In a split decision announced today, June 25, the U.S. Supreme Court, in King v. Burwell, ruled in upholding the tax credits to individuals in all states, including those with only a federal exchange. In a 6-3 decision, Chief Justice Roberts delivered the opinion of the Court.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”
This is one of the rare times that my prediction (6-3 with Chief Justice Roberts and Justice Kennedy joining the liberals, affirming the 4th Circuit) has been accurate. I note that the case was decided on statutory construction grounds and so is much more important as an statutory interpretation and administrative law case than it is as a health care case. In sum, the subsidies were upheld as to economically-eligible persons in all states, whether their exchanges are State exchanges or Federal exchanges. The Court held that the term “State” in the provision at issue was, in context, ambiguous. It declined Chevron deference but held that in the total context of the statute and what Congress was trying to establish, the whole ACA scheme would collapse if the subsidies/tax credits were not available. This is an important win for the Administration and for health insurers and their customers because the decision in King won’t, in itself, require rate increases and open season can go forward without a hitch. Context wins over text.