The Slatest

Supreme Court Upholds Subsidies in Major Victory for Obamacare

Senator Al Franken promotes the Affordable Care Act, aka Obamacare. The Supreme Court upheld a major portion of the law today.

Photo by Drew Angerer/Getty Images

On Thursday, the Supreme Court rejected a major challenge to the Affordable Care Act, ruling that federal subsidies may be made available to individuals who live in states that did not set up their own health care exchanges. The 6-3 opinion was written by Chief Justice John Roberts, and joined by Justice Anthony Kennedy and the more liberal justices. Roberts explained that:

The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. … It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation. But those requirements only work when combined with the coverage requirement and the tax credits. So it stands to reason that Congress meant for those provisions to apply in every State as well.

The majority seemed particularly persuaded by the fact that, if the court revoked subsidies in states with no exchange, those states’ insurance markets might implode:

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. [The disputed section] can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.

Writing in dissent, Justice Antonin Scalia accused the majority of “interpretive jiggery-pokery” and quipped that:

The Act that Congress passed makes tax credits available only on an “Exchange established by the State.” This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare.

The decision is a major victory for the Obama administration, which professed to have no backup plan should the court invalidate these subsidies. A decision against the ACA may well have devastated the law and its beneficiaries.