Supreme Court Allows Nationwide Health Care Subsidies
WASHINGTON — The Supreme Court ruled on Thursday that President Obama’s health care law allows the federal government to provide nationwide tax subsidies to help poor and middle-class people buy health insurance, a sweeping vindication that endorsed the larger purpose of Mr. Obama’s signature legislative achievement.
The 6-to-3 ruling means that it is all but certain that the Affordable Care Act will survive after Mr. Obama leaves office in 2017. For the second time in three years, the law survived an encounter with the Supreme Court. But the court’s tone was different this time. The first decision, in 2012, was fractured and grudging, while Thursday’s ruling was more assertive.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John G. Roberts Jr. wrote for a united six-justice majority. In 2012’s closely divided decision, Chief Justice Roberts also wrote the controlling opinion, but that time no other justice joined it in full.
In dissent on Thursday, Justice Antonin Scalia called the majority’s reasoning “quite absurd” and “interpretive jiggery-pokery.”
He announced his dissent from the bench, a sign of bitter disagreement. His summary was laced with notes of incredulity and sarcasm, sometimes drawing amused murmurs in the courtroom as he described the “interpretive somersaults” he said the majority had performed to reach the decision.
“We really should start calling this law Scotus-care,” Justice Scalia said, to laughter from the audience.
In a hastily arranged appearance in the Rose Garden on Thursday morning, a triumphant Mr. Obama praised the ruling. “After multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay,” he said, adding: “What we’re not going to do is unravel what has now been woven into the fabric of America.”
The ruling was a blow to Republicans, who have been trying to gut the law since it was enacted. But House Speaker John A. Boehner vowed that the political fight against it would continue.
“The problem with Obamacare is still fundamentally the same: The law is broken,” Mr. Boehner said. “It’s raising costs for American families, it’s raising costs for small businesses and it’s just fundamentally broken. And we’re going to continue our efforts to do everything we can to put the American people back in charge of their health care and not the federal government.”
The case concerned a central part of the Affordable Care Act that created marketplaces, known as exchanges, to allow people who lack insurance to shop for individual health plans. Some states set up their own exchanges, but about three dozen allowed the federal government to step in to run them. Across the nation, about 85 percent of customers using the exchanges qualify for subsidies to help pay for coverage, based on their income.
The question in the case, King v. Burwell, No. 14-114, was what to make of a phrase in the law that seems to say the subsidies are available only to people buying insurance on “an exchange established by the state.”
A legal victory for the plaintiffs, lawyers for the administration said, would have affected more than six million people and created havoc in the insurance markets and undermined the law.
Chief Justice Roberts acknowledged that the plaintiffs had strong arguments about the plain meaning of the contested words. But he wrote that the words must be understood as part of a larger statutory plan. “In this instance,” he wrote, “the context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.”
This was challenging, he said, in light of the law’s “more than a few examples of inartful drafting,” a consequence of rushed work behind closed doors that “does not reflect the type of care and deliberation that one might expect of such significant legislation.”
But he said the law’s interlocking parts supported a ruling in favor of the subsidies, particularly given that a contrary decision could have given rise to chaos in the insurance markets. A ruling rejecting subsidies in most of the nation would have left in place other parts of the law, including its guarantee of coverage regardless of pre-existing conditions, its requirement that most Americans obtain insurance or pay a penalty, and its expansion of Medicaid.
Without the subsidies, many people would be unable to afford insurance, and healthier consumers would go without coverage, leaving insurers with a sicker, more expensive pool of customers. That would raise prices for everyone, leading to what supporters of the law called death spirals.
“The statutory scheme compels us to reject petitioners’ interpretation,” Chief Justice Roberts wrote, referring to the challengers, “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.”
In dissent, Justice Scalia wrote that the majority had stretched the statutory text too far.
“I wholeheartedly agree with the court that sound interpretation requires paying attention to the whole law, not homing in on isolated words or even isolated sections,” Justice Scalia wrote. “Context always matters. Let us not forget, however, why context matters: It is a tool for understanding the terms of the law, not an excuse for rewriting them.”
“Reading the act as a whole leaves no doubt about the matter,” he wrote. “ ‘Exchange established by the state’ means what it looks like it means.”
Justice Scalia said the decision had damaged the court’s reputation for “honest jurisprudence.”
The court, he said, had taken into its own hands a matter involving tens of billions of dollars that should have been left to Congress.
“The court’s decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery,” Justice Scalia wrote.
“It is up to Congress to design its laws with care,” he added, “and it is up to the people to hold them to account if they fail to carry out that responsibility.”
Justices Clarence Thomas and Samuel A. Alito Jr. joined Justice Scalia’s dissenting opinion.
Chief Justice Roberts rejected the argument that Congress had limited the availability of subsidies in order to encourage states to create their own exchanges, a notion that had occurred to almost no one at the time the law was enacted.
Sixteen states and the District of Columbia have established their own exchanges. Under the law, the federal government has stepped in to run exchanges in the rest of the states.
“The whole point of that provision,” Chief Justice Roberts wrote, “is to create a federal fallback in case a state chooses not to establish its own exchange. Contrary to petitioners’ argument, Congress did not believe it was offering states a deal they would not refuse — it expressly addressed what would happen if a state did refuse the deal.
Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor and Elena Kagan joined the majority opinion. In the 2012 case, Justice Kennedy was in dissent.
The case started when four plaintiffs, all from Virginia, sued the Obama administration, saying the phrase meant that the law forbids the federal government to provide subsidies in states that do not have their own exchanges.
The plaintiffs challenged an Internal Revenue Service regulation that said subsidies were allowed whether the exchange was run by a state or by the federal government. They said the regulation was at odds with the Affordable Care Act.
In July, the United States Court of Appeals for the Fourth Circuit, in Richmond, Va., ruled against the challengers.
Judge Roger L. Gregory, writing for a three-judge panel of the court, said the contested phrase was “ambiguous and subject to multiple interpretations.” That meant, he said, that the I.R.S. interpretation was entitled to deference.
The Supreme Court’s ruling was more forceful. “This is not a case for the I.R.S.,” Chief Justice Roberts wrote. “It is instead our task to determine the correct reading.”
Julie Hirschfeld Davis and Michael D. Shear contributed reporting.