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SCOTUS Upholds Obamacare Subsidies

Posted in Our Blog on July 25, 2015

This morning, the United States Supreme Court issued its long-awaited ruling in King v. Burwell, a case that could have severely weakened or even destroyed the Affordable Care Act (a.k.a. “Obamacare”) in much of the country. The Court, however, ruled in favor of the healthcare law, upholding and securing it.

The case centered on a question over ambiguous language in the text of the Affordable Care Act law. The ACA sets up health insurance markets (called “exchanges”) for people to purchase private healthcare plans; for those below a certain income level, the federal government provides a subsidy to help pay for their coverage. The ACA gives individual states the option of setting up and running their own online healthcare exchanges, but 36 states (including Louisiana) chose not to do this, letting the federal government instead administer their exchanges. The question at issue in King v. Burwell lies with a single sentence in the ACA’s 900 pages, a sentence explaining that subsidies are available to those who enrolled in exchanges, “established by the State…” Obamacare opponents say this means that subsidies are only available to people who purchase health insurance on one of the 15 state-run exchanges. In other words, healthcare consumers in Louisiana (for example) would not be eligible for payment assistance, but consumers in California would.

Proponents of the law insist that the sentence is poorly-written but that the overall law is clearly intended to make healthcare affordable for everybody in the country, regardless of whether they purchase insurance on federal- or state-run exchanges. Indeed, some legislators who helped write the law have said publicly that the four-word clause in question was the result of a simple “drafting error.”

The question on everybody’s mind leading up to this morning’s ruling was how the Supreme Court would see it. Would the Court side with the plaintiffs, reading the text of the law literally and taking away subsidies from those who purchased healthcare on federally-run exchanges? Or would the Court decide that the intent of the law was clear and look past the poorly-written section of the law? Had the Court ruled in favor of the plaintiffs, the ramifications would have been devastating-6.4 million people have purchased healthcare plans on federally-run exchanges, and 87% of those people receive subsidies to help pay for their plans. Without subsidies, health insurance prices would dramatically rise (some estimate that premiums would cost as much as 224% more), and most people would no longer be able to afford coverage. Louisiana citizens who purchased a plan on and received a subsidy to help pay for it would have lost the subsidy, and be forced to either pay a much higher cost to stay insured or choose to drop healthcare coverage altogether (incurring a tax penalty for not being insured).

Luckily for those 6.4 million people, the Court ruled that the subsidies are legal, that people who purchase insurance on the federally-run exchanges will continue to receive subsidies. Of the nine Supreme Court justices, six ruled in favor of the law, including Chief Justice John Roberts and Justice Anthony Kennedy, who tend to side against the Obama Administration in cases such as these. Writing in his opinion for the Court, Chief Justice Roberts explains that, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” Clearly, the Court was compelled by what the Affordable Care Act was set up to do when it was written in 2009 and 2010, and chose to look past the defective, obscure language that was the crux of the argument against subsidies.

What does the future hold for Obamacare? Republican politicians have campaigned as staunch opponents of Obamacare in the past few years, but polling data shows the law is becoming ever more popular as more and more people use it. Even with a Republican-controlled House and Senate, it will be very difficult to repeal the law, especially if a Democrat is elected president in 2016 who can veto any attempt by Congress to repeal it. The number of Americans with health insurance is now at its highest level ever. Many of the doomsday predictions about how Obamacare would wreak the economy and the insurance industry have been proven wildly false. It seems that, with the ruling in King v. Burwelltoday, the Affordable Care Act is here to stay for the future.