SCOTUSblog: Court backs Obama administration on health-care subsidies: In Plain English

Since it was enacted in 2010, Republicans in Congress have voted dozens of times to repeal the Affordable Care Act, President Barack Obama’s signature legislative achievement. With no success on the legislative front, opponents of the ACA have tried their luck in the courts, but that avenue hasn’t proven any more fruitful. Three years ago, the Court upheld the Act’s individual mandate, which compels everyone to buy health insurance or pay a penalty, against a challenge based on the argument that Congress lacked the power to impose such a requirement. And today the Court turned back a challenge to the subsidies that many people receive to pay for their health insurance, ending a case that had the potential to seriously undermine the ACA, if not dismantle it altogether. Let’s talk about today’s decision in King v. Burwell in Plain English.

To understand what’s going on in this case and why today’s decision matters, it may be useful to start with a little bit of background about the Affordable Care Act more generally. There are three key features to the law. The first is what’s known as the “non-discrimination rule”: health insurance companies must sell insurance to everyone, even people who are currently sick or have a history of chronic illnesses, at a reasonable price.

The second is the individual mandate, which requires everyone to obtain health insurance or pay a penalty. This provision ensures that there are enough healthy people in the insurance pool to balance out the sick people: if healthy people aren’t required to buy health insurance, the thinking goes, but they know (because of the non-discrimination rule) that they can do so at any time, they will wait and only buy insurance if they get sick.

The subsidies are the third pillar of the system created by the ACA. Many people get health insurance through their employers, but the people who don’t – because they are self-employed or unemployed, for example – need some way to buy it. So the ACA provides for the creation of an online marketplace, known as an “exchange,” in each state. The drafters of the ACA had originally expected each state to set up its own exchange, but after many states declined to do so, the federal government (as authorized by another provision of the ACA) stepped in to create them instead. And to ensure that everyone can afford the health insurance that they are now required to buy, the ACA also provides for subsidies for people who buy their health insurance through an exchange. Here is the heart of the dispute: one provision of the ACA indicates that subsidies are only available to people who purchase their health insurance on an exchange “established by the State.” The plaintiffs in the case argued that this means that subsidies are not available to the millions of people who purchased their health insurance on an exchange that was created by the federal government, because the federal government is not a “State.”
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http://www.scotusblog.com/2015/06/court-backs-obama-administration-on-health-care-subsidies-in-plain-english