U.S. Supreme Court Upholds Affordable Care Act Subsidies in Federal Exchanges

Miller & Martin PLLC Alerts | June 25, 2015

by Chris Crevasse

On Thursday, June 25, the U.S. Supreme Court ruled that consumer subsidies can continue to be provided through both federal and state health insurance marketplaces under the Affordable Care Act (ACA).

In King v. Burwell, the Court ruled 6-3 in favor of maintaining tax credits through federally-established exchanges. Challengers to the ACA had argued that tax credits were not available through federal exchanges due to an ACA provision that appeared to allow credits only through exchanges "established by the state," but a majority of justices disagreed. In his opinion, Chief Justice John Roberts acknowledged the challengers' contention that the language in the statute is "ambiguous," but nevertheless said that the challengers' interpretation of the law "would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very 'death spirals' that Congress designed the Act to avoid." Chief Justice Roberts further noted, "The combination of no tax credits and an ineffective coverage requirement could well push a State's individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation. But those requirements only work when combined with the coverage requirement and the tax credits. So it stands to reason that Congress meant for those provisions to apply in every State as well," including those with federal exchanges.

If the Supreme Court had ruled in favor of the challengers, the viability of the ACA would have been severely undermined, with no certainty that any fixes would be provided (or desired) by Congress or state legislatures.

As always, should you have any further questions regarding the ACA, please feel free to contact Chris Crevasse or any other member of our Health Care Practice Group.

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