HealthLawProf Blog

Editor: Katharine Van Tassel
Creighton University School of Law

Thursday, June 25, 2015

King vs. Burwell: Supreme Court Upholds Obamacare Tax Subsidies

Today, in King v. Burwell, the Supreme Court upheld a key provision of the Affordable Care Act, handing a major victory to the Obama administration. The decision was 6-3, with Chief Justice John Roberts delivering the court's majority opinion. Roberts and Justice Anthony Kennedy joined the court's liberals. 

As co-blogger Davis Orentlicher explained: "the challengers cite to two lines in the Affordable Care Act (ACA) that authorize subsidies for insurance bought on state-operated health insurance exchanges, without mentioning federally-operated state exchanges. Hence, argue the challengers, subsidies should be provided only for insurance purchased on state-operated exchanges, which means in only about 1/3 of states."

The Court disagreed with the challengers. In its syllabus the Court explained that 

[w]hen analyzing an agency’s interpretation of a statute, this Court often applies the two-step framework announced in Chevron, 467 U. S. 837. But Chevron does not provide the appropriate framework here. The tax credits are one of the Act’s key reforms and whether they are available on Federal Exchanges is a question of deep “economic and political significance”; had Congress wished to assign that question to an agency, it surely would have done so expressly. And it is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort. It is instead the Court’s task to determine the correct reading of Section 36B. If the statutory language is plain, the Court must enforce it according to its terms. But oftentimes the meaning—or ambiguity—of certain words or phrases may only become evident when placed in context. So when deciding whether the language is plain, the Court must read the words “in their context and with a view to their place in the overall statutory scheme.”

***

Petitioners’ plain-meaning arguments are strong, but the Act’s context and structure compel the conclusion that Section 36B allows tax credits for insurance purchased on any Exchange created under the Act. Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid. 

759 F. 3d 358, affirmed.

Bottom line: Individuals who get their health insurance through exchange established by federal government will be eligible for tax subsidies.

http://lawprofessors.typepad.com/healthlawprof_blog/2015/06/king-vs-burwell-supreme-court-upholds-obamacare-tax-subsidies.html

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