For the second time in three years, the law survived an encounter with the Supreme Court. But the court’s tone was different this time. The first decision, in 2012, was fractured and grudging, while Thursday’s ruling was more assertive.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John G. Roberts Jr. wrote for the majority.
The court’s three most conservative members — Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. — dissented. Justice Scalia called the majority’s reasoning “quite absurd.”
“The court’s decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery,” he wrote.
“It is up to Congress to design its laws with care,” he added, “and it is up to the people to hold them to account if they fail to carry out that responsibility.”
Justice Scalia announced his dissent from the bench, a sign of bitter disagreement. His summary was laced with notes of incredulity and sarcasm, which sometimes drawing amused murmurs in the courtroom as he described the “interpretive somersaults” he said the majority had performed to reach the decision.
“We really should start calling this law SCOTUS-care,” Justice Scalia said, to laughter from the audience.
The case concerned a central part of the Affordable Care Act that created marketplaces, known as exchanges, to allow people who lack insurance to shop for individual health plans. Some states set up their own exchanges, but about three dozen allowed the federal government to step in to run them. Across the nation, about 85 percent of customers using the exchanges qualify for subsidies to help pay for coverage, based on their income.
The question in the case, King v. Burwell, No. 14-114, was what to make of a phrase in the law that seems to say the subsidies are available only to people buying insurance on “an exchange established by the state.”
Chief Justice Roberts wrote that the words must be understood as part of a larger statutory plan. “In this instance,” he wrote, “the context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.”
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” he added. “If at all possible, we must interpret the act in a way that is consistent with the former, and avoids the latter.”
Four plaintiffs, all from Virginia, sued the Obama administration, saying the phrase meant that the law forbids the federal government to provide subsidies in states that do not have their own exchanges. Congress made the distinction, they said, to encourage states to create their own exchanges.
The plaintiffs challenged an Internal Revenue Service regulation that said subsidies were allowed whether the exchange was run by a state or by the federal government. They said the regulation was at odds with the Affordable Care Act.
Lawyers for the administration said the balance of the law demonstrated that Congress could not have intended to limit the subsidies. The disputed phrase, noticed by almost no one until long after the law was enacted, was a curious way to encourage states to establish exchanges, they said. And a legal victory for the plaintiffs, the lawyers said, would affect more than six million people and create havoc in the insurance markets.
In July, the United States Court of Appeals for the Fourth Circuit, in Richmond, Va., ruled against the challengers.
Judge Roger L. Gregory, writing for a three-judge panel of the court, said the contested phrase was “ambiguous and subject to multiple interpretations.” That meant, he said, that the I.R.S. interpretation was entitled to deference.