Section 36B(a) of the act provides that tax credits “shall be allowed” for any “applicable taxpayer.”
“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,” Roberts wrote.
“In every case we must respect the role of the legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan. 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,” Roberts wrote. “Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”
Joining Chief Justice Roberts were Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan. Dissenting were Justices Antonin Scalia, Clarence Thomas and Samuel Alito.
In the dissenting opinion, Scalia argued that the case was obvious.
“This case requires us to decide whether someone who buys insurance on an exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it,” he wrote.
“In order to receive any money under §36B, an individual must enroll in an insurance plan through an 1Exchange established by the state. The Secretary of Health and Human Services is not a state. So an exchange established by the Secretary is not an Exchange established by the state — which means people who buy health insurance through such an exchange get no money under §36B. Words no longer have meaning if an exchange that is not established by a state is established by the state,” he wrote.
“It is hard to come up with a clearer way to limit tax credits to state exchanges than to use the words `established by the state.’ And it is hard to come up with a reason to include the words `by the State’ other than the purpose of limiting credits to state exchanges,” Scalia wrote.
Roberts rejected Scalia’s reasoning, writing “It is implausible that Congress meant the Act to operate in this manner.”
“Those requirements only work when combined with the coverage requirement and the tax credits,” Roberts wrote. “So it stands to reason that Congress meant for those provisions to apply in every state as well.”
Raymond Castro, a senior policy analyst with New Jersey Policy Perspective, praised the Supreme Court’s decision “to recognize that health reform provides tax credits to help consumers in all states be able to afford quality health coverage.”
Castro said now it’s time for people on both sides of the aisle to accept that the law is working and take steps to improve and fully implement it.
“The Court found what most health experts believed in the beginning, that the Affordable Care Act clearly makes tax credits available in both federal and state exchanges,” Castro said. “Had the decision gone the other way, millions of people, including 172,000 in New Jersey, would have lost their subsidies and been at risk of losing their coverage and insurance markets would have been destabilized.
Castro said instead of trying to undermine the law, opponents need to accept that health reform is here to stay and stop putting forth misguided proposals – from repealing the ACA to capping federal funding for Medicaid to repealing insurance mandates to undermine its success.