In a major victory for the Obama administration, tax subsidies are available to all those who enroll in an Obamacare plan whether it was purchased through a state or federal health insurance exchange, the U.S. Supreme Court said in a 6-3 ruling, affirming the decision of the Fourth Circuit court.
The decision in King v. Burwell would have jeopardized upward of 1.28 million people in Florida who signed up for health care through the federal exchange and received tax credits.
King v. Burwell challenged the Internal Revenue Services’ authority to grant tax subsidies to individuals who enrolled in Obamacare through a federal exchange, citing a section of the law that makes clear that the subsidies are available to those who enroll in a state exchange.
The six justices affirming the ruling, and essentially saving the heart of the Affordable Care Act, are Chief Justice John Roberts, Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan.
SCOTUS Blog reports that after acknowledging the strength of the plain language arguments from challengers, the majority of justices said, “In this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” In the oral announcement of the decision, Roberts noted several problems with the law’s wording: “The Affordable Care Act contains more than a few examples of inartful drafting.”
The federal healthcare law establishes “exchanges” at the state and federal level. Exchanges allow one-stop shopping for health coverage, giving individuals and small businesses the opportunity to readily compare available plans.
The Supreme Court decision focused on four words in the law: only people buying insurance through exchanges “established by the state” would get subsidies. Thirty-four states, including Florida, declined to create the exchanges.
The IRS rule makes the subsidies available to all who enroll in the program regardless of whether it’s through a state or the federal exchange. The petitioners live in Virginia, which did not establish a state exchange. They argue that with access to the tax subsidy, they no longer qualify for the hardship exemption under the federal healthcare law. The law allows people to be exempt from the mandate to buy health insurance if the annual cost of coverage exceeds 8 percent of the projected household income.