Supreme Court Upholds Nationwide Healthcare Subsidies

This morning the Supreme Court ruled in favor of the Obama administration in the case of King v. Burwell, the most recent challenge to the Affordable Care Act. The main issue at hand was whether the Internal Revenue Service could permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through federally funded exchanges. The language in Section 1401 of the Affordable Care Act says that federal tax credits should go to those who bought health insurance through “an exchange established by the state,” and the court Justices determined that in spite of this language healthcare subsidies are permissible nationwide.

Were the court to decide with the plaintiffs, an estimated 6.4 million people would have lost their subsidies in 34 states that use the federal health care marketplace, which could have potentially tripled their premiums. According to a report by The New York Times, the status of roughly 166,000 people in Nevada, New Mexico and Oregon was also at risk because those states had intended to run their own marketplaces, but now rely on the federal government for management.

Luckily for states like Florida, which relies most heavily on the federal subsidies, with eight percent of the population under 65 receiving subsidies, the subsidies will stand. Georgia, Maine, Montana and North Carolina are also in the clear with six percent of the population under 65 receiving subsidies.

States such as California, Colorado, Connecticut, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, New York, Rhode Island, Vermont and Washington have their own exchanges already and would not have been affected by a negative ruling.

The effect of an adverse decision would have not only hurt those currently receiving subsidies in the federal marketplaces, but would extend to people who buy their own insurance without subsidies as well by surging prices and reducing choices for health insurance shoppers regardless of income.

The 6-3 decision was written by Chief Justice John Roberts, and joined by Justice Anthony Kennedy and the more liberal justices. This is a major victory for the Obama administration, who had no backup plan were the justices to vote adversely.