As we previously reported, one of the greatest challenges to the Affordable Care Act (“ACA” or “Act”) came in King v. Burwell, otherwise known as the Obamacare subsidy lawsuit, where the plaintiffs challenged the ACA subsidies issued by the IRS in States that use the federal exchange (www.HealthCare.gov) to offer health insurance rather than their own State-run exchanges. A ruling in the challengers’ favor would have dismantled the ACA by essentially causing its financial collapse. This near-collapse of the Act was avoided yesterday when the Supreme Court issued its opinion, upholding the subsidies and finding that Americans are entitled to keep the tax subsidies that help defray the cost of insurance.
In a 6-3 opinion, the Supreme Court agreed that subsidies were always meant to be distributed through both Federal and State channels, and that the goal of the law was to cover all Americans. The decision comes after the Court found, in National Federation of Independent Business v. Seleblius, that the individual mandate (the portion of the Act that requires Americans to buy health insurance or pay a penalty) was constitutional.