The Associated Press is reporting that the United States Supreme Court, in a 6-3 ruling, has upheld subsidies for health insurance purchased both from state exchanges and the federal exchange.
According to AP, Justice Kennedy and Chief Justice Roberts joined the Court’s four liberals, Kagan Ginsburg, Sotomayor and Breyer, to make up the six vote majority.
This post will be updated after I have reviewed the actual decision.
UPDATE:
The majority opinion was written by Chief Justice Roberts. Justice Scalia wrote a dissent in which Alito and Thomas joined.
Roberts begins by outlining the history of failed attempts at health insurance reform in various states, noting that a successful formula was finally achieved in Massachusetts. Success required three components: guaranteed insurability and community rating, the individual mandate, and the subsidy (tax credit) to make the individual mandate effective. He notes that the ACA followed the Massachusetts’ model and that all three elements are necessary for success.
The individual mandate only applies if purchasing a policy does not require more than 8% of a person’s income. The subsidy is designed to bring the cost under the 8% threshold. Without the subsidy, Roberts reasons, the individual mandate would apply to significantly fewer individuals, endangering the entire program.
Petitioners brought the case as residents of Virginia which did not establish a State Exchange and where the Federal Exchange applied. The language of the ACA provides for tax credits if an exchange is “established and operated by a State”. 42 United States Code 18031, Internal Revenue Code 36B(b)-(c). Without the subsidy, the Petitioners would have been over the 8% threshold and would not have been required to purchase health insurance.
Many court watchers thought the Court would rely on the “Chevron” doctrine to decide the case. Chevron gives interpretive authority to a regulatory agency if a statute is ambiguous. In this case, Roberts reasoned that the subsidy provisions were so fundamental to the statutory scheme that its interpretation could not be left to a regulatory agency, in this case the IRS.
Instead, the Court took it as its responsibility to interpret the statute. To do so, it employed the long standing rule of statutory interpretation of ambiguous language, relying on the:
“fundamental canon of statutory construction that the words of a statute must be read in their context and within a view to their place in the overall statutory scheme.”
The dissent argued that the wording was not ambiguous, and statutory construction rules were not necessary. Roberts supported his conclusion that the wording was ambiguous in several ways, but one that was interesting. He severely criticized the ACA as having been inartfully drafted in general, including the provision in question.
The Affordable Care Act contains more than a few examples of inartful drafting. (To cite just one, the Act creates three separate Section 1563s. See 124 Stat. 270, 911, 912.) Several features of the Act’s passage contributed to that unfortunate reality. Congress wrote key parts of the Act behind closed doors, rather than through “the traditional legislative process.” … And Congress passed much of the Act using a complicated budgetary procedure known as “reconciliation,” which limited opportunities for debate and amendment, and bypassed the Senate’s normal 60-vote filibuster requirement. … As a result, the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.
He then looks for an interpretation that is consistent with the rest of the statute, noting that federal exchanges and state exchanges are treated equivalently in the overall statutory scheme. He reasons that the Petitioners’ interpretation would destabilize the health insurance market in states relying on the federal exchange, resulting in what he calls an economic death spiral resulting from the impact on the individual mandate.
Noting that the ACA was designed to avoid the “death spiral” that had doomed early failed efforts at reform, Roberts concludes that the Petitioners’ interpretation could not have been intended by Congress.
The Court concludes that insurance purchased through the Federal Exchange qualifies for the subsidy, tax credit.
Contributor, aka tidbits. Retired attorney in complex litigation, death penalty defense and constitutional law. Former Nat’l Board Chair: Alzheimer’s Association. Served on multiple political campaigns, including two for U.S. Senator Mark O. Hatfield (R-OR). Contributing author to three legal books and multiple legal publications.