ACA\'s Premium Subsidies Upheld By Supreme Court

The United States Supreme Court on Thursday upheld tax-based premium subsidies for individuals purchasing coverage through the federal insurance exchange.

The 6-3 decision likely closes the books on the last major legal challenge to the Affordable Care Act, which was signed into law in 2010 and has been the subject of intense debate in the intervening years, even as it has cut the number of uninsured Americans dramatically.

As was the case three years ago when the high court found much of the ACA constitutional, Chief Justice John G. Roberts, Jr. played a key role in today’s decision, writing both the opinion and siding with the liberal to moderate majority. By contrast, fellow conservative justices Samuel Alito, Clarence Thomas and Antonin Scalia dissented in the case. Scalia, considered the most colorful and cantankerous of the nine justices, called today’s decision “absurd” when he read his dissent from the bench, an indicator of his strong disagreement with the majority, which he said had engaged in “interpretative somersaults” to reach its decision.

Roberts took a straightforward view for his rationale, which essentially sided with Congress’ legislative intent when it wrote the ACA: That the subsidies be available whether individuals purchased coverage on a state-operated exchange or the federal healthcare.gov exchange. Language in the law had suggested that subsidies would only be available to exchanges “operated by a State.”

But according to Roberts, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” He later observed in his decision that “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.”

More than 30 states rely on the federal exchange, with lawmakers in many states declining to accept federal funds to open their own exchange because of their opposition to the ACA. More than three-quarters of those who have purchased coverage on the exchanges have relied on subsidized premiums. Various studies concluded that millions of Americans would forego coverage if they no longer had access to those subsidies, and premiums would likely rise dramatically for everyone else. One study, by the Urban Institute, concluded that an adverse ruling in King v. Buwell would have wiped out $28.8 billion in subsidies to 9.3 million people in 34 states.

A decision against subsidies would not have directly impacted California, which operates its own exchange. Nevertheless, state leaders hailed today’s decision.

“This is another victory for families across the country whose health insurance coverage was made possible by the Affordable Care Act. Nearly 8.7 million people nationwide, including more than 1.2 million Californians, are finding health insurance more affordable because they are eligible for the premium tax credit,” said California Insurance Commissioner Dave Jones, who has been roundly critical of steep premium hikes imposed by some health insurers in recent years.

"Today's Supreme Court ruling is a victory for the millions of Americans who now have affordable health care – many of them for the first time in their lives – because of Obamacare,” said Sen. Barbara Boxer, a Democrat who voted in favor of the ACA in 2010. "It is long past time for Republicans to end their efforts to undermine the Affordable Care Act and join us in fulfilling the promise of quality, affordable healthcare for all.

Anthony Wright, Executive Director of Health Access California and a member of the Payers & Providers editorial board, shared a sentiment similar to Boxer's. "Now that the Supreme Court has upheld the Affordable Care Act once again, we hope we can stop debating a five-year old law and discuss additional ways to reduce health costs and provide more health and financial security for American families,"he said. "This ridiculous challenge should have never been taken, since it was based on a hyper-literal willful misreading of four words of the Affordable Care Act, going against virtually all evidence of Congressional intent and judicial precedents."

Another California organization that applauded the decision was eHealth.com, which did so even though the state exchanges have eaten deeply into its own business of offering health insurance coverage directly to individual consumers.

"As an early and vocal supporter of the Affordable Care Act, eHealth applauds the Supreme Court's decision to maintain access to subsidies for individuals living in states that have not built their own health insurance exchanges," said eHealth, Inc. Chairman and Chief Executive Officer Gary Lauer. "Maintaining access to consumer subsidies is critical to many families and to the continued viability of the Affordable Care Act."