U.S. Supreme Court Upholds Affordable Care Act Health Care Subsidies – What Health Care Providers Should Know

On June 25, 2015, the Supreme Court of the United States held that the Affordable Care Act (ACA) authorizes federal tax credits for eligible Americans in states with their own health care exchanges, as well as in the thirty-four states with federal marketplaces.  These marketplaces, known as “exchanges,” are online venues through which eligible Americans can purchase their health insurance.  The intent of the ACA was for each state to set up its own exchange; however, when several states did not do so, the federal government set up exchanges for them.  Additionally, the ACA authorizes the federal government to provide subsidies for people who buy their health insurance through an exchange.  At issue was an ACA provision stating that the subsidies would be available to people who buy their insurance from an exchange “established by the State.”  The plaintiffs argued that the subsidies should not be available to people who buy their health insurance from a federal exchange, because the federal government is not a State.  In an opinion written by Chief Justice Roberts, the majority reasoned that a strict reading of the word “State” was at odds with Congress’s intent to provide health care for all Americans. One ACA provision, for example, refers to an individual who “resides in the State that established the Exchange,” which would disqualify the millions of Americans who reside in states that did not set up their own exchanges.  The term “State,” the Court concluded, must thus refer to both state and federal governments, and subsidies should be made available for both state and federal exchanges.

This Supreme Court decision will provide certainty for health care providers regarding expected reimbursement rates and regulation from the government.  There are no further lawsuits currently pending on the ACA and, therefore, should be no further major changes to the law based upon judicial challenges.

About the Author

Patricia Mullins-Freeman

Patricia (Peezy) Mullins-Freeman’s practice focuses primarily on employment law and health care law. Peezy also works with many employers in defense and investigation of... More about Patricia Mullins-Freeman

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