President Barack Obama’s signature health care law has survived its second life-or-death challenge, with a Supreme Court ruling that polishes his legacy and caps a huge week for the White House.
In a 6-3 decision Thursday, the court ruled administration officials acted reasonably when they extended tax credit subsidies that make insurance affordable for millions of residents in dozens of states. The decision upheld the officials’ interpretation of the law’s ambiguous language concerning health insurance exchanges.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John Roberts Jr. wrote. “If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
At the White House, Obama appeared in the Rose Garden, accompanied by Vice President Joe Biden, and declared triumphantly that “after more than 50 votes in Congress to repeal or weaken this law . . . (and) after multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay.”
The ruling was his second victory in as many days. On Wednesday, the Senate passed a Trade Promotion Authority bill, an essential element of the president’s trade agenda, but which looked dead in the water two weeks ago.
The court’s long-awaited decision in the case called King v. Burwell does not end all legal challenges to the Patient Protection and Affordable Care Act, but it’s probably the last one that had the potential to gut the law. A ruling in the other direction would have undercut the subsidized insurance program’s financial underpinnings.
Politically, moreover, the ruling appears to be a blessing for Republicans both on Capitol Hill and on the presidential campaign trail. It enables GOP lawmakers to continue attacking the health-care law rhetorically without having to face the fallout from constituents losing coverage.
“Obamacare is fundamentally broken,” stated House Speaker John Boehner, R-Ohio, insisting that “we will continue our efforts to repeal the law and replace it with patient-centered solutions.”
The high court previously upheld the law against an explicit constitutional challenge, in a 2012 decision also written by Roberts, that concluded Congress had the authority to impose the so-called individual mandate. The mandate requires individuals either to buy insurance or pay a penalty.
The new challenge was focused on the text of the law rather than on the Constitution.
At issue was the legality of the subsidies for an estimated 6.4 million subscribers in the 34 states that chose not to run their own health insurance exchanges, leaving it to the federal government.
Had the court struck down the subsidies, these low- and middle-income Americans would have lost an average of $272 per month, amounting to $3,264 per year, in federal subsidies.
Without the money, their out-of-pocket premium contributions could have jumped an average of 255 percent this year, according to an analysis by Avalere Health, an advisory company. The insurance market, some feared, would have entered a “death spiral.”
Research by the Urban Institute estimates that 7.5 million people would have become uninsured next year in the 34 states as a result of the lost subsidies and the higher premiums that would have resulted. Out-of-pocket premium contributions for those who lost subsidies would have increased by an average of $3,300 a year, or $275 per month, according to Avalere.
The market for individual insurance, which is sold outside the workplace and on the marketplaces, would have shrunk by 70 percent in the affected states next year. And premiums would have increased 55 percent, making coverage unaffordable for millions of healthy people.
Underscoring a pragmatic approach that he’s shown on other cases as well, Roberts added that the tax credits are necessary “to avoid the type of calamitous result that Congress plainly meant to avoid.”
Critics contended the law as written only permitted the subsidies to go to people who use state-run exchanges. The administration reasoned the subsidies were intended to be available in all states.
The health care law encourages states, but does not require them, to establish exchanges to offer one-stop shopping for insurance coverage. As inducement, the law offers tax credits to people qualified by income who buy insurance through an exchange “established by the State.”
Driven primarily by Republican resistance, 34 states declined to establish health insurance exchanges. Nevertheless, the Internal Revenue Service has extended tax credit subsidies to residents of these states who buy insurance through the federal exchange, HealthCare.gov.
Challengers said the law’s black-and-white text means what it says: A health exchange must be established by “the state” for the subsidies to be available. The federal government, by this reasoning, cannot substitute when states have declined to act.
Supporters of the law countered that the questionable phrase makes sense only in context, and the court’s majority agreed that, as Roberts put it, “the context and structure of the law of the Act compel us to depart from what would otherwise be the most natural reading” of the pertinent phrase.
“In every case we must respect the role of the Legislature, and take care not to undo what it has done,” Roberts wrote. “A fair reading of legislation demands a fair understanding of the legislative plan.”
Justices Clarence Thomas, Samuel Alito Jr. and Antonin Scalia dissented, with Scalia calling the majority’s reasoning “quite absurd.”
“Words no longer have meaning if an Exchange that is not established by a state is ‘established by the state.’” Scalia 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.’”
With his characteristic angry flair, Scalia further asserted that “we should start calling this law SCOTUScare.”
House Minority Leader Nancy Pelosi of California, who as House speaker muscled the legislation over the finish line, called the ruling a “victory for common sense and for all American families.”
Marcia D. Greenberger of the National Women’s Law Center said the ruling “means the Affordable Care Act will continue to help millions of women and their families afford health insurance.”
The four plaintiffs in the case, all Virginia residents -- David King, Brenda Levy, Rose Luck, and Douglas Hurst -- responded in a joint statement that they were “deeply disappointed” with the ruling.
“First, it threatens something that our democracy is based on -- the rule of law,” the four plaintiffs said. “And second, it allows the IRS to keep offering nationwide subsidies even though the law that Congress passed says otherwise.”
The health law still faces additional legal challenges, though none pose such a dramatic threat.
They include a federal lawsuit by House Republicans challenging the federal government’s plan to pay health insurance companies about $175 billion over the next 10 years to help poor people pay for doctor and hospital visits.
The lawsuit, filed in November against Health and Human Services Secretary Sylvia Burwell and the U.S. Treasury, claims the Obama administration overstepped its executive authority by OKing the payments even though the money was never appropriated by Congress.
Other suits continue to challenge how the law might be limited by religious objections, among others.