The Washington PostDemocracy Dies in Darkness

A simple guide to today’s important Supreme Court decision about Obamacare

Placeholder while article actions load

Scenes of demonstrations outside the Supreme Court over Obamacare

WASHINGTON, DC - MARCH 04: James Cook, 5, right center, stands with his father, Jumaane Cook as they demonstrate outside the Supreme Court of the United States as the court heard arguments that pertain to a portion of the Affordable Care Act on Wednesday March 04, 2015 in Washington, DC. (Matt McClain/ The Washington Post)

The Supreme Court has ruled in favor of the Obama administration on the Affordable Care Act, the president's signature domestic policy achievement. In King v. Burwell, the justices rejected a challenge to the financial assistance that millions of Americans are receiving to purchase health insurance by a vote of 6-3. The case was considered the greatest threat to the future of the law commonly known as Obamacare since three years ago, when the court rejected a separate challenge to the law's mandate that most Americans buy health insurance.

Here's the decision, and below are answers to a few questions you might have about the big lawsuit:

What was the lawsuit all about?

The Affordable Care Act, or the ACA, created marketplaces, or exchanges, where people can shop for individual and family health insurance if they don't have another source of coverage. The law directs the federal government to set up exchanges in states that didn't build their own, which was the case for about two-thirds of the country. The law also provides subsidies through the exchanges to people who meet income requirements.

The King challengers said the law only authorizes subsidies through exchanges established by the states. They argued that the law was intentionally designed this way to pressure states to set up their own insurance marketplaces. They contended the IRS illegally issued a rule in 2012 providing subsidies through the federal exchanges when it became clear that most states wouldn't set up their own exchanges by 2014, when the marketplaces opened.

The Obama administration, however, argued the challenge is politically motivated and wrongly focuses on just a few words in the ACA. The administration said a reading of the entire law makes clear that subsidies are available in all exchanges, regardless of who's running them. The law was intended to extend health insurance to as many Americans as possible, the administration argued, so the law's drafters would have no reason to withhold subsidies to so many people.

Who was challenging the government?

The plaintiffs were four Virginians who do not want to buy health insurance, as mandated by the ACA. They argue the IRS illegally interpreted the ACA to authorize subsidies through federal-run exchange, and that without those subsidies, they would be exempt from the requirement to purchase insurance because they don't earn enough. The challenge is funded by the Competitive Enterprise Institute, a libertarian think tank opposed to the ACA. Federal courts have also heard three other cases challenging the subsidies, but the Supreme Court is only considering King.

Why did people think this case was so important to the future of ACA?

The subsidies are a critical part of the law, working with two other major ACA pieces — the guaranteed availability of health insurance and the individual mandate. The law prevents health insurers from denying coverage or charging people more because of their medical condition. To help offset the costs of sicker customers, the law requires most people to have insurance or pay an annual penalty for not having coverage. To make that coverage affordable, the law provides subsidies to low- and middle-income families. The subsidies are paid directly to insurers, who then apply the discount to their customers' monthly premiums. On average, the subsidies knock down the price of monthly premiums by nearly 75 percent.

A ruling overturning the subsidies would have caused more than 8 million people across the country to lose health insurance as a result of a ruling against the government, according to recent estimates. And it would have wreaked havoc on the insurance market. Without the aid, it was expected that the lower-income and healthier enrollees would quickly drop coverage, leaving just the sickest patients who need coverage the most. Insurers would have raised their rates to cover the costs, pricing even more people out of coverage and causing problems for the individual insurance market outside of just the exchanges.

One note, however: Most people who would have lost their subsidies in such a ruling would have been spared from the penalty for not having health insurance since they don't earn enough.

Which states would have been affected?

The challenge was only to the subsidies in states that didn't set up their own marketplaces, so residents of 16 states and the District of Columbia wouldn't have seen their financial assistance taken away if the government had lost. In the following map from the Kaiser Family Foundation, residents of states with "Federally-facilitated Marketplaces" and "State-Partnership Marketplaces," as labeled below, could have lost the subsidies.

How were past Obamacare cases decided?

This case marks the third time the ACA has been before the Supreme Court since it was enacted five years ago. In 2012, the court narrowly upheld the individual mandate, the requirement for most Americans to have health insurance, while also ruling that the federal government couldn't force states to expand their Medicaid programs. And last year, the court ruled that the government couldn't require closely held businesses to offer their employees contraceptive coverage against their religious objections.

How did the court rule on this one?

Chief Justice John Roberts wrote the ruling for the court. He agreed with the Obama administration. It wouldn't have made sense, he argued, for Congress to have set up a system in which insurance markets simply wouldn't have functioned in states that did not have their own exchanges.

"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," the chief justice wrote.

Notably, the court's position was firm, as Greg Sargent argues in The Washington Post. The justices might have decided that guessing at Congress's intentions was none of their business, invoking a legal principal called Chevron deference, and leaving the interpretation of Obamacare to the executive branch. That would have allowed the Obama administration's reading of the law to stand -- but a future president could have reversed it and stopped providing the subsidies.

Roberts was joined by justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonya Sotomayor, and Elena Kagan.

What about the other three justices?

Antonin Scalia wrote for the dissenting justices, who also included Clarence Thomas and Samuel Alito.

Those three agreed with the opponents of the law. "Words no longer have meaning if an Exchange that is not established by a State is 'established by the State,' " he wrote, citing the text of the law. "It is hard to come up with a clearer way to limit tax credits to state Exchanges than to use the words 'established by
the State.' And it is hard to come up with a reason to include the words 'by the State' other than the purpose of limiting credits to state Exchanges."

At one point, Scalia referred to the government's argument as "pure applesauce."

What's next?

Republicans are outraged by the Supreme Court's decision. Mike Huckabee, the former governor of Arkansas, called it "an out-of-control act of judicial tyranny." He and many of the other GOP presidential candidates have reiterated their promises to repeal and replace the law if they win next year.

At the same time, many conservative strategists and politicians are quietly relieved that the Republicans who control Congress don't immediately have to come up with a plan to place the subsidies that millions of Americans would have lost if the Supreme Court had ruled against the administration, Karen Tumulty reports in The Washington Post. Republicans don't agree on the best way to move forward with health policy, and the task of responding to the Supreme Court's decision would have exposed those disagreements to public view.

Now, some Republicans are talking about compromising with the president, proposing small changes to the law that he and Democrats might also support. The president would be able to veto anything more than that.

The ACA looks to be secure, at least until 2017, when a new president and new lawmakers will take office in Washington. At that time, Republicans might be able to repeal the law through an act of Congress if the election goes well for them. If they win the presidential race, but Congress remains gridlocked, they could also use a little-noticed section of the ACA to free conservative states to take a different approach to health policy. The next president would be able to waive some of the most controversial provisions of the law as long as state officials have a plan to provide decent, affordable health insurance to a comparable number of people as are insured under the law as it stands.

The original version of this post appeared online in March, when the court heard oral arguments in this case. The original author was staff writer Jason Millman, who has left the paper, and some of his language was retained. This version has been expanded and brought up to date with the ruling.