King v. Burwell: Is the ACA Here to Stay?

By Wendy Parmet

With Chief Justice Roberts’ remarkably strong decision today for the Supreme Court in King v. Burwell millions of Americans can now rest assured:  affordable health insurance is here to stay.  There may not be a constitutional right to health care in the U.S., and thanks to the Court’s 2012 decision regarding the Affordable Care Act’s Medicaid expansion, millions of citizens (not to mention non-citizens) remain uninsured; but the ACA’s promise of providing affordable coverage to millions of low income Americans is now secure.

The question before the Court in Burwell was whether individuals in the 34 states that rely on a federally-operated health insurance exchange, rather than a state-created exchange, are eligible for the federal tax credits. Without those credits, most people could not afford to buy insurance on the exchanges. Nor would they be subject to the ACA’s mandate to have coverage. As the Court recognized, as healthy people fled the exchanges, the insurance markets in states with federally-operated exchanges would experience a death spiral.

The challengers’ arguments were simple, if disingenuous. The provision in the ACA that calculates the amount of credits to which an individual is entitled based in part on the period of time in which the individual is enrolled in a plan “through an Exchange established by the State.” According to the challengers and the dissenting justices, those words make it clear that tax credits are limited to individuals who purchase insurance through state-created exchanges. Conceding that their interpretation would effectively kill the exchanges in the 34 states that rely on a federal exchange, the challengers concocted the theory that Congress inserted a poison pill into the ACA to push states to create their own exchanges.

Fortunately for millions of Americans, 6 members of the Court disagreed. What is remarkable about the Court’s opinion, however, is not its conclusion. The challengers’ case was weak from the get-go. What’s most notable is the way the Court reached its conclusion.

The Obama Administration and supporting amici curiae offered the Court three different paths to saving the ACA. One was based on so-called Chevron deference. This holds that when statutes are not clear, courts should defer to the administrative agencies which interpret them, in this case the Internal Revenue Agency which had ruled that tax credits were available to individuals who purchase insurance through federally-created exchanges. If the Court had followed this path, the ACA would have lived for another day, but a future Administration could have reversed course. This can’t happen now because Chief Justice Roberts’ opinion expressly rejected Chevron deference, finding that the statute is not ambiguous. The statute, he determined, requires that subsidies be made available to people who buy insurance on a federally-created exchange.

A second path to upholding the statute was hinted at by Justice Kennedy during oral arguments when he asked whether the challengers’ interpretation of the Act would unconstitutionally coerce the states. Many commentators thought that Court might rely on that reasoning and construe the statute in the Obama Administration’s favor, while expressly stating it did so to prevent unconstitutional coercion of the states. Such an approach would have saved the ACA, but it might have planted new constitutional doubts about the scope of federal authority.

The third approach, and the one adopted by the Court, was to interpret the ACA as requiring that subsidies be available to people purchasing insurance on federally-established exchanges. The Court reached this conclusion by refusing to read the words “established by the State” out-of-context. Instead, the Court recognized that the interpretation offered by the challengers simply made no sense in light of the ACA taken as whole. Congress did not allow for federally-created exchanges only to make them collapse. When all of the provisions of the ACA are read together, the majority insisted, the meaning of the disputed words is crystal clear. Exchanges established by the state are exchanges created under the Act for a state, regardless of whether they are operated by the federal government or the states.

With that simple but declarative ruling, the Supreme Court provided the most decisive victory possible for the ACA, and for Americans who need health care.  The statute is clear. Subsidies cannot be withdrawn by a future Administration. Nor are there any new constitutional concerns. Although some politicians will continue to insist otherwise, the existential debates over the ACA may finally be laid to rest; and so millions of Americans can rest easily.

Cross-listed with Human Rights at Home blog,

One thought to “King v. Burwell: Is the ACA Here to Stay?”

  1. “affordable health insurance is here to stay.” Why do you have to add “affordable”??? Shouldn’t you be rather non-partisan? “Universal” health care is maybe there to stay … for a while at least. But: a) if one has to subsidize it, it can’t be affordable? And b) even with all the additional paying customers, health insurance providers have not had “economies of scale”, as would happen in industry, but rather had to take on more risk and risk comes with an extra premium. The whole misconstrued act rest one one pivotal grandiose mistake: introducing four tiers of “plans”, bronze through platinum. This leads to anyone already expecting more payouts than “pay-ins” to choose platinum and the healthier, esp. younger, choosing bronze. But no plan can survive without a mix of risks. There have to be net payers in order to afford net withdrawals! In a few short months to years, platinum plans will become insolvent and either have to be bailed out (attracting more “customers” that way) or … bronze will have to “merge” with higher tiers to finance those. The losers are all those who paid into the lesser plans and are then confiscaded!

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