The Supreme Court announced Friday that it will hear the most serious challenge to the Affordable Care Act since the justices found it constitutional more than two years ago: a lawsuit targeting the federal subsidies that help millions of Americans buy health insurance.
More than 4 million people receive the subsidies, which the Obama administration contends are essential to the act by making insurance more affordable for low- and middle-income families.
But challengers say the administration is violating the plain language of the law. They are represented by the same conservative legal strategists who fell one vote short of convincing the court that the law was unconstitutional the last time around.
The question in this challenge is whether the subsidies should be available to all Americans who qualify or only to those who purchase insurance through exchanges “established by the state.”
About a third of the states have created exchanges, and the challengers say the subsidies should be available only in those places. As the law authorizes, federal authorities have stepped in to establish exchanges where the states have refused.
The decision to hear the case, which will be decided by the end of the court’s term in June, comes as the act’s second enrollment period begins Nov. 15. Separately, the Republican takeover of the Senate in the midterm elections probably means more attacks by the GOP opponents of President Obama’s signature domestic achievement.
“This lawsuit reflects just another partisan attempt to undermine the Affordable Care Act and to strip millions of American families of tax credits that Congress intended for them to have,” White House press secretary Josh Earnest said in a statement.
The decision to accept the case — along with the increased likelihood that the justices will be compelled to decide whether same-sex couples have a constitutional right to marry — could transform what had been forecast as a quiet term for the court.
On the same-sex marriage front, challengers of prohibitions in Ohio, Michigan, Tennessee and Kentucky, who lost Thursday in a 2-to-1 ruling by a panel of the U.S. Court of Appeals for the 6th Circuit, said Friday that they will move quickly to the Supreme Court.
The justices had decided last month not to review decisions by three appeals courts that had struck down state bans. As a result, the number of states allowing such unions proliferated. But the contrary ruling by the 6th Circuit presents the justices with an undeniable split, and advocates said they will rush to get the issue before the Supreme Court in time for it to accept cases for the current term.
Technically, there was no split in the Obamacare issue. The court’s acceptance of King v. Burwell follows a unanimous decision by a panel of the U.S. Court of Appeals for the 4th Circuit that sided with the Obama administration.
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 the challengers. But the full D.C. Circuit put that ruling aside to let all the court’s judges weigh in, and the argument was scheduled for December.
Some were suspicious of the court’s decision to accept the Obamacare case before those appeals were completed.
The decision “appears to be a very political act on the part of at least four members of the Supreme Court,” said Ron Pollack, the executive director of Families USA, a consumer health advocacy group that is one of the law’s champions. He referred to the number of justices, out of nine, required to accept a case. “It really flies in the face of the various guidelines the court uses to decide which cases it will schedule to hear.”
But Washington lawyer Michael Carvin, representing individuals in Virginia who objected to the subsidies, told the court in his brief that it had to act quickly.
If his side is correct, Carvin said, “it means millions of people are ineligible for subsidies and exempt from the ACA’s individual mandate penalty. It means hundreds of thousands of employers are free of the Act’s employer mandate.”
He added: “And it means that the IRS is illegally spending billions of taxpayer dollars every month without congressional authority.”
It was the Internal Revenue Service that ruled that, while the wording in the law could be construed as confusing, Congress’s intent was that all receive the subsidies. More than four out of five people who have received coverage through the federal exchange are getting a tax credit.
But the challengers say limiting the tax credits to only exchanges “established by the state” was intentional, to coerce the states into action.
The administration disagrees, arguing that Congress understood the ACA would work only if the subsidies were provided to all who were required to buy insurance. Otherwise, the law would not have authorized federal authorities to establish the exchanges when states balked.
The “tax credits at issue here are essential to the Affordable Care Act’s goals of making affordable health coverage available to all Americans and ensuring functional insurance markets,” Solicitor General Donald B. Verrilli Jr. told the court in his brief asking the justices to let the 4th Circuit’s ruling stand. “Petitioners’ argument that the act denies those credits to millions of people in 34 states is contrary to the act’s text and structure and would render the act unrecognizable to the Congress that passed it.”
The only point of agreement between challengers and the administration is that the subsidies are critical to the act.
The ACA requires individuals to either purchase health insurance or pay a tax penalty, and it is the mass participation that keeps the pool of the insured from being drawn only from those who most need expensive medical care.
But the administration said the law’s authors realized that people cannot be commanded to buy what they can’t afford, and so the subsidies were a critical part of the plan.
“Absent the tax credits, millions of low- and moderate-income Americans” would have been without the financial help, Verrilli said, “undermining the viability of insurance markets and risking the death spirals that plagued earlier state efforts at reform.”
For those who purchase insurance on the exchanges, the subsidies cover on average 76 percent of their premiums.
In one of the most controversial and closely watched decisions of the modern court, the justices in 2012 upheld the constitutionality of what has become known as Obamacare on a 5-to-4 vote.
Chief Justice John G. Roberts Jr. sided with the court’s liberals to provide the key vote and wrote an opinion that essentially said the court had gone out of its way to uphold the constitutionality of the act.
His vote is likely to be the controlling one again. Four justices — Antonin Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr. — would have struck the entire law as unconstitutional.
Amy Goldstein contributed to this report.