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The U.S. Supreme Court today upheld the tax subsidies for health insureds across the country including those in states without their own health exchanges that use the federal health insurance exchange.
In a 6-3 opinion (King v. Burwell) written by Chief Justice John Roberts, the court rejected a challenge based on a four-word phrase that said tax credits would be available only on an exchange “established by the state” and thus should not be available to the states that use the federal exchange for purchasing insurance. Only 16 states have their own exchange.
However, the court found that the phrase, which it acknowledged is ambiguous, should be read in the broader context of the entire statute and not in a way that limits the availability of the subsidies. Reading it narrowly “would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid,” the court said.
The court said Congress made the guaranteed issue and community rating requirements applicable in every state, 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,” the court said.
