More than 160,000 Hoosiers will keep their Obamacare health insurance subsidies under a ruling Thursday from the U.S. Supreme Court.
The high court upheld a decision by the Internal Revenue Service to provide tax breaks to citizens who buy insurance through local health exchanges – even if those marketplaces are operated by the federal government.
The original law said those subsidies are to be available to people who purchase insurance through state-based exchanges. The court said that can be interpreted to mean state or federal exchanges.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John Roberts wrote in the majority opinion. “If at all possible, we must interpret the act in a way that is consistent with the former, and avoids the latter.”
The decision is a blow to Obamacare opponents who had hoped the court would rule against the subsidies, which could undermine the law and lead to big changes. Indiana Gov. Mike Pence, a Republican, called it “profoundly disappointing.”
And U.S. Sen. Dan Coats, R-Indiana, said it’s “now clear that it will take a new occupant of the White House to repeal and replace Obamacare.”
“I will continue the fight to work on real health care solutions that lower costs, increase coverage and put patients in charge of their own health care decisions,” Coats said.
The case comes out of Virginia, where four people sued saying they should not have to buy health insurance and should not qualify for a tax credit – because they are in a state that did not create its own exchange. But the decision impacts people in all states with a federal exchange, including thousands of people in Indiana.
“Today’s decision is good news for Hoosiers,” said state Democratic Sens. Karen Tallian of Portage and Tim Lanane, D-Anderson, in a joint statement. “This decision once again legitimizes the legality of the Affordable Care Act and puts to rest any lingering doubt. This has always been about ensuring Hoosiers have access to affordable care and unfortunately, some politicians in our state have lost sight of that.”
Roberts said in the opinion that the reach of the health care law is significant.
“Without the tax credits, the coverage requirement would apply to fewer individuals,” Roberts wrote. “And it would be a lot fewer. In 2014, approximately 87 percent of people who bought insurance on a federal exchange did so with tax credits, and virtually all of those people would become exempt.”
Indiana Attorney General Greg Zoeller filed a similar suit in an effort to protect Hoosier governments from paying penalties for failing to provide minimum health coverage to employees. Those penalties kick in if at least one employee signs up through an exchange and receives the federal subsidy.
Zoeller – representing the state and several school districts – argued that no Indiana employer should be subject to the penalty because Indiana has a federal exchange, not a state exchange.
But the Supreme Court’s ruling Thursday invalidates the argument.
The majority decision said other parts of the Affordable Care Act – which impact how insurance companies can set premium costs – apply to all states but they “only work when combined with the coverage requirement and the tax credits. So it stands to reason that Congress meant for those provisions to apply in every state as well.”
Zoeller said in a statement he’s reviewing the ruling. He said his goal “has never been to cancel IRS tax credit subsidies for our citizens,” although that could have been the impact had his suit been successful.
“But it is vitally important to ensure the national health care system is based on a firm legal and constitutional foundation,” he said.
“Whether the IRS exceeded the authority congress granted was a significant legal question that only the Supreme Court could answer with finality,” said Indiana Solicitor General Thomas Fisher. “The court has ruled the ACA will be interpreted to allow IRS tax credits – and consequently, the tax penalties of the employer mandate – even in states that do not operate their own exchanges. Though many will disagree with this outcome given the plain text of the statute, we all must respect the court’s ruling.”
Indiana Democratic Chairman John Zody said he hopes the decision means that Republican Gov. Mike Pence and others will cease their fight to eliminate the health care law.
“Today, many Hoosiers can breathe easier knowing they will not lose the health care coverage they depend on each day,” Zody said. “The Supreme Court’s opinion on King v. Burwell reaffirms what we already know – commonsense ideas that improve the lives of everyday folks, including Hoosiers, will always win.”
But Pence said the health care law “must be repealed” and states provided with flexibility to craft their own solutions.
“Today’s display of judicial activism by the Supreme Court upholds this deeply flawed law to the detriment of millions of Hoosiers who will continue to be subject to the mandates and taxes in Obamacare,” Pence said.
In a judicial dissent, Justice Antonin Scalia – joined by Justices Clarence Thomas and Samuel Alito – said that it is “quite absurd” a majority of the court determined that when the Affordable Care Act says “exchange established by the state” it means “exchange established by the state or the federal government.”
Scalia said that the majority decision’s reasoning is “largely self-defeating” because it argues that making the tax credits unavailable in state with federal exchanges will have “disastrous economic consequences.”
“If that is so, however, wouldn’t one expect states to react by setting up their own exchanges?” Scalia asked. “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? “
He said the majority “rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare.”
Scott Pelath, House minority leader
“Perhaps this will be the final decision that puts an end to a farce that has lasted far too long, thanks to the vindictive actions of a few who cannot abide by the thought that working families deserve affordable health care.”
U.S. Senate candidate Eric Holcomb, Republican
“Those of us who feel that the Affordable Care Act was the wrong answer to a national problem just can’t continue talking about what we’re against; we now have to present what we’re for.”
President Barack Obama
“So today is a victory for hardworking Americans all across this country whose lives will continue to become more secure in a changing economy because of this law.”
Caitlin Priest, Director of Public Policy at Covering Kids and Families-IN
“Our enrollment staff has seen first-hand how important the Affordable Care Act is to these families, and today’s ruling means that we can continue our work toward achieving a culture of coverage in Indiana.”
Doug Leonard, President, Indiana Hospital Association
“As more individuals gain the security of health coverage, Indiana will reap the benefits of a healthier workforce and population.”
U.S. Sen. Dan Coats, R-Indiana
“I am deeply disappointed that the Supreme Court has decided in favor of the terribly flawed Obamacare law. Millions of Americans will now be forced to continue under a poorly-written and poorly-executed law that is not working for the overwhelming majority of Hoosiers.”
Lesley Weidenbener is an executive editor of TheStatehouseFile.com, a news service powered by Franklin College journalism students.