In a ruling that just came down, the Supreme Court ruled in favor of the Obama Administration and against the plaintiffs in King v Burwell.
The Court ruled 6-3, with Thomas, Scalia, and Alito dissenting.
The opinion was written by Chief Justice John Roberts, who also authored the opinion in the previous case concerning the individual mandate. His strongly worded opinion included this: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them…[the decision will] avoid the type of calamitous result that Congress plainly meant to avoid.”
The King v Burwell case was based on six words in PPACA, namely “an Exchange established by the State”, with the plaintiffs contending “the federal government isn’t allowed to provide subsidies to the residents of states that refused to establish health insurance exchanges under the law.” (quote from HuffPo).
There are 37 states where the federal exchange is operational; losing the subsidies would have increased members’ costs by an average of 417% in the ten states that would have been most affected.
Opponents of ACA said these words meant subsidies were illegal and must end, while proponents averred that this was just a small misstatement in the original language.
While this may appear as a defeat for GOP opponents, it may well be a decision that GOP politicians are privately relieved to see. If the Court had ruled in favor of the plaintiffs, the subsidies in the majority of states would be thrown out – or at least would be ended unless a legislative fix was authored either on a Federal or state level. If these efforts had not borne fruit, and there’s a lot of doubt they would have, GOP politicians running for office would have faced many voters angry that their subsidies were gone, along with their health insurance.
As most of the would-have-been-affected states are GOP strongholds, this would have been bad news indeed in a Presidential election year.
What does this mean for you?
Not much – unless you work for a health plan…
Of course, this guy is pretty happy…
ACA continues, and while we may see some additional legal challenges, they will be minor at best, and nowhere near the significance of this decision.
If you work for a health plan, there’s a huge sigh of relief. The opposite decision would have murdered health plan stocks, thrown markets into chaos, and led to an administrative cluster-mess.
Oh, and if you own health care stocks, it’s a pretty great day, with three big health care provider stocks up close to double digits.