In a 6 to 3 opinion, in King v. Burwell, Chief Justice Roberts writing for the court stated that “the Act’s context and structure compel the conclusion that [the ACA] allows tax credits for insurance purchased on any Exchange created under the Act.” As drafted, the Affordable Care Act (ACA) limits subsidies to those who sign up for health insurance through exchanges “established by the State.” The Internal Revenue Service (IRS), which administers the tax subsidy program, has interpreted the subsidies provision as applying to all exchanges. The question before the court was whether the ACA should be “literally interpreted” and that Congress’ intent was that only participants in state established exchanges would receive subsidies or whether the subsidies provision is a textual error and that looking at a “broader approach” it’s clear that Congress intended for all exchanges to allow for subsidies.
First, the Court establishes that “when read in context, the phrase ‘an Exchange established by the State … is properly viewed as ambiguous.” The Court then rejects the IRS’ authority to interpret the ACA as mandating that subsidies are available in all exchanges on the grounds that “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.” Although the Court acknowledges that King’s plain-meaning argument is strong, their argument is ultimately rejected on the grounds that taken as a whole the Congressional intent in the ACA is clear. “The statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very “death spirals” that Congress designed the Act to avoid.” Without the availability of subsidies in states under the federal exchange, insurance would be so expensive that many individuals would not purchase insurance, which undermines the ACA’s statutory scheme and goal of universal coverage. The subsidies “are necessary for the Federal Exchanges to function like their State Exchange counterparts.”
Justices Scalia, Thomas, and Alito dissented from the Court’s decision stating that the text of the ACA is clear and that the Court’s decision “is of course quite absurd.” Scalia, writing for the dissent, goes on to say that “it is hard to come up with a reason to include the words ‘by the State’ other than the purpose of limiting credits to state exchanges. Scalia goes on to say that the Court seems focused on “saving the Affordable Care Act” and that the Court ignored other contextual clues in the Act that would have undermined its Congressional intent argument.