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A look at what the Supreme Court's health care ruling in King vs. Burwell means

WASHINGTON, DC - JUNE 25: The US Supreme Court is shown after a ruling was announced in favor of the Affordable Care Act. June 25, 2015 in Washington, DC. The high court ruled that the Affordable Care Act may provide nationwide tax subsidies to help poor and middle-class people buy health insurance. [Mark Wilson | Getty Images]
WASHINGTON, DC - JUNE 25: The US Supreme Court is shown after a ruling was announced in favor of the Affordable Care Act. June 25, 2015 in Washington, DC. The high court ruled that the Affordable Care Act may provide nationwide tax subsidies to help poor and middle-class people buy health insurance. [Mark Wilson | Getty Images]
Published Jun. 26, 2015

The Supreme Court ruled that President Barack Obama's health care law may provide nationwide tax subsidies to help poor and middle-class people buy health insurance. Here is some of their reasoning, on both sides:

The bottom line

Chief Justice John Roberts explained why he and five other justices turned back this challenge to the Affordable Care Act:

"In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined — 'to say what the law is.' . . . That is easier in some cases than in others. But in every case we must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan. Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress's plan, and that is the reading we adopt.''

From the majority opinion

Key phrase open to interpretation: The six justices in the majority concluded that the disputed phrase in the Affordable Care Act — "an exchange established by the state" — is ambiguous when read in context, and therefore can be interpreted in different ways. It does not have to be interpreted literally, as meaning that no subsidies are available to people in states that have not set up their own exchanges:

"Anyway, we 'must do our best, bearing in mind the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.' Utility Air Regulatory Group, 573 U. S., at ___ (slip op., at 15) (internal quotation marks omitted). After reading Section 36B along with other related provisions in the Act, we cannot conclude that the phrase 'an Exchange established by the State under (Section 18031)' is unambiguous."

Ruling to avert an insurance 'death spiral': The majority chose to interpret the ambiguous phrase in a way that allows the law to work, rather than cause an upheaval:

"Given that the text is ambiguous, we must turn to the broader structure of the Act to determine the meaning of Section 36B. 'A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme . . . because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law." United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 371 (1988). Here, the statutory scheme compels us to reject petitioners' interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very "death spirals" that Congress designed the Act to avoid.

Roberts says court has final word on interpreting phrase: Usually, under the so-called Chevron doctrine, the courts defer to executive branch agencies charged with carrying out a statute in deciding how to interpret ambiguous provisions. While the Obama administration has interpreted the phrase one way, a future administration opposed to the law might interpret the other way. In this passage, the chief justice forecloses that possibility, saying the court has now definitively interpreted it:

"When analyzing an agency's interpretation of a statute, we often apply the two-step framework announced in Chevron, 467 U. S. 837. Under that framework, we ask whether the statute is ambiguous and, if so, whether the agency's interpretation is reasonable. . . . This is one of those cases. The tax credits are among the Act's key reforms, involving billions of dollars in spending each year and affecting the price of health insurance for millions of people. Whether those credits are available on Federal Exchanges is thus a question of deep 'economic and political significance' that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly. … It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort. … This is not a case for the IRS. It is instead our task to determine the correct reading of Section 36B.''

From the dissenting opinion

Scalia argues for a literal interpretation: Justice Antonin Scalia and two dissenting justices maintained that the disputed phrase in the Affordable Care Act should be interpreted literally and accuses the majority of having a political motive, harkening back to the 2012 ruling upholding the insurance mandate provision of the health care law:

"Words no longer have meaning if an exchange that is not established by a state is 'established by the State.' It is hard to come up with a clearer way to limit tax credits to state exchanges than to use the words 'established by the State.' And it is hard to come up with a reason to include the words 'by the State' other than the purpose of limiting credits to state Exchanges. . . . Under all the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved.''

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Striking down subsidies could lead to more state exchanges: Scalia argues that it is not clear that the provision was not intended to deny subsidies as a way to compel states to set up insurance exchanges:

"Worst of all for the repute of today's decision, the Court's reasoning is largely self-defeating. The Court predicts that making tax credits unavailable in States that do not set up their own Exchanges would cause disastrous economic consequences there. If that is so, however, wouldn't one expect States to react by setting up their own Exchanges? And wouldn't that outcome satisfy two of the Act's goals rather than just one: enabling the Act's reforms to work and promoting state involvement in the Act's implementation? The Court protests that the very existence of a federal fallback shows that Congress expected that some States might fail to set up their own Exchanges. Ante, at 19. So it does. It does not show, however, that Congress expected the number of recalcitrant States to be particularly large. The more accurate the Court's dire economic predictions, the smaller that number is likely to be. That reality destroys the Court's pretense that applying the law as written would imperil 'the viability of the entire Affordable Care Act.' "

'Scotuscare,' anyone?

Justice Scalia quips that the Supreme Court has creatively interpreted the Affordable Care Act so many times that it should be nicknamed "Scotuscare," not "Obamacare'':

"Today's opinion changes the usual rules of statutory interpretation for the sake of the Affordable Care Act. That, alas, is not a novelty. (Justice Scalia describes the two major results of the 2012 health law case: the act's mandate that everyone maintain health insurance or pay a penalty was constitutional as a "tax," and states were free to reject the act's Medicaid expansion without losing all of their existing Medicare funding, as the act said they must.) Having transformed two major parts of the law, the Court today has turned its attention to a third. The Act that Congress passed makes tax credits available only on an 'Exchange established by the State.' This Court, however, concludes that this limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare in light of the court's 'somersaults of statutory interpretation' and 'interpretive jiggery-pokery'' to uphold the law.

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