S

The King v. Burrell case was all about the letter s ...or capital S




Internal Revenue Code section 36B, enacted as part of the ACA, includes the following provision:

In the case of an applicable taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the premium assistance credit amount of the taxpayer for the taxable year.

(2) (a) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 [1] of the Patient Protection and Affordable Care Act, [...][20]

Opinion of the Court[edit]

On June 25, 2015 the Supreme Court issued its ruling, written by Chief Justice Roberts, rejecting the challenge to the act. The Court noted that previous attempts to reform health care insurance "encouraged people to wait until they got sick to buy insurance" resulting in "an economic 'death spiral': premiums rose, the number of people buying insurance declined, and insurers left the market entirely."

It further noted that in 2006 "Massachusetts discovered a way to make the guaranteed issue and community rating requirements work—by requiring individuals to buy insurance and by providing tax credits to certain individuals to make insurance more affordable." and that "the Affordable Care Act adopts a version of the three key reforms that made the Massachusetts system successful."

The Court found that the Chevron test "does not provide the appropriate framework here." and also rejected the Court of Appeals approach of deferring to the IRS: "The tax credits are one of the Act’s key reforms and whether they are available on Federal Exchanges is a question of deep 'economic and political significance'; had Congress wished to assign that question to an agency, it surely would have done so expressly. And 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." It concluded that it is "the Court's task to determine the correct reading of Section 36B."

Citing FDA v. Brown & Williamson Tobacco Corp, the Court noted that "when deciding whether the language is plain, the Court must read the words 'in their context and with a view to their place in the overall statutory scheme.'"


When read in context, the phrase "an Exchange established by the State under [42 U. S. C. §18031]" is properly viewed as ambiguous. The phrase may be limited in its reach to State Exchanges. But it could also refer to all Exchanges—both State and Federal—for purposes of the tax credits. If a State chooses not to follow the directive in Section 18031 to establish an Exchange, the Act tells the Secretary of Health and Human Services to establish "such Exchange." §18041. And by using the words "such Exchange," the Act indicates that State and Federal Exchanges should be the same. But State and Federal Exchanges would differ in a fundamental way if tax credits were available only on State Exchanges—one type of Exchange would help make insurance more affordable by providing billions of dollars to the States' citizens; the other type of Exchange would not.

Having found the the text ambiguous, the Court, citing United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, looked "to the broader structure of the Act to determine whether one of Section 36B's 'permissible meanings produces a substantive effect that is compatible with the rest of the law.'" It rejected "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. Under petitioners' reading, the Act would not work in a State with a Federal Exchange. As they see it, one of the Act’s three major reforms—the tax credits—would not apply. And a second major reform—the coverage requirement—would not apply in a meaningful way, because so many individuals would be exempt from the requirement without the tax credits. If petitioners are right, therefore, only one of the Act's three major reforms would apply in States with a Federal Exchange. The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits. It thus stands to reason that Congress meant for those provisions to apply in every State as well."[1]

By choosing to resolve the ambiguous language of the statute by looking at the purpose of the statute as a whole rather than by applying the Chevron doctrine, the Court's decision precludes the possibility of the IRS reversing its decision to have subsidies available on the federally-run exchange in the future.

Dissent[edit]

In a dissent joined by Justices Thomas and Alito, Justice Scalia wrote: "The Court holds that when the Patient Protection and Affordable Care Act says 'Exchange established by the State it means 'Exchange established by the State or the Federal Government.' That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so."[1]
https://en.wikipedia.org/wiki/King_v._Burwell