In the latest case to challenge elements of the Affordable Care Act (“Act”), the United States Supreme Court in a six-to-three vote, ruled on June 25, 2015 in King v. Burwell that premium subsidies will remain available in 36 states in which the federal government has primary responsibility for running health insurance exchanges.

The legal issue before the Court was the validity of Internal Revenue Service regulations that allow premium subsidies to individuals enrolled in a health plan through exchanges operated by a State or by the federal government.  The regulation interprets Section 36B(b)(2) of the Internal Revenue Code added by the Act which provides that the IRS is to calculate tax credits for premiums for qualified health plans “which were enrolled in through an Exchange established by the State.”

The Court was not persuaded by the petitioners’ argument that the plain, unambiguous language of the statutory provision prevented the IRS from establishing the regulation and there was no basis for the Court rejecting the plain text of Section 36B that only tax credits were available on state exchanges.  Rather, the Court viewed Section 36B as ambigu­ous in that the phrase could be limited in its reach to State exchanges but it could also refer to all exchanges—both State and Federal—for purposes of the tax credits.  Given that it determined that the text was ambiguous, the Court looked to the broader structure of the Act to determine whether one of Section 36B’s permissible meanings produced a substantive effect that was compatible with the rest of the Act, the core purpose of which is to provide quality, affordable health care.

Chief Justice Roberts concluded his lengthy majority opinion with the following statement that summarized the majority’s rational for the decision “[a] fair reading of legislation demands a fair understanding of the legislative plan.  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. Section 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”