The Supreme Court yesterday decided that Congress meant what it said when it enacted the Affordable Care Act (ACA). The ACA requires people in all 50 states to carry health insurance and provided tax credits to help them afford it. To have offered such credits only in the dozen states that set up their own exchanges would have been cruel and unsustainable because premiums for many people would have been unaffordable.
But the law said that such credits could be paid in exchanges ‘established by a state,’ which led some to claim that the credits could not be paid to people enrolled by the federally operated exchange. In his opinion, Chief Justice Roberts euphemistically calls that wording ‘inartful.’ Six Supreme Court justices decided that, read in its entirety, the law provides tax credits in every state, whether the state manages the exchange itself or lets the federal government do it for them.
That decision is unsurprising. More surprising is that the Court agreed to hear the case. When it did so, cases on the same issue were making their ways through four federal circuits. In only one of the four circuits was there a standing decision, and it found that tax credits were available everywhere.
It is customary for the Supreme Court to wait to take a case until action in lower courts is complete or two circuits have disagreed. In this situation, the justices, eyeing the electoral calendar, may have preferred to hear the case sooner rather than later to avoid confronting it in the middle of a presidential election.
Whatever the Court’s motives for taking the case, their willingness to hear the case caused supporters of the Affordable Care Act enormous unease. Were the more conservative members of the Court poised to accept an interpretation of the law that ACA supporters found ridiculous but that inartful legislative drafting gave the gloss of plausibility? Judicial demeanor at oral argument was not comforting. A 5-4 decision disallowing payment of tax credits seemed ominously plausible.
Future Challenges for the ACA
The Court’s 6-3 decision ended those fears. The existential threat to health reform from litigation is over. But efforts to undo the Affordable Care Act are not at an end. They will continue in the political sphere. And that is where they should be. ACA opponents know that there is little chance for them to roll back the Affordable Care Act in any fundamental way as long as a Democrat is in the White House. To dismantle the law, they must win the presidency in 2016.
But winning the presidency will not be enough. It would be mid 2017 before ACA opponents could draft and enact legislation to curb the Affordable Care Act and months more before it could take effect. To borrow a metaphor from the military, even if those opposed to the ACA win the presidency, they will have to deal with ‘facts on the ground.’
Well over 30 million Americans will be receiving health insurance under the Affordable Care Act. That will include people who can afford health insurance because of the tax credits the Supreme Court affirmed today. It will include millions more insured through Medicaid in the steadily growing number of states that have agreed to extend Medicaid coverage. It will include the young adult children covered under parental plans because the ACA requires this option.
Insurance companies will have millions more customers because of the ACA. Hospitals will fill more beds because previously uninsured people will be able to afford care and will have fewer unpaid bills generated by people who were uninsured but the hospitals had to admit under previous law. Drug companies and device manufacturers will be enjoying increased sales because of the ACA.
The elderly will have better drug coverage because the ACA has eliminated the notorious ‘donut hole’—the drug expenditures that Medicare previously did not cover.
Those facts will discourage any frontal assault on the ACA, particularly if the rate of increase of health spending remains as well controlled as it has been for the past seven years.
Of course, differences between supporters and opponents of the ACA will not vanish. But those differences will not preclude constructive legislation. Beginning in 2017, the ACA gives states, an opening to propose alternative ways of achieving the goals of the Affordable Care Act, alone on in groups, by alternative means. The law authorizes the president to approve such waivers if they serve the goals of the law. The United States is large and diverse. Use of this authority may help diffuse the bitter acrimony surrounding Obamacare, as my colleague, Stuart Butler, has suggested. At the same time, Obamacare supporters have their own list of changes that they believe would improve the law. At the top of the list is fixing the ‘family glitch,’ a drafting error that unintentionally deprives many families of access to the insurance exchanges and to tax credits that would make insurance affordable.
As Chief Justice Roberts wrote near the end of his opinion of the Court, “In a democracy, the power to make the law rests with those chosen by the people….Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” The Supreme Court decision assuring that tax credits are available in all states spares the nation chaos and turmoil. It returns the debate about health care policy to the political arena where it belongs. In so doing, it brings a bit closer the time when the two parties may find it in their interest to sit down and deal with the twin realities of the Affordable Care Act: it is imperfect legislation that needs fixing, and it is decidedly here to stay.
Henry J. Aaron is a Senior Fellow, Economic Studies at the Brookings Institution.