The Supreme Court on Thursday upheld a key part of the Affordable Care Act that provides health insurance subsidies to all qualifying Americans, awarding a major victory to President Obama and validating his most prized domestic achievement.
In the 6-to-3 decision, Chief Justice John G. Roberts Jr. delivered a sympathetic affirmation of what has become known as Obamacare, and his legal reasoning seemed to insulate the 2010 law against the legion of opponents who want to undermine the program before it takes hold in American life.
From the White House Rose Garden, Obama declared: “The Affordable Care Act is here to stay.”
The decision for the second time defused a potential conflict between Obama and the Supreme Court over the sprawling government program that is likely to define the president’s domestic legacy. Although more challenges are to come, an adverse ruling in this case could have been a mortal blow to the program, which continues to divide the nation and roil political conversation.
The ruling came on a day when the court handed the administration a second significant victory, upholding a legal tool that civil rights groups say is vital in challenging discriminatory housing tactics.
In considering the health-care law, the justices were asked to interpret a passage that said the tax credits are authorized for those who buy insurance on marketplaces that are “established by the state.”
But federal exchanges were authorized for states that did not set up their own, and the Obama administration argued that millions of people served by a federal marketplace were entitled to the subsidies, too.
The court agreed that that was the only way the law would work and that, although the legislation’s wording was problematic, Congress’s intent was clear.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible we must interpret the Act in a way that is consistent with the former, and avoids the latter,” Roberts wrote.
Joining the chief justice in the majority were Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan. Opposing the decision were Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr.
Kennedy’s position in the majority was particularly significant. In 2012, he was one of four justices who would have found the entire law unconstitutional.
Scalia said Roberts, who wrote the decision in 2012 that saved the Affordable Care Act from that challenge, has performed “somersaults of statutory interpretation” to preserve the law.
“We should start calling this law SCOTUScare,” he said. The comment drew laughter as Scalia emphasized his disagreement with the decision by reading part of his dissent from the bench.
The two cases, Scalia said, “will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.”
The latest filings show that about 10.2 million people had signed up and paid their insurance premiums through the exchanges as of March, and 6.4 million were receiving subsidies to help afford coverage in the 34 states that had not set up their own marketplaces.
Those consumers stood to lose their subsidies, worth about $1.7 billion a month, if the justices had agreed with the challenge.
Customers in the jurisdictions with their own exchanges — 16 states, including Maryland, as well as the District of Columbia — were not at risk. But because of the delicate economics of the health-care law, the entire national program could have been in jeopardy if the court had struck down the contested subsidies.
Obama heralded the court ruling. “After nearly a century of talk, decades of trying, a year of bipartisan debate, we finally declared that in America, health care is not a privilege for a few but a right for all,” he told reporters as Vice President Biden stood by his side.
Senate Majority Leader Mitch McConnell (R-Ky.) said the administration should not “crow” about its victory.
“Today’s ruling won’t change Obamacare’s multitude of broken promises, including the one that resulted in millions of Americans losing the coverage they had and wanted to keep,” he said in a statement.
Senate Minority Leader Harry M. Reid (D-Nev.) said Republicans should stop trying to kill the legislation that passed five years ago and move on to other matters. “Enough is enough,” he said.
Health-care stocks jumped immediately after the decision. The ruling was particularly good news for hospitals, which are likely to see fewer uninsured patients in emergency rooms.
Stock in HCA Holdings, which runs 165 hospitals nationwide, rose 9 percent after the ruling, while that of Universal Health Services, which has 226 hospitals including George Washington Hospital in the District, increased 7 percent.
The challenge to the health-care law was brought by the same conservative legal strategists who three years ago fell one vote short of convincing the court that the law was unconstitutional. The latest challenge was about how the law is to be carried out.
There seemed to be a different tone to Roberts’s opinion this time. In 2012, he distanced the court from the legislation, writing, “It is not our job to protect the people from the consequences of their political choices.”
But in Thursday’s opinion, the language was more sympathetic. The complicated program “grew out of a long history of failed health insurance reform,” Roberts noted. He added that it was designed “to ensure that anyone who wanted to buy health insurance could do so.”
He acknowledged the disjointed way the law was written. It “contains more than a few examples of inartful drafting. . . . Congress wrote key parts of the act behind closed doors, rather than through the traditional legislative process,” Roberts wrote.
But rather than simply focusing on the phrase “established by the state,” Roberts said the court had to look at the intent of the entire law.
“The statutory scheme compels us to reject petitioners’ interpretation because it 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,” Roberts wrote.
He rejected the challengers’ argument that Congress intended to give the states an incentive to create their own exchanges.
To agree, Roberts said, would require rewriting the statute. “The states likely would have created their own exchanges in the absence of the IRS rule, which eliminated any incentive that the states had to do so.”
Some legal experts had thought the court might find the law ambiguous and thus simply uphold the Internal Revenue Service rule that said those who buy insurance on the federal exchange are entitled to the subsidies, in the form of tax credits, just as those who buy on a state exchange are. The court’s precedents call for deference to an agency when the law is unclear.
But crucially, Roberts said this was not a decision for an agency to make. He said the court needed to look at the law as a whole and concluded that even though the legislation’s language might be murky, its intent was clear.
“This is an even stronger ruling for the government than anticipated and means that a future president will not be able to reverse the interpretation through a different administrative interpretation,” said Heather Howard, a lecturer at Princeton University’s Woodrow Wilson School of Public and International Affairs.
Scalia said the majority had exceeded its power and colorfully accused it of “interpretive
The decision “reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery,” he wrote. “We lack the prerogative to repair laws that do not work out in practice, just as the people lack the ability to throw us out of office if they dislike the solutions we concoct.”
Although Republicans generally denounced the ruling, some party leaders concluded that it at least relieved them from having to find an alternative.
Many of the 6.4 million Americans who receive subsidies through the federal marketplace are in conservative Southern states where Republicans are the strongest, according to a recent Urban Institute analysis. Many live in states such as Florida, Georgia, Louisiana, North Carolina and Texas, where elected officials oppose the health-care law and have balked at setting up their own exchanges. Another big group lives in the Midwest, in states such as Illinois, Indiana, Ohio and Wisconsin.
Supporters of the law were worried when the court initially reached out to consider the challenge.
The case involved four plaintiffs from Virginia, which did not establish its own exchange. They said it was illegal for the IRS to say subsidies were available through the federal marketplace, which operated in the state.
A panel of the U.S. Court of Appeals for the 4th Circuit had ruled unanimously that, even though it was a close call, the IRS was within its authority to interpret the law to mean all Americans should receive the subsidies, because the statute authorized the federal health-care exchange to step in for states that did not establish their own.
In a separate case involving the same issue, a panel of the U.S. Court of Appeals for the D.C. Circuit had ruled 2 to 1 for different challengers. The full D.C. Circuit put that ruling aside to let all the court’s judges weigh in, and the argument had been scheduled.
But the challengers said the Supreme Court should decide the issue, because if they were correct, billions of dollars from the federal Treasury were being illegally spent.
The case was King v. Burwell.