The United States Supreme Court, by a 6-3 majority, decided today in King v. Burwell that the Internal Revenue Service did not exceed authority granted by Congress when it adopted a rule that makes Affordable Care Act (“ACA”) premium subsidies available in states that operate Federally Facilitated Exchanges.

For the health insurance marketplace, and the millions of businesses and individuals in it, today’s decision is, as Chief Justice Roberts wrote, the avoidance of a calamity that Congress did not intend to precipitate through its use of ambiguous language developed in a hurry, behind closed doors.

Petitioners and their amici curiae argued that the ACA authorized IRS provision of tax credits solely for taxpayers “…enrolled in through an Exchange established by the State…,” quoting ACA’s statutory text (26 U.S.C. §36B(c)(2)(A)(i)), and not for taxpayers who purchase ACA mandated insurance on Federally Facilitated Exchanges. The Respondents and their amici curiae argued that discernment of Congressional intent necessitates consideration of Congressional objectives in undertaking healthcare reform.

The amicus brief of an alliance that includes Libertarian and free-market constitutional advocates highlighted the Petitioners’ central argument: “… the text of the Affordable Care Act… makes tax credits available only to those purchasing the insurance on the state Exchanges…”  That brief advocated for a literal reading of statutory text and avoidance of inferences of Congressional intent: “Legislative intent is, on its best day, a secondary interpretative tool courts will sometimes employ when the primary interpretative means fail to yield a clear answer.  But that is not the case here.  The ACA’s text is clear… In a case like this, the statute’s text is the only sure footing.  It must be enforced as written.”

The Majority opinion, authored by Chief Justice Roberts, and joined by Justices Kennedy, Ginsberg, Breyer, Sotomayor, and Kagan, held that the ACA’s context and structure authorizes the IRS rule allowing tax credits for insurance on any Exchange created under the ACA, noting that adopting the contrary position 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.”

The Majority acknowledged the coherence of Petitioners’ arguments for literal statutory interpretation, but nevertheless found that the phrase “an Exchange established by the State” is properly viewed as ambiguous.  The Chief Justice noted that the Affordable Care Act contains “more than a few examples of inartful drafting.”

In a scathing dissent, Justice Scalia, joined by Justices Thomas and Alito, described the Majority’s reasoning as “interpretative jiggery pokery” and accused the Court of changing the usual rules of statutory interpretation for the sake of the ACA.  Justice Scalia even suggested that in light of the Supreme Court decisions in this case and theNFIB v. Sebelius case from 2012, “we should start calling this law SCOTUScare.”

Chief Justice Roberts responded to the dissent in several footnotes and succinctly explained the reasoning of the Majority:

A fair reading of legislation demands a fair understanding of the legislative plan. 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. 

Chief Justice Roberts also said, “Here, the statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange.” In interpreting the ACA, he referred to Congressional objective of avoiding disruption of health insurance markets:

Those credits are necessary for the Federal Exchanges to function like their State Exchange counterparts, and to avoid the type of calamitous result that Congress plainly meant to avoid. * * * 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.  

According to a Kaiser Family Foundation study, “In 2015, 87% of people who selected a plan in states with a Federally-run Marketplace received premium subsidies to make their coverage affordable.”

The amicus curiae brief of the national trade association of health insurance industry, America’s Health Insurance Plans (“AHIP”), cautioned that the statutory interpretation advanced by the Petitioners and their amici curiae would preclude expansion of healthcare insurance coverage as Congress intended:  “Congress required individuals to purchase insurance coverage or pay a tax penalty, and provided tax credits to ensure that the former option is affordable and thus a meaningful one. The tax credits are an essential part of the ACA’S reform.  If Petitioners prevail, millions of Americans would lose tax credits and thus the ability to afford insurance and obtain necessary medical care.”

Health industry executives had cautioned that invalidation of the IRS rule would have intensified disruption, hardships, and cost-shifting, and frustrated of the over-arching effort of Congress to extend access to affordable healthcare to more Americans.

According to the Urban Institute, approximately 9.3 million individuals nationally would have lost financial assistance, including 1.1 million people in Florida.  This equates to a loss of $28.8 billion in financial assistance for consumers, including $3.9 billion in Florida.  With the absence of financial assistance, lower-income and healthier members would have quickly dropped coverage, leaving just the sickest members who need coverage the most.  With only the sickest individuals left in the market,  premiums would increase substantially in 2016.

Data of the Department of Health and Human Services, as presented in its report addressing health insurance marketplace open enrollment for the period ending February 2015, show that in Florida the average monthly tax credit is $294 with 93% of Exchange enrollees receiving a tax credit which is higher than the national average of 87%.

Hospital executives are keenly aware that invalidation of the IRS rule could have led to increases in the numbers of Americans without health insurance.  Patrick Taylor, M.D., CEO of Ft. Lauderdale’s Holy Cross Hospital, said:

Although folks would still have had healthcare coverage under the ACA, they obviously could not afford it. That outcome would have taken us back to having people seek care through emergency conditions as no other resources are available to them. The emergency room is not the way to get day-to-day primary healthcare treatment. 

Typically, hospitals’ delivery of care to patients who have no health insurance squeezes their margins, which are thin, and necessitate that they seek relief from other sources such as health insurers.  Medicare and Medicaid are not likely to fill the gap. Hospitals genuinely want to care for people and honor their missions but must at the same time confront the economic realities of fiscal stewardship. 

Florida Blue, the Blue Cross and Blue Shield plan for Florida, expressed appreciation for the Supreme Court’s ruling: “Today’s U.S. Supreme Court ruling helps ensure that Florida Blue can continue to provide access to high quality and affordable health care solutions to the people of Florida, no matter how they purchase coverage  Our members who bought health plans through the Marketplace with help of subsidies can continue to utilize their plans with no loss of federal financial assistance based on the Court’s decision.”

The Supreme Court decision in King v. Burwell avoids the “calamitous” consequences that the Respondents, their amici curiae, and Justice Roberts described. The ACA has endured another challenge.  The story of its implementation continues to develop.