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Supreme Court Upholds Obamacare Subsidies for Federal Exchanges

By Casey C. Sullivan, Esq. | Last updated on

The Affordable Care Act allows the federal government to provide subsidies to poor and middle-class people purchasing insurance on the federal exchange, the Supreme Court ruled in King v. Burwell today. Opponents to Obamacare had claimed that federal subsidies were, based on the language of the Act, limited to plans purchased on exchanges individual states set up themselves, not those obtained through

The exact language of the Act must yield to its overall intent, the Court decided in its 6-3 decision. Chief Justice Roberts wrote for the majority that, "Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them."

Reading the Act in Context

There's no question that the Affordable Care Act states that federal subsidies are available to those who purchase their insurance on "an exchange established by the state." That language, Roberts, wrote, cannot be taken alone however, and must be interpreted in the "context and structure of the act." That context is Congress' desire to support health insurance markets and the ACA must be interpreted to support that end. That allows the court to read "established by the state" to include exchanges established by the federal government on behalf of the states.

The Court upheld the exchanges, but noted that the Affordable Care Act was an error-riddled bill. Roberts highlighted the Act's "inartful drafting." These include three different sections labeled Section 1563. Those errors should not be fatal, however, and when ambiguous, must yield to the overall structure and intent of Obamacare.


Of course, that approach enraged the Court's leading textualist, Antonin Scalia, whose dissent was joined by Thomas and Alito. The Court's interpretation, he argued, rewrote the Act so deeply that "we should start calling this law SCOTUScare."

Had the case come out differently, more than 6 million people could have lost their insurance subsidies, most of them in "red states" where the need for subsidies was greatest. In fact, that was widely expected to be the result. Last week, Politico surveyed the potential fallout for GOP candidates should the subsidies fail. The New York Times, just two days ago, examined how a loss would impact Obama's legacy.

Instead, Obamacare now looks stronger and more settled than ever. Unlike in their decision supporting the ACA's individual mandate, today's majority decision was confident, assured and could almost be read as establishing a judicial requirement to support to the Act where possible. The idea that Obamacare can be undone in the Court, rather than Congress, may finally be expiring.

Certainly President Obama hopes that's the outcome -- in his comments after the decision was released, he declared, "after multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay."

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