Has the Supreme Court had enough? Could we finally be done with challenges to the health care law? In King v. Burwell [PDF], the Court ruled against the most recent challenge to the health care law and upheld one of the key provisions in the law—tax credits are available to people enrolled through a federal or state Exchange. Along the way, the majority also made it seem as though they don’t plan to hear any more ACA cases.
To challenge the health care law, the Competitive Enterprise Institute recruited four people from Virginia who didn’t want to buy health insurance. The plaintiffs argued that the IRS impermissibly provided tax credits that made health insurance affordable in states, like Virginia, that have federally run exchanges. They claimed they are harmed by these tax credits because, once health insurance is affordable, they will be required to purchase coverage or pay a tax penalty. Without tax credits, they wouldn’t have access to affordable insurance, so there would be no tax penalty.
The plaintiffs relied on a few words in the extremely large law—a law that is over 900 pages [PDF], with a countless amount of sections and subsections. But, the plaintiffs’ argument rests on just four words in one subparagraph. This provision says that tax credits are available to people enrolled in “an Exchange established by the State.” The plaintiffs claimed that federally run exchanges, like Virginia’s, are not “established by the State.” And so, they argued, they shouldn’t be eligible for tax credits, which would mean that the individual mandate would not apply to them. However, under the Internal Revenue Service’s (IRS) interpretation of the law, these individuals are eligible for tax credits.
The Court’s Opinion
The Court didn’t buy the plaintiffs’ argument. The 6-3 majority decided that Congress didn’t intend for the IRS to determine whether or not individuals covered through a federal Exchange would receive tax credits. And the Court, interpreting the law in plain English, concluded that tax credits are available to all Exchange enrollees.
So what does “established by the State” really mean?
The Court had to decide if “Exchange established by the State” includes federally run Exchanges. So, the Court examined the law’s definition of Exchange.
Under the health care law, states don’t need to create their own Exchange. If a state chooses not to create an exchange, then the Secretary of Health and Human Services will create the Exchange for the State. Looking at the health care law as a whole and in the context of the statute, the Court decided the statute didn’t envision tax credits only being available in states that created their exchanges. If this were true, all of the provisions specific to “Exchange[s] established by the state” wouldn’t apply in all states, and the law just wouldn’t make sense.
The Death Spiral
The Court also looked at what Congress was trying to accomplish with the ACA health care law. The majority noted that Congress included significant insurance market reforms to make sure that everyone has access to health insurance. The law required everyone to have health insurance, and included the tax credits to make sure that more people can afford insurance. If the law meant only people covered through state run Exchanges could get subsidies, millions of Americans could not afford insurance. The only people in the federal healthcare markets would be sick people, so insurance costs would sky rocket. And then even fewer people could afford insurance, so the entire system would collapse. According to the Court, the health care law, with its interlocking reforms was created to avoid this death spiral, and it is unbelievable that Congress meant for the statute to only refer to state Exchanges.
We’re done here.
With all of these factors combined, the Court decided “an Exchange established by the State” really means federal and state Exchanges. The law wouldn’t make sense if the language meant anything else. And since the Court’s decision is clear about what the statute means, another administration can’t come into power and say the law means anything different. Tax credits are available in every state and the only way to change that is for Congress to change the law.
Has the opinion made it clear that the Supreme Court is done with challenges to the health care law? This is the second time in three years it has upheld the law. In the words of the Chief Justice, “we must take care not to undo what [the Legislature] has done.” He continued, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” Congress passed the ACA to help everyone afford quality health care and the Court knows this, too. The ACA is here to stay.