In a controversial landmark decision on Thursday, June 25, the Supreme Court upheld the nationwide tax subsidies underpinning President Barack Obama’s health care law, preserving coverage for millions of Americans.
In a 6-3 ruling, the high court made subsidies to purchase health insurance available in states without their own insurance exchange, extending coverage for low-income Americans and minorities. The decision marked a major victory for the Obama administration, which first established the Affordable Care Act in 2010 as a federally-run exchange for Americans not covered by their employers or state-run health plans.
“Five years ago, after nearly a century of talk, decades of trying, a year of bipartisan debate, we finally declared that in America, health care is not a privilege for a few but a right for all,” the President announced. “The Affordable Care Act is here to stay. We’ve got more work to do, but what we’re not going to do is unravel what has now been women into the fabric of America.”
The high profile case was already the second major challenge to the ACA, more commonly known as Obamacare, since its passage. If the law was overturned, at least 6.4 million Americans living in states without their own health insurance exchanges would have been at risk of losing aid.
“Congress passed [Obamacare] to improve health insurance markets, not to destroy them,” wrote Chief Justice John Roberts, who voted in support of the law. Roberts was also the key vote to uphold Obamacare in 2012.
Just 16 states and the District of Columbia have set up their own health insurance marketplaces, leaving millions in 34 states that rely on exchanges run by the federal government vulnerable to the Court’s ruling. Overall, 10.2 million citizens nationwide have already signed up for health insurance under Obamacare.
In their vote, the Supreme Court justices said that the subsidies that 8.7 million people currently receive (on average, $272 a month) to make insurance affordable do not depend on where they live.
“Limiting the subsidies only to individuals in states with their own exchanges could well push insurance markets in the other states into a death spiral,” Roberts declared in the majority opinion, joining Justice Anthony Kennedy—often the Court’s swing vote—and the four liberal justices.
Justice Antonin Scalia, in a dissent summarized from the bench, strongly disagreed with the move. “We should start calling this law SCOTUScare,” he said, suggesting his colleagues’ ownership by virtue of their previous attempts to save the law from what he considered “worthy challenges.”
Scalia said that Roberts’s 2012 decision, which upheld the law and his opinion on Thursday “will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.”
The other two justices who joined the dissent, as they did in 2012, were Samuel Alito and Clarence Thomas.
The health insurance industry breathed a sigh of relief at the Supreme Court ruling, arguing more people will be fairly covered. A national organization representing state regulators from both political parties said the court’s decision will mean stable markets for consumers.
“This decision allows state officials to move forward with a level of confidence that their markets will not see significant disruption due to a paradigm shift,” said Ben Nelson, CEO of the National Association of Insurance Commissioners and a former Democratic senator from Nebraska.
Shares of publicly traded hospital operators, including HCA Holdings Inc. and Tenet Healthcare Corp., soared after the ruling relieved those companies of possibly having to deal with an influx of uninsured people. Investors were worried that many patients would drop their coverage if they no longer had tax credits to help pay for it.
Members of the GOP said the ruling would not mean the end of the longstanding political fight over the health care law.
Senator Lindsey Graham (R-South Carolina), who announced her run for president, said that for all 2016 candidates, health care will be “the most dominant issue in the country.”
“[Democrats] now have a choice: crow about Obamacare’s latest wobble toward the edge, or work with us to address the ongoing negative impact of a 2,000-page law that continues to make life miserable for too many of the same people it purported to help,” said Senate Majority Leader Mitch McConnell.
“Today’s ruling makes it clear that if we want to fix our broken healthcare system, then we will need to elect a Republican president with proven ideas and real solutions that will help American families,” said Reince Priebus, Chairman of the Republican National Committee. “Hillary Clinton supports big government mandates and expanding the government’s reach into our healthcare system, maneuvers that have made our healthcare system worse off. What you will not hear from Democrats today is any information on how to make healthcare more affordable at a time when premiums are getting more expensive.”
Opponents of the ACA argued that the vast majority of people who now get help paying for their insurance premiums are ineligible for their federal tax credits, perhaps because roughly three dozen states do not have their own marketplaces and instead use the federal government’s.
Their view is that “established by the state,” four words used in the Obamacare law, demonstrated that subsidies were to be available only to people in states with their own exchanges.
They said that Congress limited the subsidies in order to encourage the states to set up their own exchanges and when that failed, the IRS tried to “fix” the law.
The administration and other congressional Democrats argued that the idea behind the ACA’s structure was to decrease the number of uninsured Americans, and to prevent insurers from denying coverage because of “pre-existing” health conditions. It requires almost everyone to be insured and provides financial help to consumers who otherwise would spend too much on their premiums.
Several portions of the law indicate that consumers can claim tax credits no matter where they live, and lawmakers did not say subsidies would be limited. In a separate brief to the court, several states said they had no inkling that they had to set up their own exchange for residents to get tax credits.
In court, Solicitor General Donald B. Verrilli, Jr. convinced the justices to decide, arguing that Congress always intended the subsidies be available to everyone, regardless of the state leaders’ actions.
“If the challengers prevailed, states [with federally-run exchanges] would face the very death spirals the Act was structured to avoid and insurance coverage for millions of their residents would be extinguished,” Verrilli argued.
Lower courts were split on the issue. The US Court of Appeals (for DC) invalidated the IRS rule, while the Fourth Circuit Court of Appeals ruled in favor of Obamacare.
“[The ACA] is working to improve access, affordability and quality,” said Department of Health & Human Services Secretary Sylvia Burwell in a press call on Thursday. “People’s lives have been changed and even saved because they have health insurance—many for the first time. They have coverage that can keep them healthy and provide quality care…the ACA strengthens protections for almost every American with health insurance.”
“I hope that this positive decision will do what the American people want us to do—focus on the substance and turn to building on the progress we have made, to move forward to provide more Americans with affordable access to quality coverage and create a health care system that improves the quality of care and spends our dollars more wisely.”
Ethnic groups express support
Advocates and supporters of the law expressed their belief that the ACA’s passing is “good news” for low-income families and communities of color.
“The Supreme Court did the right thing, focusing on what Congress intended rather than nit-picking over wording that wasn’t perfect,” said Tahira Cunningham, health policy director of the Greenlining Institute. “Millions of Americans can now breathe a sigh of relief that their health insurance won’t be taken away, and it will still be affordable.”
African Americans and Latinos, the two ethnic groups most likely to be insured, had recent gains in health coverage through Obamacare, according to a Gallup survey. The act has cut the uninsured rate by more than one third since the law took effect.
“The Court’s decision is right as a matter of law and policy,” said Kathy Ko Chin, president and CEO of the Asian & Pacific Islander American Health Forum (APIAHF). “Today the Court protected health care access for millions across the country, including many Asian Americans, Native Hawaiians and Pacific Islanders who are now covered for the first time in decades.”
“Today’s decision ensures that individuals can count on the coverage they now have,” Ko Chin said.
“Millions of Americans, including hundreds of thousands of Asian Americans, Native Hawaiians and Pacific Islanders (AANHPIs) have had access to critically important health coverage because of the ACA,” said Stewart Kwoh, President and Executive Director of Asian Americans Advancing Justice – LA. “Today’s Supreme Court decision reaffirms the validity of the ACA. Now all efforts must be made to ensure that those remaining uninsured individuals have access to affordable, quality health coverage, whether through Medicaid, the Marketplaces, or further health care reform efforts.”
Supporting the Obamacare tax subsidies, APIAHF and Advancing Justice jointly filed an amicus brief last January discussing the lack of coverage options, lingering health disparities and life-threatening consequences facing the Asian American and Pacific Islander community. (with reports from BBC, Associated Press, CNN, Washington Post)
