Supreme Court Upholds the Affordable Care Act’s Tax Subsidies

June 25, 2015|1:24 p.m.| Virgie Townsend

On Thursday, the Supreme Court ruled in a 6-3 decision in King v. Burwell to maintain the nationwide tax subsidies established by the Affordable Care Act (ACA) to help poor and middle-class Americans obtain health insurance.

At issue was language in ACA that said the tax subsidies would be available through “an exchange established by the state.” The petitioners argued that the plain meaning of the language meant that the subsidies could only be available through state-based healthcare exchanges, and not in states that have federally-facilitated exchanges.

However, the majority opinion ruled that a significant component of the law’s legislative intent was to avoid the destabilization of the insurance markets, which behooved the court to maintain the subsidies. Examining the language within the context of the overall law, the court held in its majority opinion: “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 tax credits. It thus stands to reason that Congress meant for those provisions to apply in every state as well.”

Chief Justice John G. Roberts Jr. authored the decision for the court. Justices Antonin Scalia, Clarence Thomas, and Samuel A. Alito Jr. dissented. In his dissent, Scalia wrote in favor of the plain-meaning approach, stating: “Words no longer have meaning if an exchange that is not established by a state is 'established by the state.' It is hard to come up with a clearer way to limit tax credits to state exchanges than to use the words 'established by the state.”

For public health takes on today’s ruling, see the American Public Health Association’s statement and Association of Maternal and Child Health Programs’ statement.

Virgie Townsend, JD, is senior editor of communications and social media at ASTHO.