The U.S. Supreme Court on a 6-3 vote has upheld the constitutionality of government subsidies to aid consumers in buying healthcare coverage on federal and state health insurance exchanges in what appears to be a sweeping victory for the Obama administration.
Conservative justices Anthony Kennedy and Chief Justice John Roberts sided with liberal justices in the ruling. Opponents of the Affordable Care Act argued that four words in the law permitted subsidies only in states that established an exchange, which would leave out 34 states that did not.
The court agreed with the administration argument that under Section 36B of the law covering subsidies, that they are available to individuals in states that have a federal exchange. The tax credits are one of the Acts key reforms and whether they are available on the Federal Exchanges is question of deep economic and political significance; had Congress wished to assign that question to an agency, it surely would have done so expressly, according to the ruling. And it is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort.
It is instead the Courts task to determine the correct reading of Section 36B. If the statutory language is plain, the Court must enforce it according to its terms. But oftentimes the meaningor ambiguityof certain words or phrases may only become evident when placed in context. So when deciding whether the language is plain, the court must read the words in their context and with a view to their place in the overall statutory scheme. (FDA vs. Brown & Williamston Tobacco Corp.)
Consequently, the majority of the court ruled that the language was ambiguous and could be interpreted to limit the reach of subsidies to state exchanges, but also could be interpreted to refer to all exchanges.
And the court worried about calamity. The combination of no tax credits and an ineffective tax coverage requirement could well push a States individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community ratings 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.
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