Supreme Court Upholds ACA Subsidies in All States
Written by Editor   
Thursday, June 25, 2015 11:23 AM
Quick Brief:  The Supreme Court has upheld the eligibility for government subsidies for 34 states that did not establish a state marketplace.


The Affordable Care Act (ACA) avoided a potential death blow today when the Supreme Court ruled that citizens in 34 states that did not establish their own insurance marketplaces, or exchanges, are eligible for premium subsidies under the 2010 law.

The decision offers relief to 6.4 million Americans in those 34 states who have purchased private coverage with the help of subsidies.

For the second time now, the ACA has survived Supreme Court scrutiny. The challenge to the subsidies centered on a section of the law saying that this assistance was intended for individuals buying a health plan through an exchange "established by the state." Only 16 states opted for their own exchange. The remaining 34 states defaulted to a federally established exchange that uses the enrollment website called

In 2012, the Internal Revenue Service (IRS) interpreted the law as a whole to mean that qualifying citizens in those 34 hold-out states also could receive subsidies, which take the form of a tax credit. ACA critics challenged that policy in several federal lawsuits, saying that the government should follow the letter of the law and limit subsidies to people obtaining coverage through an exchange "established by the state."

When the Obama administration defended the IRS ruling in those cases, it said that the law treated federally established exchanges as proxies for those created by states.  Two federal appellate courts rendered conflicting decisions on the legality of the subsidies, prompting the Supreme Court to hear one of the cases, King v. Burwell.

The Supreme Court has now preserved the status quo.