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Examining the U.S. Supreme Court Ruling on the Affordable Care Act Subsidies

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July 1, 2015

On June 25, the U. S. Supreme Court by a vote of 6-3 ruled that insurance subsidies created by the federal Affordable Care Act (ACA) can be offered in both states that established their own health care exchanges and states where the federal government established them.  These exchanges are government-administered websites where consumers can compare and choose insurance plans.

In the case, King v. Burwell, plaintiffs claimed that subsidies under the ACA (“Obamacare”) are available only for those who enroll through exchanges “established by the State,” as the law is worded. 

Thirteen states including California set up their own health plan exchanges.  In 37 states, the federal government is running the program.  Plaintiffs charged that the wording of the law prevented the availability of subsidies in those states. 

In his majority opinion, Chief Justice John Roberts wrote that although the challengers’ arguments about the plain meaning of the statute were “strong,” 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.”

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Roberts wrote. "If at all possible, we must interpret the act in a way that is consistent with the former, and avoids the latter."

Although Covered California (the state’s health exchange) enrollees were not at risk of losing their subsidies, a ruling invalidating subsidies offered through the federal health exchange “could have resulted in changes to the federal law, which could have affected California,” according to a Covered California statement.

However, others have cautioned that courts are supposed to base rulings on the actual language in a law, not second-guess Congress’s intent.  In order for the rule of law to survive, words must have meaning.  They point out that Congress specifically chose to authorize billions of dollars in subsidies as an incentive for states to establish their own health care marketplaces.  Congress wanted state involvement.  That was its specific intent, and the court should not, in effect, rewrite the law. 

Indeed, in his dissent, referring to the law’s words, “established by the State,” Justice Antonin Scalia, wrote, “It is hard to come up with a reason to use these words other than the purpose of limiting credits to state exchanges.”

"We really should start calling the law SCOTUScare," he added, referencing to the current ruling combined with the court’s earlier 2012 decision upholding the constitutionality of the law.  In the earlier case, the high court upheld by a vote of 5 to 4 the individual mandate to buy health insurance or pay a “penalty” by interpreting the law’s term “penalty” as a tax – thus authorizing the law under Congress's taxing power.

The current system will now remain in place, with subsidies available in all 50 states.  Currently about 11.4 million Americans are enrolled in private health coverage through state and federal marketplaces under the Affordable Care Act, with 86 percent of them receiving financial assistance from the federal government to help pay premiums.

In California, more than 1.8 million people have enrolled in health insurance under Covered California, which estimates that in 2014 it provided about $426 per month in subsidies per enrolled household. 

The Catholic Church has long supported access to health care for all and insisted that good health care should respect and support the well-being of all persons, especially those who are the most vulnerable.  The ACA has expanded coverage to millions of uninsured and underinsured in our communities but it has significant sections, such as mandated contraception and abortion coverage, which are contrary to Catholic teachings.