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Supreme Court Affirms Insurance Premium Credit

June 26, 2015

On Thursday, June 25th, the Supreme Court ruled that Obamacare's insurance premium credits can go to eligible residents of any state, including those states that chose to use a federally-facilitated exchange. In a decision written by Chief Justice Roberts, the Court's ruling in King v. Burwell preserves the premium credits for 6.4 million people in those states that have chosen not to establish a state exchange. The vote was 6-3. Roberts was joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor and Kagan. Justices Scalia, Alito and Thomas dissented.

"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Chief Justice Roberts wrote for the court.

"It is implausible that Congress meant the Act to operate in this manner," the majority decision went on. "Congress made the guaranteed issue and community rating requirements application 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 plaintiffs in King v. Burwell explicitly challenged the IRS's authority to issue rules that allow premium credits to go to those who purchased insurance on the federal exchanges. In its arguments, the Supreme Court majority did not base their decision on whether or not the IRS had authority to allow the credits for insurance purchased on the federal exchanges. "This is not a case for the IRS," the decision said.

Rather the decision referred to an earlier case that held "In extraordinary cases" a court should "hesitate before concluding that Congress has intended such an implicit delegation" to a federal agency. "This is one of those cases," Chief Justice John Roberts wrote. "The tax credits are among the Act's key reforms, involving billions of dollars in spending each year and affecting the price of health insurance for millions of people."

"Whether those credits are available on Federal Exchanges is thus a question of deep 'economic and political significance' that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly," Roberts added. "It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort."

In his dissent, Justice Scalia wrote "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," he continued.