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BREAKING: Supreme Court Upholds ACA Subsidies

June 25, 2015
by Gabriel Perna
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Another challenge against the validity of the Affordable Care Act (ACA) has gone by the wayside, with the Supreme Court upholding the legality of tax credits in federally run exchanges.
 
The Supreme Court ruled 6-3, affirming the 4th Circuit Court's decision on the matter and siding with the Obama administration. Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer, Elena Kagan, and Anthony Kennedy comprised the majority opinion. Roberts delivered the opinion. 
 
Virginia resident David King was the lead petitioner, who sued the Department of Health and Human Services. The four petitioners did not want to purchase health insurance and in their view, the Virginia exchange did not qualify as an exchange established by the states, which they said, meants tax credits would not be available based on the law's passage. Under the rule, they said they would have to buy health insurance or be taxed by the IRS. The lower courts dismissed their charges, viewing the Act as "ambiguous and subject to two different interpretations." 
 
The Supreme Court agreed that the passage the petitioners were challenging was ambiguous. In the opinion, Roberts cited several examples why they couldn't conclude it was unambiguous. He said the structure of the law suggested that tax credits were not limited to State Exchanges. "Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Roberts wrote. 
 
By killing the tax subsidies portion of the ACA, many healthcare policy pundits predicted it would have a domino affect that would destroy the entire law itself. The law has gone a long way in moving healthcare towards a value-based payment system. 
 
This was the latest major challenge to the law's legality to reach the nation's highest court. Three years back, the Supreme Court ruled that the ACA's Individual Mandate could be upheld as a tax.
 

In a statement to the press, President Barack Obama said that the “Affordable Care Act is here to stay.” He said that the ruling is a victory for every hardworking American. “Access to quality, affordable health care is a right, not a privilege,” he stated.

His top healthcare official, HHS Secretary Sylvia Mathews Burwell said in a statement, “I hope that this positive decision will do what the American people want us to do -- focus on the substance and turn to building on the progress we have made. They want us to move forward to provide more Americans with affordable access to quality coverage and create a health care system that improves the quality of care and spends our dollars more wisely.”

Various industry stakeholder groups responded to the decision as well. Most were in favor, saying that had the subsidies not been upheld would have caused healthcare prices to skyrocket.

“The subsidies upheld today help patients afford health insurance so they can see a doctor when they need one and not have to wait until a small health problem becomes a crisis. The subsidies provide patients with peace of mind that they will not risk bankruptcy should they become seriously ill or injured and experience catastrophic health care costs,” the American Medical Association President Steven J. Stack, M.D., said in a statement.

“The wait and see period is over and now states can move forward. Leaders in the 34 states that rely on the FFM [Federally Facilitated Marketplace] can examine and improve coordination between their Medicaid and CHIP programs and the FFM to ensure a seamless coverage experience; consider ways to make coverage more affordable in their markets; design new exchange models to offer states more flexible roles; and carefully review opportunities to seek significant waivers in 2017 that will allow for more state experimentation in providing affordable, quality coverage,” said Trish Riley, National Academy for State Health Policy Executive Director.

It wasn’t all positive reaction though. As expected, Republican leaders were against the ruling. Sen. Lamar Alexander (R-TN), who is Chair of the Senate’s Health Education Labor and Pensions (HELP) Committee, said that the decision was unfortunate.

“The 36 percent increase in some individual health care rates announced recently should remind Tennesseans that Obamacare was an historic mistake. It gave Americans higher health care costs while reducing our choices of health plans, doctors and hospitals. Republicans are ready to reduce the cost of health care so more people can afford it, put patients back in charge, and restore freedom and choice to the health care market,” he said in a statement.

 

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