The U.S. Supreme Court’s decision upholding tax credits for health insurance is in accord with one of the most basic principles of law: Statutes should be interpreted to fulfill the intent of the legislature.
Congress clearly intended for the Affordable Care Act to make health insurance available for almost all Americans. The Thursday decision in King v. Burwell allows millions of Americans to continue to have tax credits and access to health care. A contrary ruling likely would have collapsed the health care exchanges – surely not what Congress wanted to happen.
Prior to the Affordable Care Act, about 50 million Americans were without health care coverage. For the poorest among us, the act required that states receiving Medicaid funds provide coverage to those within 133 percent of the federal poverty level. For those above the poverty level but without adequate resources to buy insurance, the act creates federal tax credits to individuals who enroll in a health plan “through an Exchange established by the State.”
The problem, though, is that only 16 states, including California, have established their own exchanges. In the other 34 states, the exchanges are created by the federal government. The issue before the Supreme Court was whether those who purchased health insurance from a federally created exchange – an estimated 6.5 million Americans – could get tax credits.
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The court ruled 6-3 that those who purchase insurance from a federal exchange also are entitled to tax credits. In the majority opinion, Chief Justice John Roberts noted the ambiguity in the statute. It says tax credits are available if health insurance is purchased from a state-established exchange, but it also says that the federal government shall create “such” an exchange if a state does not do so. Most important, Roberts stressed that Congress’ clear purpose was to make tax credits available to those who otherwise could not afford health insurance.
In fact, denying such tax credits would almost surely collapse the health care exchanges created by the federal government and maybe all of them in the country. If individuals could not get tax credits and purchase insurance, the risk pools of the exchanges would be significantly altered. A Rand study has estimated that costs of health insurance in the federally created exchanges could increase by as much as 47 percent if these individuals no longer could participate without the tax credits. Many then would be priced out of being able to afford health insurance on the exchanges, which would further limit the risk pools and create a “death spiral” that would undermine these exchanges.
The court rightly said that Congress surely could not have intended to give states the ability to destroy the Affordable Care Act by refusing to create health care exchanges. Roberts concluded his majority opinion by declaring: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
That is exactly what the court did in upholding tax credits for all who purchase insurance. It is easy to focus on this case as purely a question of law as to how a federal statute should be interpreted.
But that would ignore the crucial human dimension of this case. Millions of people will continue to have access to health care because of this decision. Lives will be saved and suffering will be lessened. This is exactly what Congress intended.
Erwin Chemerinsky is dean of the University of California, Irvine, School of Law.