A relieved Marilyn Lynch summed up her reaction to the Supreme Court’s decision to uphold the Affordable Care Act’s health insurance subsidies in small handful of words.
“Bless those justices,” the Kansas Citian said. “That’s all I can say.”
The subsidies, a key provision of Obamacare, make health insurance truly affordable for Lynch and millions of other low- and middle-income residents in dozens of states.
At issue was the legality of the subsidies for an estimated 6.4 million subscribers in the 34 states, including Kansas and Missouri, that chose not to run their own health insurance exchanges, leaving it to the federal government.
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Critics contended the law, as written, only permitted the subsidies to go to people who use state-run exchanges. The Obama administration says the subsidies were intended to be available in all states.
Lynch, a 64-year-old actor with a day job in a marketing firm, has high blood pressure. With medical attention, she’s been able to keep it under control.
But without the subsidy that brings her monthly premium down to $327, Lynch said she couldn’t afford her insurance plan. And without insurance, she’d miss doctor appointments and skip medication.
“I’d be sitting on a high blood pressure time bomb,” she said.
In a 6-3 decision, the court ruled that officials in President Barack Obama’s administration acted reasonably when they interpreted the law’s seemingly ambiguous language concerning health insurance exchanges.
The high court previously upheld the law against an explicit constitutional challenge, in a 2012 decision 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.
Obamacare encourages states, but does not require them, to establish exchanges to offer one-stop shopping for insurance coverage. As an 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 that 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 those states who buy insurance through the federal exchange, HealthCare.gov.
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 that 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,” Chief Justice John Roberts Jr. wrote for the majority. “A fair reading of legislation demands a fair understanding of the legislative plan.”
Justices Clarence Thomas, Samuel Alito Jr. and Antonin Scalia dissented, with Scalia calling the majority’s reasoning “quite absurd.”
“Words no longer have meaning if an Exchange that is not established by a state is ‘established by the state.’” Scalia wrote. “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.’”
Had the court ruled against the subsidies, health policy experts predicted widespread disruption of insurance markets in states using the federal exchange.
More than 223,000 people in Missouri who signed up for plans through the federal exchange would have seen an average premium increase of 330 percent, and nearly 77,000 people in Kansas would have seen a 228 percent increase, according to Avalere Health, a health care consulting firm.
Kansans receive an average monthly tax credit of $211, while Missourians’ average credit is $281 per month, according to the U.S. Department of Health and Human Services.
Without the subsidies as an incentive to purchase insurance, many of the young and healthy in the least need of health care would drop their coverage. The older and chronically ill people left in the insurance plans would face higher premiums, which would lead to further desertions by healthy policy holders, creating what the insurance industry calls a “death spiral.”
“There are problems with insurance, there are problems with hospitals, but attacking the subsidies is not attacking the problems,” said Kristine Cloughley of Pleasant Hill. She and her husband, Kenny, rely on the subsidy to make their insurance affordable.
“The people who benefit from (the subsidies) have lots of worries” just making ends meet, Cloughley said.
Cloughley said she knows a woman who waited to get insurance until the ACA exchange made it affordable. When she was covered, the woman went for a routine checkup and was diagnosed with breast cancer that was treated successfully.
“There’s a family now who still has a mother because of Obamacare,” Cloughley said.
Safety-net hospitals and clinics also faced financial hardship if their patients dropped coverage and joined the ranks of the uninsured.
At Truman Medical Center, about 5,000 patients have insurance through the federal exchange, the hospital’s CEO Charlie Shields estimated. If they lost coverage, it would add another $5 million to $6 million to the hospital’s $134 million uncompensated care burden.
“It may not seem like a lot, but we have such a gap in funding, 5 to 6 million makes a big difference,” Shields said.
House Minority Leader Nancy Pelosi of California, who as Democratic House speaker muscled the legislation over the finish line, called the ruling a “victory for common sense and for all American families.”
Marcia D. Greenberger of the National Women’s Law Center said the ruling “means the Affordable Care Act will continue to help millions of women and their families afford health insurance.”
The four plaintiffs in the case, all Virginia residents — David King, Brenda Levy, Rose Luck, and Douglas Hurst — responded in a joint statement:
“We are deeply disappointed with today’s Supreme Court decision because it hurts Americans like us in two ways. First, it threatens something that our democracy is based on — the rule of law. And second, it allows the IRS to keep offering nationwide subsidies even though the law that Congress passed says otherwise.”
The health law still faces additional legal challenges, though none pose such a dramatic threat.
They include a federal lawsuit by House Republicans challenging the federal government’s plan to pay health insurance companies about $175 billion over the next 10 years to help poor people pay for doctor and hospital visits.
The lawsuit, filed in November against Health and Human Services Secretary Sylvia Burwell and the U.S. Treasury, claims the Obama administration overstepped its executive authority by approving the payments even though the money was never appropriated by Congress.
And expect more votes by Congress to repeal the ACA or overturn parts of the law, said Linda Sheppard, a senior analyst with the Kansas Health Institute.
Those efforts would be thwarted for now by Obama’s veto, Sheppard said. But after Obama leaves the White House, “if there is a Republican president sympathetic to eliminating the ACA, that could happen.”
Lindsay Wise of McClatchy Newspapers contributed to this report.
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