U.S. Supreme Court upholds health care subsidies

President Barack Obama’s signature health-care reform law survived its second life-or-death challenge Thursday, as a divided Supreme Court upheld tax credit subsidies that make insurance affordable for millions of residents in dozens of states.

In a 6-3 decision, the court reasoned Obama administration officials acted reasonably when they interpreted the law’s seemingly ambiguous language concerning health insurance exchanges.

“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,” Chief Justice John Roberts, Jr. wrote.

The court’s long-awaited decision in the case called King v. Burwell does not end all legal challenges to the Patient Protection and Affordable Care Act, but it’s probably the last one that had the potential to gut the law. A ruling in the other direction would have undercut the subsidized insurance program’s financial underpinnings.

Politically, moreover, the ruling appears to be a blessing for Republicans both on Capitol Hill and on the presidential campaign trail. It enables GOP lawmakers to continue attacking Obamacare rhetorically without having to legislate or face the fallout from constituents losing coverage.

The high court previously upheld the law against an explicit constitutional challenge, in a 2012 decision written by Chief Justice John Roberts Jr. that concluded Congress had the authority to impose the so-called individual mandate. The mandate requires individuals either to buy insurance or pay a penalty.

The new challenge was focused on the text of the law rather than on the Constitution

At issue was the legality of the subsidies for an estimated 6.4 million subscribers in the 34 states that chose not to run their own health insurance exchanges, leaving it to the federal government. Critics contended the law as written only permitted the subsidies to go to people who use state-run exchanges. The administration says the subsidies were intended to be available in all states.

The health care law encourages states, but does not require them, to establish exchanges to offer one-stop shopping for insurance coverage. As inducement, the law offers tax credits to people qualified by income who buy insurance through an exchange “established by the State.”

The challenge turned on this four-word phrase.

Driven primarily by Republican resistance, 34 states declined to establish health insurance exchanges. Nevertheless, the Internal Revenue Service has extended tax credit subsidies to residents of these states who buy insurance through the federal exchange, HealthCare.gov.

Republicans left with few options after Supreme Court ruling

Challengers said the law’s black-and-white text means what it says: A health exchange must be established by “the state” for the subsidies to be available. The federal government, by this reasoning, cannot substitute when states have declined to act.

Supporters of the law countered that the questionable phrase makes sense only in context.

“In every case we must respect the role of the Legislature, and take care not to undo what it has done,” Robers wrote. “A fair reading of legislation demands a fair understanding of the legislative plan.”

Justices Clarence Thomas, Samuel Alito, Jr. and Antonin Scalia dissented.

The unlikelihood of a gridlocked Congress stepping in to fill a gap left by a court ruling against the health care law was underscored during the oral argument last March, when Justice Anton Scalia contended that lawmakers pass statutes that take care of problems “all the time.”

“Well, this Congress,” Solicitor General Donald Verrilli, Jr. began.

Widespread laughter then broke up the courtroom.

This story was originally published June 25, 2015 at 10:13 AM with the headline "U.S. Supreme Court upholds health care subsidies."