Obamacare Subsidies Survive Supreme Court Challenge

Published June 25, 2015

A key provision of the Affordable Care Act (ACA), also known as Obamacare, allowing 6.4 million Americans to receive health insurance subsidies to purchase health insurance, was upheld by the Supreme Court.

Chief Justice John Roberts wrote the 6-3 decision ensuring consumers who purchased health insurance in the 34 state exchanges will continue to receive subsidies for doing so.

Roberts argued a ruling against the Obamacare state exchanges would plunge the health insurance markets of those states into a “death spiral.”

“The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner,” Roberts wrote in his opinion. “The argument that the phrase ‘established by the State’ would be superfluous if Congress meant to extend tax credits to both State and Federal Exchanges is unpersuasive.”

In his dissent, Justice Antonin Scalia scolded the Obama administration for engaging in “somersaults of statutory interpretation” in its ruling on the health care law.

“We should start calling this law SCOTUScare,” Scalia wrote in his dissent.

‘The Law Is Still Flawed’

King v. Burwell was the latest legal challenge to Obamacare since the Supreme Court ruled the law constitutional three years ago. The plaintiffs argued the Affordable Care Act only allowed subsidies to be used in marketplaces “established by the state,” thus excluding those purchased on the federal exchange.

Sally Pipes, president of the Pacific Research Institute, says the Court’s 6-3 decision in King v. Burwell was very disappointing but not unexpected.

“Justices Roberts and Kennedy were afraid to upset the Obamacare applecart,” Pipes said. “The law is still flawed, and the American people will face higher premiums, higher deductibles, and limited networks of doctors and hospitals in the future. As Justice Scalia said “the court has changed the usual rules of statutory interpretation for the sake of the ACA.”

The Court’s decision ironically removes a difficulty for the GOP in developing a strategy for reforming and possibly replacing the law, she says.

“If the subsidies had been deemed illegal, the GOP would have been in a bind, as the members were divided on whether to continue to provide bridge subsidies up until mid-2017 for those in the 34 exchanges run by the federal government or to end the subsidies immediately,” Pipes said.

The Court’s decision moves the issue back to Congress, she says.

“The Republican candidates will have to develop a plan as to how they will deal with SCOTUScare, as Justice Scalia called it in his dissenting opinion,” she said. “There is no doubt that Obamacare will be the major issue in the 2016 election campaign.”

Grace-Marie Turner, president of the Galen Institute, agreed, calling the decision “shocking.”

“The biggest loser is the rule of law,” Turner said. “The final verdict now goes to the American people in 2016.”

Huge Issue in 2016

Health care will now become a huge issue in the 2016 presidential election, says Dr. Roger Stark, a health care policy analyst at the Washington Policy Center and a retired physician.

“By November 2016, millions of Americans will have seen their health insurance premiums rise, will have seen their provider networks limited, and will have experienced a decrease in overall access to health care thanks to the ACA,” Stark said. “These people will vote against the ACA in 2016.”

John R. Graham, a senior fellow at the National Center for Policy Analysis, says in the long run, the people, not the courts, will decide the fate of Obamacare.

“In the short term, many of the 16 states that have their own exchanges will look to dump them back on the federal government, to reduce their operating costs,” Graham said.

“In the medium term, Obamacare’s opponents in Congress will not be able to repeal it until 2017 at the earliest; however, that does not mean they can do nothing,” he said. “Instead, they should pass fiscally responsible health [care] reforms that the president will sign.”

For example, Congress can offset spending from the medical device excise tax repeal by adopting proposals from the president’s budget, such as paying the same fees for certain procedures whether done at a physician’s office or a hospital, saving an estimated $29 billion, he says.

Kenneth Artz ([email protected]) is managing editor of Health Care News.

Internet Info:

“King Et Al. v. Burwell, Secretary of Health and Human Services, Et Al.,” U.S. Supreme Court, June 25, 2015: https://heartland.org/sites/default/files/269675181-obama-care-ruling.pdf