In the long awaited decision in King v. Burwell, the Supreme Court ruled this morning in a 6-to-3 decision that the Affordable Care Act (“ACA”) permits tax credits for individuals who purchase their health insurance through a Federal health insurance marketplace (“Federal Exchange”), not just for individuals who purchase through State-operated marketplaces.
The Court declared the phrase “an Exchange established by the State” in Section 36B of the ACA was ambiguous when read in context of the entire Act. As a result, the Court was permitted to look at the broader structure of the ACA to interpret whether the tax credits were available to individuals enrolled in a Federal Exchange. Based on its review of how the term “Exchange” is used within the broader structure of the Act, the Court concluded that the ACA was not intended to distinguish between tax credits to individuals who purchase insurance through a Federal Exchange and those who purchase insurance through an Exchange created and operated by a State. The Court reasoned that an alternative interpretation would destabilize the individual insurance market in any State with a Federal Exchange and likely create the very “death spirals” that Congress designed the ACA to avoid.
Chief Justice Roberts wrote the majority opinion of the court and once again upheld the key provisions of the ACA. Although critical of the “inartful drafting” by Congress, the majority opinion states: “[W]e must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of the legislation demands a fair reading of the legislative plan.”
Health insurance companies are likely to view this decision as good news. It also will likely be considered good news for health care providers who provide services to individuals who have purchased their insurance through a Federal Exchange, as many of these individuals would not be able to afford health insurance without the assistance provided by the tax credits at issue and, therefore, could drop their insurance coverage. And, of course, the decision is most likely welcome news to those individuals in States without Exchanges who rely on the Federal Exchange to obtain affordable insurance coverage and want to maintain that coverage.
The full text of the Court’s opinion is available here.