On June 25, 2015, the U.S. Supreme Court rendered a decision in the highly-anticipated Patient Protection and Affordable Care Act (“ACA”) case, King et al. v. Burwell, Secretary of Health and Human Services, et al, 576 U.S. ____ (2015) (slip op.). In King, the Court decided whether the ACA intended for tax credits to be available to individuals who purchased their insurance through either a state or federal exchange or just through a state exchange. Exchanges are places “in each State where people can shop for insurance, usually online,” and whose creation are required by the ACA. Ultimately, the Court held both state and federal exchanges could offer tax credits to purchasers.

The King case was brought by four Virginia residents who did not want to purchase health insurance on the federal exchange established by the federal government in Virginia. The issue before the Court centered on four words in the ACA, an “Exchange established by the State” and if that phrase allows federal exchanges established by the federal government to offer tax credits. Whether federal exchanges, such as the one offered in Virginia, qualified for the tax credit affected whether the plaintiffs were required to buy health insurance.

The plaintiffs argued that Virginia’s exchange should not qualify for tax credits, because it was not an “Exchange established by the State.” If Virginia’s federally-established exchange did not qualify for tax credits, as they argued, then the plaintiffs would not receive a tax credit, the cost of insurance would be more than eight percent (8%) of their income, and the plaintiffs would not be required to purchase health insurance. If, however, Virginia’s exchange did qualify for the tax credits, a stance supported by the IRS, then plaintiffs would receive a tax credit, making the cost of insurance less than eight percent (8%) of their income, and subjecting the plaintiffs to the purchasing requirement. The IRS promulgated a rule allowing both state and federal exchanges to offer tax credits, taking the position that such language allowed tax credits to be available on “an Exchange,” “regardless of whether the Exchange is established and operated by a State” or the federal government.

The plaintiffs filed suit to challenge the IRS Rule that made tax credits available to both state and federal exchanges. On appeal, the Fourth Circuit Court of Appeals deferred to the IRS’s interpretation under the principle of administrative deference, and agreed that federal exchanges could offer tax credits. On the same day, the Court of Appeals for the District of Columbia held the IRS Rule was contrary to the ACA. The disagreement between appellate courts prompted the Supreme Court to weigh in.

While the Court considered the plain meaning of the phrase at issue, it did so with an eye towards “the words ‘in their context and with a view to their place in the overall statutory scheme.’” Considering the overall context, the Court stated that the phrase was ambiguous. Critically, the Court opined that the ACA contained “more than a few examples of inartful drafting,” and “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.” In finding the ACA meant for tax credits to be available through both state and federal exchanges, the Court pointed out that the opposing view was inconsistent with the ACA’s goal and would cause “the type of calamitous result that Congress plainly meant to avoid.”

In rejecting the plaintiffs’ argument, the Court concluded that a strict reading would result in states where only one of the three goals of the ACA could be effectuated, thereby undermining the purpose of the ACA. The Court noted that plaintiffs’ plain meaning arguments were strong, but “the context and structure of the Act compel[ed] [the Court] to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” Thus, the statutory scheme compelled the Court to reject plaintiffs’ “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 [ACA] to avoid.” The majority opinion concluded with inspirational words regarding respecting the role of the legislature and protecting the legislation they passed.

Interestingly, the Court failed to give any deference to the IRS Rule. Instead, the Court found this was an extraordinary case where there existed “reason to hesitate before concluding that Congress has intended” to implicitly delegate to an agency the ability to fill-in statutory gaps. The Court felt that had Congress intended to assign the question of tax credits to the IRS, Congress would have done so expressly due to the “deep ‘economic and political significance’” of the matter. Specifically, the Court noted that the IRS “has no expertise in crafting health insurance policy of this sort.” This aspect of the decision could act to curb future actions of administrative agencies when those actions pertain to areas outside of their designated expertise.

Overall, the bottom line of the King decision is that the Court upheld the status quo of the ACA and the insurance markets. The current “Exchanges,” both state and federal, can continue to operate in the same manner as before. The Court’s opinion eliminates the need for a legislative stop-gap

On June 25, 2015, the U.S. Supreme Court rendered a decision in the highly-anticipated Patient Protection and Affordable Care Act (“ACA”) case, King et al. v. Burwell, Secretary of Health and Human Services, et al, 576 U.S. ____ (2015) (slip op.). In King, the Court decided whether the ACA intended for tax credits to be available to individuals who purchased their insurance through either a state or federal exchange or just through a state exchange. Exchanges are places “in each State where people can shop for insurance, usually online,” and whose creation are required by the ACA. Ultimately, the Court held both state and federal exchanges could offer tax credits to purchasers.

The King case was brought by four Virginia residents who did not want to purchase health insurance on the federal exchange established by the federal government in Virginia. The issue before the Court centered on four words in the ACA, an “Exchange established by the State” and if that phrase allows federal exchanges established by the federal government to offer tax credits. Whether federal exchanges, such as the one offered in Virginia, qualified for the tax credit affected whether the plaintiffs were required to buy health insurance.

The plaintiffs argued that Virginia’s exchange should not qualify for tax credits, because it was not an “Exchange established by the State.” If Virginia’s federally-established exchange did not qualify for tax credits, as they argued, then the plaintiffs would not receive a tax credit, the cost of insurance would be more than eight percent (8%) of their income, and the plaintiffs would not be required to purchase health insurance. If, however, Virginia’s exchange did qualify for the tax credits, a stance supported by the IRS, then plaintiffs would receive a tax credit, making the cost of insurance less than eight percent (8%) of their income, and subjecting the plaintiffs to the purchasing requirement. The IRS promulgated a rule allowing both state and federal exchanges to offer tax credits, taking the position that such language allowed tax credits to be available on “an Exchange,” “regardless of whether the Exchange is established and operated by a State” or the federal government.

The plaintiffs filed suit to challenge the IRS Rule that made tax credits available to both state and federal exchanges. On appeal, the Fourth Circuit Court of Appeals deferred to the IRS’s interpretation under the principle of administrative deference, and agreed that federal exchanges could offer tax credits. On the same day, the Court of Appeals for the District of Columbia held the IRS Rule was contrary to the ACA. The disagreement between appellate courts prompted the Supreme Court to weigh in.

While the Court considered the plain meaning of the phrase at issue, it did so with an eye towards “the words ‘in their context and with a view to their place in the overall statutory scheme.’” Considering the overall context, the Court stated that the phrase was ambiguous. Critically, the Court opined that the ACA contained “more than a few examples of inartful drafting,” and “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.” In finding the ACA meant for tax credits to be available through both state and federal exchanges, the Court pointed out that the opposing view was inconsistent with the ACA’s goal and would cause “the type of calamitous result that Congress plainly meant to avoid.”

In rejecting the plaintiffs’ argument, the Court concluded that a strict reading would result in states where only one of the three goals of the ACA could be effectuated, thereby undermining the purpose of the ACA. The Court noted that plaintiffs’ plain meaning arguments were strong, but “the context and structure of the Act compel[ed] [the Court] to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” Thus, the statutory scheme compelled the Court to reject plaintiffs’ “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 [ACA] to avoid.” The majority opinion concluded with inspirational words regarding respecting the role of the legislature and protecting the legislation they passed.

Interestingly, the Court failed to give any deference to the IRS Rule. Instead, the Court found this was an extraordinary case where there existed “reason to hesitate before concluding that Congress has intended” to implicitly delegate to an agency the ability to fill-in statutory gaps. The Court felt that had Congress intended to assign the question of tax credits to the IRS, Congress would have done so expressly due to the “deep ‘economic and political significance’” of the matter. Specifically, the Court noted that the IRS “has no expertise in crafting health insurance policy of this sort.” This aspect of the decision could act to curb future actions of administrative agencies when those actions pertain to areas outside of their designated expertise.

Overall, the bottom line of the King decision is that the Court upheld the status quo of the ACA and the insurance markets. The current “Exchanges,” both state and federal, can continue to operate in the same manner as before. The Court’s opinion eliminates the need for a legislative stop-gap

On June 25, 2015, the U.S. Supreme Court rendered a decision in the highly-anticipated Patient Protection and Affordable Care Act (“ACA”) case, King et al. v. Burwell, Secretary of Health and Human Services, et al, 576 U.S. ____ (2015) (slip op.). In King, the Court decided whether the ACA intended for tax credits to be available to individuals who purchased their insurance through either a state or federal exchange or just through a state exchange. Exchanges are places “in each State where people can shop for insurance, usually online,” and whose creation are required by the ACA. Ultimately, the Court held both state and federal exchanges could offer tax credits to purchasers.

The King case was brought by four Virginia residents who did not want to purchase health insurance on the federal exchange established by the federal government in Virginia. The issue before the Court centered on four words in the ACA, an “Exchange established by the State” and if that phrase allows federal exchanges established by the federal government to offer tax credits. Whether federal exchanges, such as the one offered in Virginia, qualified for the tax credit affected whether the plaintiffs were required to buy health insurance.

The plaintiffs argued that Virginia’s exchange should not qualify for tax credits, because it was not an “Exchange established by the State.” If Virginia’s federally-established exchange did not qualify for tax credits, as they argued, then the plaintiffs would not receive a tax credit, the cost of insurance would be more than eight percent (8%) of their income, and the plaintiffs would not be required to purchase health insurance. If, however, Virginia’s exchange did qualify for the tax credits, a stance supported by the IRS, then plaintiffs would receive a tax credit, making the cost of insurance less than eight percent (8%) of their income, and subjecting the plaintiffs to the purchasing requirement. The IRS promulgated a rule allowing both state and federal exchanges to offer tax credits, taking the position that such language allowed tax credits to be available on “an Exchange,” “regardless of whether the Exchange is established and operated by a State” or the federal government.

The plaintiffs filed suit to challenge the IRS Rule that made tax credits available to both state and federal exchanges. On appeal, the Fourth Circuit Court of Appeals deferred to the IRS’s interpretation under the principle of administrative deference, and agreed that federal exchanges could offer tax credits. On the same day, the Court of Appeals for the District of Columbia held the IRS Rule was contrary to the ACA. The disagreement between appellate courts prompted the Supreme Court to weigh in.

While the Court considered the plain meaning of the phrase at issue, it did so with an eye towards “the words ‘in their context and with a view to their place in the overall statutory scheme.’” Considering the overall context, the Court stated that the phrase was ambiguous. Critically, the Court opined that the ACA contained “more than a few examples of inartful drafting,” and “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.” In finding the ACA meant for tax credits to be available through both state and federal exchanges, the Court pointed out that the opposing view was inconsistent with the ACA’s goal and would cause “the type of calamitous result that Congress plainly meant to avoid.”

In rejecting the plaintiffs’ argument, the Court concluded that a strict reading would result in states where only one of the three goals of the ACA could be effectuated, thereby undermining the purpose of the ACA. The Court noted that plaintiffs’ plain meaning arguments were strong, but “the context and structure of the Act compel[ed] [the Court] to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” Thus, the statutory scheme compelled the Court to reject plaintiffs’ “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 [ACA] to avoid.” The majority opinion concluded with inspirational words regarding respecting the role of the legislature and protecting the legislation they passed.

Interestingly, the Court failed to give any deference to the IRS Rule. Instead, the Court found this was an extraordinary case where there existed “reason to hesitate before concluding that Congress has intended” to implicitly delegate to an agency the ability to fill-in statutory gaps. The Court felt that had Congress intended to assign the question of tax credits to the IRS, Congress would have done so expressly due to the “deep ‘economic and political significance’” of the matter. Specifically, the Court noted that the IRS “has no expertise in crafting health insurance policy of this sort.” This aspect of the decision could act to curb future actions of administrative agencies when those actions pertain to areas outside of their designated expertise.

Overall, the bottom line of the King decision is that the Court upheld the status quo of the ACA and the insurance markets. The current “Exchanges,” both state and federal, can continue to operate in the same manner as before. The Court’s opinion eliminates the need for a legislative stop-gap

On June 25, 2015, the U.S. Supreme Court rendered a decision in the highly-anticipated Patient Protection and Affordable Care Act (“ACA”) case, King et al. v. Burwell, Secretary of Health and Human Services, et al, 576 U.S. ____ (2015) (slip op.). In King, the Court decided whether the ACA intended for tax credits to be available to individuals who purchased their insurance through either a state or federal exchange or just through a state exchange. Exchanges are places “in each State where people can shop for insurance, usually online,” and whose creation are required by the ACA. Ultimately, the Court held both state and federal exchanges could offer tax credits to purchasers.

The King case was brought by four Virginia residents who did not want to purchase health insurance on the federal exchange established by the federal government in Virginia. The issue before the Court centered on four words in the ACA, an “Exchange established by the State” and if that phrase allows federal exchanges established by the federal government to offer tax credits. Whether federal exchanges, such as the one offered in Virginia, qualified for the tax credit affected whether the plaintiffs were required to buy health insurance.

The plaintiffs argued that Virginia’s exchange should not qualify for tax credits, because it was not an “Exchange established by the State.” If Virginia’s federally-established exchange did not qualify for tax credits, as they argued, then the plaintiffs would not receive a tax credit, the cost of insurance would be more than eight percent (8%) of their income, and the plaintiffs would not be required to purchase health insurance. If, however, Virginia’s exchange did qualify for the tax credits, a stance supported by the IRS, then plaintiffs would receive a tax credit, making the cost of insurance less than eight percent (8%) of their income, and subjecting the plaintiffs to the purchasing requirement. The IRS promulgated a rule allowing both state and federal exchanges to offer tax credits, taking the position that such language allowed tax credits to be available on “an Exchange,” “regardless of whether the Exchange is established and operated by a State” or the federal government.

The plaintiffs filed suit to challenge the IRS Rule that made tax credits available to both state and federal exchanges. On appeal, the Fourth Circuit Court of Appeals deferred to the IRS’s interpretation under the principle of administrative deference, and agreed that federal exchanges could offer tax credits. On the same day, the Court of Appeals for the District of Columbia held the IRS Rule was contrary to the ACA. The disagreement between appellate courts prompted the Supreme Court to weigh in.

While the Court considered the plain meaning of the phrase at issue, it did so with an eye towards “the words ‘in their context and with a view to their place in the overall statutory scheme.’” Considering the overall context, the Court stated that the phrase was ambiguous. Critically, the Court opined that the ACA contained “more than a few examples of inartful drafting,” and “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.” In finding the ACA meant for tax credits to be available through both state and federal exchanges, the Court pointed out that the opposing view was inconsistent with the ACA’s goal and would cause “the type of calamitous result that Congress plainly meant to avoid.”

In rejecting the plaintiffs’ argument, the Court concluded that a strict reading would result in states where only one of the three goals of the ACA could be effectuated, thereby undermining the purpose of the ACA. The Court noted that plaintiffs’ plain meaning arguments were strong, but “the context and structure of the Act compel[ed] [the Court] to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” Thus, the statutory scheme compelled the Court to reject plaintiffs’ “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 [ACA] to avoid.” The majority opinion concluded with inspirational words regarding respecting the role of the legislature and protecting the legislation they passed.

Interestingly, the Court failed to give any deference to the IRS Rule. Instead, the Court found this was an extraordinary case where there existed “reason to hesitate before concluding that Congress has intended” to implicitly delegate to an agency the ability to fill-in statutory gaps. The Court felt that had Congress intended to assign the question of tax credits to the IRS, Congress would have done so expressly due to the “deep ‘economic and political significance’” of the matter. Specifically, the Court noted that the IRS “has no expertise in crafting health insurance policy of this sort.” This aspect of the decision could act to curb future actions of administrative agencies when those actions pertain to areas outside of their designated expertise.

Overall, the bottom line of the King decision is that the Court upheld the status quo of the ACA and the insurance markets. The current “Exchanges,” both state and federal, can continue to operate in the same manner as before. The Court’s opinion eliminates the need for a legislative stop-gap

On June 25, 2015, the U.S. Supreme Court rendered a decision in the highly-anticipated Patient Protection and Affordable Care Act (“ACA”) case, King et al. v. Burwell, Secretary of Health and Human Services, et al, 576 U.S. ____ (2015) (slip op.). In King, the Court decided whether the ACA intended for tax credits to be available to individuals who purchased their insurance through either a state or federal exchange or just through a state exchange. Exchanges are places “in each State where people can shop for insurance, usually online,” and whose creation are required by the ACA. Ultimately, the Court held both state and federal exchanges could offer tax credits to purchasers.

The King case was brought by four Virginia residents who did not want to purchase health insurance on the federal exchange established by the federal government in Virginia. The issue before the Court centered on four words in the ACA, an “Exchange established by the State” and if that phrase allows federal exchanges established by the federal government to offer tax credits. Whether federal exchanges, such as the one offered in Virginia, qualified for the tax credit affected whether the plaintiffs were required to buy health insurance.

The plaintiffs argued that Virginia’s exchange should not qualify for tax credits, because it was not an “Exchange established by the State.” If Virginia’s federally-established exchange did not qualify for tax credits, as they argued, then the plaintiffs would not receive a tax credit, the cost of insurance would be more than eight percent (8%) of their income, and the plaintiffs would not be required to purchase health insurance. If, however, Virginia’s exchange did qualify for the tax credits, a stance supported by the IRS, then plaintiffs would receive a tax credit, making the cost of insurance less than eight percent (8%) of their income, and subjecting the plaintiffs to the purchasing requirement. The IRS promulgated a rule allowing both state and federal exchanges to offer tax credits, taking the position that such language allowed tax credits to be available on “an Exchange,” “regardless of whether the Exchange is established and operated by a State” or the federal government.

The plaintiffs filed suit to challenge the IRS Rule that made tax credits available to both state and federal exchanges. On appeal, the Fourth Circuit Court of Appeals deferred to the IRS’s interpretation under the principle of administrative deference, and agreed that federal exchanges could offer tax credits. On the same day, the Court of Appeals for the District of Columbia held the IRS Rule was contrary to the ACA. The disagreement between appellate courts prompted the Supreme Court to weigh in.

While the Court considered the plain meaning of the phrase at issue, it did so with an eye towards “the words ‘in their context and with a view to their place in the overall statutory scheme.’” Considering the overall context, the Court stated that the phrase was ambiguous. Critically, the Court opined that the ACA contained “more than a few examples of inartful drafting,” and “the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.” In finding the ACA meant for tax credits to be available through both state and federal exchanges, the Court pointed out that the opposing view was inconsistent with the ACA’s goal and would cause “the type of calamitous result that Congress plainly meant to avoid.”

In rejecting the plaintiffs’ argument, the Court concluded that a strict reading would result in states where only one of the three goals of the ACA could be effectuated, thereby undermining the purpose of the ACA. The Court noted that plaintiffs’ plain meaning arguments were strong, but “the context and structure of the Act compel[ed] [the Court] to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” Thus, the statutory scheme compelled the Court to reject plaintiffs’ “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 [ACA] to avoid.” The majority opinion concluded with inspirational words regarding respecting the role of the legislature and protecting the legislation they passed.

Interestingly, the Court failed to give any deference to the IRS Rule. Instead, the Court found this was an extraordinary case where there existed “reason to hesitate before concluding that Congress has intended” to implicitly delegate to an agency the ability to fill-in statutory gaps. The Court felt that had Congress intended to assign the question of tax credits to the IRS, Congress would have done so expressly due to the “deep ‘economic and political significance’” of the matter. Specifically, the Court noted that the IRS “has no expertise in crafting health insurance policy of this sort.” This aspect of the decision could act to curb future actions of administrative agencies when those actions pertain to areas outside of their designated expertise.

Overall, the bottom line of the King decision is that the Court upheld the status quo of the ACA and the insurance markets. The current “Exchanges,” both state and federal, can continue to operate in the same manner as before. The Court’s opinion eliminates the need for a legislative stop-gap