Today, the United States Supreme Court issued a ruling upholding the Affordable Care Act and individual subsidies for purchasing coverage through an Exchange.
The case, King v. Burwell, challenged the legality of health care reform premium subsidies in states that offer Federal, not State-based, Marketplaces. The Affordable Care Act is drafted to permit tax credit premium subsidies for certain qualifying individuals who purchase coverage through "an Exchange established by the State." Thirty-four states did not establish their own health care Marketplace and instead rely on the Federal Marketplace available at www.healthcare.gov. The plaintiffs argued that since ACA is drafted to apply to an Exchange established by the State, those individuals with coverage offered through an Exchange established by the federal government should not be eligible for a premium subsidy.
In a 6-3 ruling, the Supreme Court found that the clause "an Exchange established by the State" is ambiguous and could refer to all Exchanges, both State and Federal, for purposes of the tax credit. The Court rejected the plaintiff's interpretation of the law because it would destabilize the insurance market and cause a death spiral for coverage that the ACA was drafted to avoid. Relying on the ACA's context and structure, the Court found that tax credits could be available for insurance purchased on both State and Federal Exchanges created under ACA.
This decision quells yet another challenge to the legitimacy of health care reform.
