High court rescues Obamacare (again)

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By a 6-3 decision, the U.S. Supreme Court has upheld the Obamacare subsidies that have helped millions of people buy health insurance through the federal marketplace at HealthCare.gov.

“This was a good day for America,” President Barack Obama declared, reacting to Thursday’s verdict.

In a case that had threatened to throw the health insurance market into chaos, the nation’s highest court has ruled against plaintiffs who argued that the money-saving tax credits should not be available in the more than 30 states relying on the federal exchange website.

Their challenge came down to four little words: a passage in the massive Obama health care law that says consumers are eligible for the subsidies when they obtain health insurance through an exchange “established by the state.” Only 13 states and the District of Columbia are operating their own exchanges.

The Obama administration said that the subsidies were intended for consumers in all states, and lawmakers and others involved in writing the law had described the wording in question as a “drafting error.”

What the court said

In the majority were Chief Justice John Roberts and Justices Anthony Kennedy, Stephen Breyer, Ruth Bader Ginsburg, Sonya Sotomayor and Elena Kagan.

“When read in context, the phrase ‘an exchange established by the state’ … is properly viewed as ambiguous,” their ruling reads. “The phrase may be limited in its reach to state exchanges. But it could also refer to all exchanges — both state and federal — for purposes of the tax credits.”

The majority opinion also raises the specter of a health insurance “death spiral” had the subsidies been scrapped. Analysts warned that consumers would drop their coverage rather than pay their much higher premiums without the tax credits. Only people in the poorest health would keep their exchange plans, forcing insurers to raise rates substantially and driving even more consumers out of the market.

In a dissent, Justices Antonin Scalia, Clarence Thomas and Samuel Alito say that 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. That philosophy ignores the American people’s decision to give Congress ‘all legislative powers’ enumerated by the Constitution.”

Case had sparked fears of rate spikes

An analysis of federal data by The Associated Press estimated that a ruling against the administration would have cost roughly 8 million Americans up to $24 billion a year.

A report released earlier this month by the consulting firm Avalere Health said consumers with exchange plans would have had to pay an additional $3,300 per year, on average, without the subsidies. Researchers at the RAND Corp. said 8 million Americans would become uninsured and that premiums in the affected states could spike by 47 percent if the tax credits were lost.

“America would have gone backwards,” the president said Thursday, during an appearance in the White House Rose Garden. “That’s not what we do. That’s not what America does. We move forward.”

The impact of a decision gutting the subsidies would have been almost immediate. Supreme Court rulings usually go into effect after 25 days, which would have provided lawmakers with little time to react.

The 3rd Obamacare case before the Supremes

The court’s action is unlikely to change the minds of health reform opponents.

“Obamacare is fundamentally broken, increasing health care costs for millions of Americans” House Speaker John Boehner said, in a statement. “Today’s ruling doesn’t change that fact.”

The case was the third involving Obamacare to reach the nation’s highest court since the health care law was signed more than five years ago. And it’s the second time that the justices have saved President Barack Obama’s signature domestic policy achievement.

In 2012, the Supreme Court narrowly upheld the “individual mandate,” the law’s backbone that requires most Americans to carry health insurance. But the court at that time also allowed states to opt out of the section of the law calling for an expansion of Medicaid to cover more poor Americans.

Last year, the justices — in another close ruling — ruled that for-profit companies that are family owned and operated may ignore Obamacare’s contraceptive coverage requirement on religious grounds.