Supreme Court Rules 6-3 in Favor of Federal Obamacare Subsidies


I. Summary II. History III. Court Hearing IV. Court Ruling
 
 
I. Summary
On Mar. 4, 2015, the US Supreme Court heard arguments in the case King v. Burwell. The lawsuit challenged the ability of the federal government to provide health insurance subsidies to people who purchased health insurance through the federal Obamacare health insurance exchange.

The lawsuit was brought against the US Department of Health and Human Services by four Virginia residents (David King et al.) who were forced to buy health insurance because of federal subsidies, without which the plaintiffs would have been exempted from the health insurance mandate.

Title I (Subtitle E) of the Affordable Care Act states that subsidies to help purchase health insurance are available to people "through an Exchange established by the State under [section] 1311 of the Patient Protection and Affordable Care Act." The plaintiffs in King v. Burwell argued that since the Affordable Care Act clearly states that federal subsidies are only available to people who purchased health insurance through a state run health insurance exchange, then subsidies should not be available to people who purchased health insurance through the federal Obamacare health insurance exchange (healthcare.gov).

Under the Affordable Care Act, states were required to set up health insurance exchanges or utilize the federal health insurance exchange; many states declined to set up their own state run health insurance exchanges. As of June 2015, there were 36 states utilizing the federal health insurance exchange or a state-federal partnership exchange. Only 14 states currently run their own health insurance exchanges.

According to a Mar. 31, 2015 report by the Centers for Medicare and Medicaid Services, 6.4 million consumers purchased health insurance through the federal health insurance exchange and received an average subsidy of $272 per month to help them afford health insurance. The plaintiffs in King v. Burwell challenged the ability of these 6.4 million consumers to continue to receive subsidies to purchase health insurance.

On June 25, 2015 the United States Supreme Court ruled (6-3) (212 KB) against the plaintiffs in King v. Burwell, and in favor of allowing the federal government to continue providing subsidies to individuals who purchase health insurance through the federal health insurance exchange.

The majority opinion was written by Chief Justice John Roberts and joined by Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. Justices Samuel Alito, Antonin Scalia, and Clarence Thomas dissented.
     
Sources:

Adrianna McIntyre and Sarah Kliff, "King v. Burwell: 11 Facts to Understand Obamacare's Biggest Threat," vox.com, June 18, 2015

Centers for Medicare & Medicaid Services, "March 31, 2015 Effectuated Enrollment Snapshot," cms.gov, Mar. 31, 2015

David G. Savage, "Supreme Court Rules for Obama in Healthcare Law Challenge," latimes.com, June 25, 2015


II. History
June 25, 2015 On June 25, 2015, the United States Supreme Court ruled (6-3)(212 KB) to uphold the Fourth Circuit decision in King v. Burwell, allowing the federal government to continue providing subsidies to individuals who purchased health insurance through the federal health insurance exchange.
Mar. 4, 2015 On Mar. 4, 2015, the United States Supreme Court heard oral arguments(897 KB) in the case King v. Burwell.
Nov. 7, 2014 On Nov. 7, 2014, the United States Supreme Court agreed to hear(39 KB) the case King v. Burwell.
July 22, 2014 On July 22, 2014 the United States Court of Appeals for the Fourth Circuit ruled (3-0)(564 KB) against the plaintiffs in King v. Burwell.
Feb. 18, 2014 On Feb. 18, 2014, the United States District Court for the Eastern District of Virginia rejected the plaintiffs' arguments and granted the government's motion to dismiss the case in King v. Burwell.
Source:

Constitutional Accountability Center, "King v. Burwell," theusconstitution.org (accessed June 24, 2015)


III. Court Hearing
 
Date Issue for the Court Attorneys Oral Arguments
 
Mar. 4, 2015 Federal Health Insurance Subsidies - According to the American Bar Association, the following is the issue before the court:

"May the Internal Revenue Service permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through Exchanges established by the federal government under section 1321 of the Patient Protection and Affordable Care Act?"
For petitioners: Michael A. Carvin

For respondents: Donald B. Verrilli, Jr., Solicitor General
Transcript - No. 14-114. King. v Burwell.(897 KB)

Audio - Mar. 4 file(40 MB)
Source:

American Bar Association, "King v. Burwell," americanbar.org (accessed June 24, 2015)


IV. Court Ruling:
On June 25, 2015 the United States Supreme Court ruled (6-3) (212 KB)  against the plaintiffs in King v. Burwell, and in favor of allowing the federal government to continue providing subsidies to individuals who purchased health insurance through the federal health insurance exchange.

The majority opinion was written by Chief Justice John Roberts and joined by Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. Justices Samuel Alito, Antonin Scalia, and Clarence Thomas dissented.

Quotations from the majority opinion and the dissent in King v. Burwell:
     
In the case King v. Burwell (decided June 25, 2015), the US Supreme Court, in a 6-3 majority decision written by Chief Justice John G. Roberts, JD, held that:   Antonin Scalia, LLB Clarence Thomas, LLB, and Samuel Alito, JD, US Supreme Court Justices, wrote in their June 25, 2015 dissenting opinion in King v. Burwell:

"The Patient Protection and Affordable Care Act adopts a series of interlocking reforms designed to expand coverage in the individual health insurance market...

In addition to those reforms, the Act requires the creation of an 'Exchange' in each State—basically, 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...

[T]he Act seeks to make insurance more affordable by giving refundable tax credits to individuals with household incomes between 100 percent and 400 percent of the federal poverty line. §36B…

The issue in this case is whether the Act's tax credits are available in States that have a Federal Exchange rather than a State Exchange. The Act initially provides that tax credits 'shall be allowed' for any 'applicable taxpayer.' 26 U. S. C. §36B(a). The Act then provides that the amount of the tax credit depends in part on whether the taxpayer has enrolled in an insurance plan through 'an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act'...

[W]e must determine whether a Federal Exchange is 'established by the State' for purposes of Section 36B...

[T]he structure of Section 36B itself suggests that tax credits are not limited to State Exchanges. Section 36B(a) initially provides that tax credits 'shall be allowed' for any 'applicable taxpayer.' Section 36B(c)(1) then defines an 'applicable taxpayer' as someone who (among other things) has a household income between 100 percent and 400 percent of the federal poverty line. Together, these two provisions appear to make anyone in the specified income range eligible to receive a tax credit...

Petitioners' arguments about the plain meaning of Section 36B are strong. But while the meaning of the phrase 'an Exchange established by the State under [42 U. S. C. §18031]' may seem plain 'when viewed in isolation,' such a reading turns out to be 'untenable in light of [the statute] as a whole.'

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. Section 36B can fairly be read consistent with what we see as Congress's plan, and that is the reading we adopt."

 

"The Court holds that when the Patient Protection and Affordable Care Act says 'Exchange established by the State' it means 'Exchange established by the State or the Federal Government.' That is of course quite absurd, and the Court's 21 pages of explanation make it no less so…

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. In order to receive any money under §36B, an individual must enroll in an insurance plan through an 'Exchange 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.' 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…

I wholeheartedly agree with the Court that sound interpretation requires paying attention to the whole law, not homing in on isolated words or even isolated sections. Context always matters. Let us not forget, however, why context matters: It is a tool for understanding the terms of the law, not an excuse for rewriting them…

Congress did not, by the way, repeat 'Exchange established by the State under [§18031]' by rote throughout the Act. Quite the contrary, clause after clause of the law uses a more general term such as 'Exchange' or 'Exchange established under [§18031].' See, e.g., 42 U. S. C. §§18031(k), 18033; 26 U. S. C. §6055. It is common sense that any speaker who says 'Exchange' some of the time, but 'Exchange established by the State' the rest of the time, probably means something by the contrast…

The Court has not come close to presenting the compelling contextual case necessary to justify departing from the ordinary meaning of the terms of the law. Quite the contrary, context only underscores the outlandishness of the Court's interpretation. Reading the Act as a whole leaves no doubt about the matter: 'Exchange established by the State' means what it looks like it means."

Full Text: US Supreme Court Ruling in King v. Burwell (212 KB)


Additional Links:
A. Obamacare in the Supreme Court, 5-4 Decision on June 28, 2012
B. Yes and No Answers to What Obamacare Does and Does Not Do
C. Is the Patient Protection and Affordable Care Act (Obamacare) Good for America?