Obamacare Here to Stay…For Now

Despite repeated challenges to the Affordable Care Act (“Obamacare”), the United States Supreme Court has upheld its constitutionality and otherwise interpreted the statute so that the benefits sought by the legislation will have the widest impact. Most recently, on June 25, 2015, the Court issued a ruling in King v. Burwell. Three Justices of the Supreme Court disagreed with the majority opinion, writing that “normal rules of [statutory] interpretation seem to yield to the overriding principle of the present Court: The Affordable Care Act must be saved.”

Under Obamacare, every State is required to establish an “American Health Benefit Exchange” – a marketplace where people can shop for health insurance plans. It provides that if a State does not comply with this instruction, the Secretary of Health and Human Services must “establish and operate such Exchange within the State.” 42 U.S.C. §18041(c)(1). A separate part of the Act grants “premium tax credits” to subsidize certain purchases of health insurance made on the Exchanges. The King case required the Supreme Court to decide whether someone who purchased insurance on an Exchange established by the Secretary, as opposed to a State, gets tax credits. Justice Scalia, writing for the dissenting Judges, was blunt:

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.” (Scalia, J., dissenting)

Chief Justice Roberts, writing for the majority of the Justices, found that “the phrase ‘established by the State’ is not so clear.” Despite the Act containing a definition of “State” to mean each of the 50 States and the District of Columbia, the majority concluded that Obamacare may not always use the phrase “established by the State” in its most natural sense. They concluded the phrase was ambiguous and interpreted it in view of the broader purposes of the Act such that tax credits are available to individuals in States that have a Federal Exchange.

Whatever view you may have about Obamacare, it appears that the Supreme Court will not overturn or frustrate the intent of purposes of the Act. Indeed, Justice Scalia’s dissent in King makes this very point. Any repeal or change to Obamacare will have to be dealt with legislatively, if at all. We expect this subject matter will be greatly debated in the next election and that there will be much rhetoric over the successes and failures of Obamacare. For now, in any event, it is here to stay.


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