The Affordable Care Act survived its second major challenge at the U.S. Supreme Court on Thursday. In a 6-to-3 decision, the justices ruled that the Internal Revenue Service can continue to provide health-insurance subsidies to middle-class people living in all states.
At issue in the case, King v. Burwell, was whether the subsidies should go to residents of the roughly three dozen states that use the federal health-insurance exchange, in addition to those who live in states that run their own exchanges.
It’s a highly technical difference, but had the decision gone the other way, Obamacare might have unraveled. Individuals who receive these subsidies make less than $48,000 per year, and many would struggle to afford health-insurance plans without the government’s financial help. Health-policy analysts feared that, without the subsidies in place, healthy people would withdraw from the health-insurance exchanges in large numbers. That, in turn, would cause premiums to skyrocket, making insurance unaffordable to almost anyone who does not receive insurance coverage through their jobs.
The Affordable Care Act gave states the option to either set up their own exchanges or to rely on the federal government’s marketplace through Healthcare.gov. The part of the law that describes the subsidies said they should only apply to people in the exchanges “established by the state.” The plaintiffs in the King case said that clause meant the IRS was offering subsidies to residents of federal-exchange states illegally.
In the opinion of the Court, Chief Justice John Roberts dismissed the idea that the fate of the entire Obamacare law should hinge on such a technicality.
“In petitioners’ view, Congress made the viability of the entire Affordable Care Act turn on the ultimate ancillary provision: a sub sub-sub section of the Tax Code,” he wrote. “We doubt that is what Congress meant to do.”
Many patient advocates cheered the decision. “It means that millions of people with serious health conditions such as cancer will continue to have access to essential treatment and care, and millions of others at risk for disease will be able to afford preventive screenings and tests that could save their lives,” said Chris Hansen, president of the American Cancer Society’s advocacy arm, in a statement.
Justices Antonin Scalia, Clarence Thomas, and Samuel Alito dissented, writing, “Words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’”
Roberts concludes by saying that the Court is attempting to respect what Congress hoped to accomplish in passing the law: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”
There are still a few, more minor, legal challenges to Obamacare remaining. But at least for now, the law lives to see another day.