Supreme Court Upholds Obamacare Subsidies In Federal Exchanges

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in on Oct 28, 2016.

On June 25, 2015, the United States Supreme Court ruled that despite language in the Affordable Care Act (otherwise known as “Obamacare”) providing that subsidies to reduce the cost of health insurance only are available to individuals enrolled in healthcare exchanges established by the states, those subsidies also are available to individuals enrolled in the health insurance exchange established by the federal government – healthcare.gov. More than 30 states previously declined to establish a healthcare exchange, leaving their residents to purchase health insurance from healthcare.gov if the residents did not have employer-provided insurance or Medicare/Medicaid.

The Supreme Court ruled in a 6-3 decision that the Obamacare statute was so poorly drafted with conflicting and contradictory language in so many areas that the statute was “ambiguous” and therefore the Court needed to look at the overall purpose of the statute to determine how to apply the subsidy portion of the statute. The six Justices in the majority decided that the purpose of Obamacare was to “improve health insurance markets, not to destroy them,” and concluded that it needed to interpret the availability of subsidies in a way to be consistent with that intent. Accordingly, the Court ruled that individuals can obtain subsidies to reduce the cost of their health insurance whether that insurance is purchased from the state or federal government, regardless of what the Obamacare statutory language actually says. The majority opinion was authored by Chief Justice John Roberts, the same Justice who authored the Court’s prior opinion upholding Obamacare’s constitutionality as a “tax.”

The dissent, authored by Justice Scalia, stated that the clear language of the Obamacare statute does not permit the issuance of subsidies through healthcare.gov, and the majority’s opinion was rewriting the law to such an extent that “[w]e should start calling this law SCOTUScare” (referring to the popular acronym for the Supreme Court).

The end result – the subsidy system will continue as it exists now for at least the duration of the Obama presidency but whether that system can sustain itself financially remains to be seen.

For questions or additional information contact Kimberly L. Russell, Esquire, 610-941-2541 or by email to krussell@kaplaw.com.