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Supreme Court Upholds Federal Obamacare Subsidies

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On Thursday, the United States Supreme Court ruled 6-3 in favor of the Obama administration in King v. Burwell, a lawsuit which challenged the IRS’ rewriting of key provisions of the Affordable Care Act.

The case would have caused roughly 61,000 Mainers to lose federal subsidies, but would have freed over 72,000 Maine citizens from the individual mandate, and over 387,000 workers from the employer mandate.

At issue in the case was whether or not insurance plans sold through the federal insurance market, known as healthcare.gov, were eligible for government subsidies.

The subsidies – which are available for individuals who earn up to 400 percent of the federal poverty level – cover roughly 72 percent of the cost of an individual’s insurance plan.

The plaintiffs alleged that the ACA only intended for these subsidies to be used on plans which were purchased through state-based exchanges. They pointed to provisions of the ACA which explicitly stated that individuals were only eligible to receive an insurance subsidy if they purchased a plan through a market “established by the state.”

This would have created an incentive for states to establish their own insurance marketplaces, in order to allow their citizens to receive insurance subsidies.

However, the Supreme Court, in its second ruling which preserves the ACA, ruled in favor of the IRS and the Obama administration, who had allowed subsidies to flow through the federal marketplace because just 24 states established their own exchange.

Chief Justice John Roberts, in the majority opinion, asserted that a “fair construction” of the statute involved looking at more than individual provisions and sections of the text. He opined that although a plain text reading of the ACA did not allow for federal subsidies, a ruling against the Obama administration would cause a “death spiral” of increasing cost and decreasing coverage.

Roberts admitted that the ACA contains many examples of “inartful drafting,” but ruled that the Congress never meant to withhold subsidies from individuals who utilize the federal exchange.

Justices Scalia, in his dissent, strongly criticized the majority for supporting and rewriting the law, and went so far as claiming that Obamacare should now be referred to as “SCOTUScare.”

About Patrick Marvin

Patrick Marvin is a former Policy Analyst for The Maine Heritage Policy Center. He holds a Masters Degree from the University of New Hampshire, and has an extensive background in analysis and research.

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