Supreme Court Looks at Big Picture, Affirms ACA Subsidies

The U.S. Supreme Court in June upheld a key provision of the Affordable Care Act (ACA), permitting continued use of tax-credit subsidies to pay for health insurance premiums for low-income Americans.

Writing for the majority in a 6-to-3 decision in the King v. Burwell case, Chief Justice John Roberts rejected arguments claiming the subsidies applied only in states with their own exchanges and not in the 34 states that used federal insurance exchanges.

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” said Roberts, choosing to concentrate on the greater context of the law rather than a narrow interpretation of text.

Ruling for the plaintiffs would have left millions of people without health insurance.

“We are pleased that the Supreme Court upheld subsidies for more than six million people,” said APA President Renée Binder, M.D., in a statement. “Today’s decision means these Americans will continue to receive vital mental health benefits as guaranteed by the ACA.”

The ACA rests on three interlocking supports, all of which must be in place for the system to work successfully, noted Roberts. Those included guaranteed coverage for all regardless of prior health status, a mandate for individuals to purchase the insurance or pay a penalty, and subsidies to help people with lower incomes purchase health insurance on exchanges.

Without the subsidies, however, fewer people would be covered and premiums for the rest would rise, pricing still more out of the market, until the whole edifice collapsed, he said.

“The combination of no tax credits and an ineffective coverage requirement could well push a state’s individual insurance market into a death spiral,” wrote Roberts. “It is implausible that Congress meant the Act to operate in this manner.”

In states that did not set up their own exchanges, the federal government is empowered to operate its own exchange. Arguments in King v. Burwell hinged on whether the phrase “state exchanges” covered those federal entities as well.

Acknowledging that there were “more than a few examples of inartful drafting” in the ACA, the court’s majority chose to look at the “broader structure of the Act” in holding for the government and allowing “tax credits for insurance purchased on any Exchange created under the Act.”

The chief justice was joined by Justices Sonia Sotomayor, Elena Kagan, Ruth Bader Ginsburg, Stephen Breyer, and Anthony Kennedy. Justices Samuel Alito and Clarence Thomas sided with Justice Antonin Scalia, whose 20-page dissent referred to Roberts’ reasoning as “interpretive jiggery-pokery” and “[p]ure applesauce.”

In fact, the court apparently skirted its usual way of deciding administrative law, in this case involving the Internal Revenue Service, said Sara Rosenbaum, J.D., a professor of health policy at the George Washington University Milken Institute School of Public Health.

“In an ambiguous statute, when an agency has been given the power by Congress to decide a question, the courts usually defer to the agency,” she said. “The court took deference off the table and looked at what the law did or did not do. No executive branch decision can now change the subsidies; only Congress can do that. So subsidies are here to stay unless Congress changes the law.”

The decision has significant implications for people with mental illness, said Harsh K. Trivedi, M.D., M.B.A., chair of APA’s Council on Healthcare Systems and Financing.

“For many of our patients, expansion of the ACA has provided a crucial lifeline to access needed health care services, to better engage in treatment, and to experience not just recovery, but to be well again,” said Trivedi, an associate professor and vice chair for clinical affairs in the Department of Psychiatry at Vanderbilt University in Nashville.

For his part, President Barack Obama said it was time to move past the controversy over the law with which he is so identified.

“The ACA is here to stay,” he said in remarks televised from the White House shortly after the decision was handed down. “This was a good day for America.”

However, the ACA may face still more court challenges, and several Republican politicians vowed to continue their efforts to repeal it.

APA joined with other medical professional organizations like the AMA and the American Academy of Pediatrics in backing the court’s decision.

“We will continue to work with Congress, the administration, and the medical community to ensure that mental illness and substance use disorders are treated the same as other illnesses as outlined in the ACA,” said APA CEO and Medical Director Saul Levin, M.D., M.P.A. ■