First responses to the Supreme Court's 6-3 decision to uphold federal subsidies have broken down on party lines, with liberals celebrating a second major legal victory for the Affordable Care Act. The law is likely safe at least through the 2016 elections—although it's unclear if Congressional Republicans will be ready to give up their repeal-and-replace ambitions. What is clear is that the subsidies are safe in perpetuity.
From a political perspective, it's key that the Court says the ACA's tax credits are not just permissible but required.— Larry Levitt (@larry_levitt) June 25, 2015
Notably, the ruling was not decided on Chevron deference, which is a principle of administrative law that requires courts to "defer to interpretations of statutes made by those government agencies charged with enforcing them, unless such interpretations are unreasonable." What this means for King v. Burwell is that later adminstrations can't reinterpret the law to outlaw subsidies.
The most significant surprise is the Court's refusal to defer to the IRS. Looks like a president in 2017 can't rethink the rule.— Nicholas Bagley (@nicholas_bagley) June 25, 2015
By not using Chevron, SCOTUS saved Republican presidential candidates from having to promise to yank away people's subsidies if elected.— Josh Barro (@jbarro) June 25, 2015
President Obama's reaction
The president addressed the nation shortly following the ruling, underscoring the feeling of many that this latest victory suggests that the Affordable Care Act is now indelibly entrenched in American law. "The Affordable Care Act is here to stay," Obama said. He took the opportunity to defend the efficacy of the legislation and repeated several times: "It's working."
"This is not an abstract thing anymore," the president said. "This is reality. The law is working exactly as it's supposed to."
The AMA was quick to express its satisfaction with the decision:
"The American Medical Association is relieved that today's Supreme Court decision will allow millions of patients to continue accessing the healthcare they need and deserve," said AMA president Steven J. Stack, MD. "Physicians know that the uninsured live sicker and die younger so the AMA has been a leading voice in support of expanding health insurance access to ensure patients can get the care they require.
"The subsidies upheld today help patients afford health insurance so they can see a doctor when they need one and not have to wait until a small health problem becomes a crisis. The subsidies provide patients with peace of mind that they will not risk bankruptcy should they become seriously ill or injured and experience catastrophic healthcare costs.
"With this case now behind us, we hope our country can move forward and continue strengthening our nation's healthcare system."
Some stakeholders were more reserved, indicating that while the decision was an overall positive for the industry, it is not a cure-all for rising healthcare costs:
"Today's Supreme Court ruling ensures that millions of Americans can receive financial assistance from the government to help them continue to afford their health insurance coverage," wrote Blue Cross and Blue Shield in a statement. "Blue Cross and Blue Shield companies are committed to providing quality, affordable coverage community by community, nationwide, and we will continue in that long tradition. There is still more work to be done to make healthcare more affordable."
"With today's decision, the Supreme Court has ensured that health insurance subsidies will continue to be available for the millions of folks with coverage through HealthCare.gov," says Joel White, President of the Council for Affordable Health Coverage. "But these subsidies mask the true cost of health insurance. Taxpayers and consumers cannot afford to subsidize coverage whose cost is spiraling upward every year and growing faster than wages and the economy. This is a key opportunity for Congress and the Administration to work together to solve healthcare's seemingly intractable affordability issues. They can start by tweaking the current system of subsidies to incentivize patients, insurers, and providers to bring down health costs."
Future impact of the ruling
Some industry experts are positing that now that subsidies are safe for states that use Healthcare.gov, more states will move away from the expense and difficulty of running their own marketplaces. "There may be a little bit of buyers' remorse going on in some state capitals right now," Sabrina Corlette, the director of the Center on Health Insurance Reforms at Georgetown University told Margot Sanger-Katz.
"It's becoming clear that more of those states will revert to a federal system for enrolling people in health insurance," Sanger-Katz wrote.
There's also a good chance that, with the uncertainty of an adverse ruling gone, the major payer mergers that have been hovering on the brink will start coming fast:
#KingVBurwelI ruling clears rocks from road for payer merger mania. With uncertainty over, deals will fall fast now.— John Gorman (@JohnGorman18) June 25, 2015
David French, senior vice president for government relations for the National Retail Federation, indicated that he believed the ruling would smooth the way for Congress to make needed changes to the existent law.
"The Supreme Court decision should provide the pressure needed to thaw out congressional intransigence over healthcare and pave the way for both parties, Congress and the administration to work together to reform the ACA to make it more practical and reasonable," French wrote. "The nation's business community will not stand by as partisan bickering trumps prudent changes. There are no more excuses for congressional inaction and political posturing. We urge Congress to seize the moment and fix the healthcare law."
Industry experts agreed:
There's little doubt the ACA is now here to stay. Maybe the debate now shifts to how to improve it, which reasonable people disagree about.— Larry Levitt (@larry_levitt) June 25, 2015
Meanwhile, on Wall Street...
Hospital stocks immediately skyrocketed on the back of the news.