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.”

On June 30, 2014 the United States Supreme Court ruled in favor of Hobby Lobby in a controversial 5-4 decision regarding the Affordable Care Act provision mandating that insurance policies cover contraceptives without charge to the insured.  The Court ruled that Hobby Lobby, Inc. a corporation which owns a number of arts and crafts stores can refuse to provide health insurance coverage to employees for some forms of birth control.  The company, deemed to be a “closely held” corporation, is owned by a family of devout evangelical Christians who objected on religious grounds to providing health insurance which would pay for certain types of birth control, specifically intrauterine devices and morning-after pills.

The Supreme Court’s decision is limited to the requirement under the Affordable Care Act to provide contraceptives at no cost as one of a list of women’s preventative health services.

Justice Alito, writing for the majority,  stated that it is not necessarily the case that an insurance coverage mandate will be struck down if it conflicts with an employer’s religious beliefs.  This is a narrow decision which applies to companies which are “closely held” or “family-owned” and where the religious identity of the company is  strongly tied to the owner’s religious beliefs.   The court cautioned against concern that this decision would allow employers to opt out of covering other medical procedures like blood transfusions.

In addition to the controversial religious aspects of the decision its real significance may lie in the fact that this is the first time the Court has ruled that a for-profit business can hold religious beliefs.  The real struggle in the future is likely to be in determining what it takes to be a “closely held” business with sincerely held religious belief.  What determines a company’s status as closely held is a creature of state law, and some states do not define or even use that term.  What is clear is that this decision has moved the discussion from family owned businesses and the proverbial “Mom and Pop” operation to a large, profitable company.  The Court’s majority was convinced that the management of Hobby Lobby was concentrated in a small enough group of people with the same religious beliefs to support their refusal to provide the mandated coverage on religious grounds.  The question now is what the future implications of this decision might be, not only with respect to the ACA but in connection with other laws against which a religious objection might be lodged.