The Supreme Court ruled 6-3 in favor of keeping the tax credits for states without a state based exchange. This is a huge win for the Affordable Care Act. This was viewed by some as the last big battle of the ACA.
When you read the actual ruling, the court points out that the term death spiral. The ruling addressed if the tax credits were taken away, from the 36 state that did not establish an exchange, that the other states would be impacted negatively. Without the tax credits most people would drop out of the health insurance, leaving only the high claims members. This creates a death spiral, where only sick people have coverage, which leads to even higher rates. The court realized if the tax credit went a way, we could see the entire individual health insurance market implode. I think that is the main reason they ruled in favor of keeping the tax credits.
The legal argument to keep the tax credits, boils down to the statement.
“at least for purposes of the tax credits. If a State chooses not to follow the directive in Section 18031 that it establish an Exchange, the Act tells the Secretary to establish “such Exchange.” §18041. And by using the words “such Exchange,” the Act indicates that State and Federal Exchanges should be the same.”
“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.”
Had the court ruled against the tax credits, the fall out would have been astronomical. The entire Individual health insurance market would have collapsed. What Individual health insurance companies that are still in the market, may have pulled out. The leadership at these companies have been very frustrated with the ACA.
If you agree or disagree with the ACA, this is the best outcome for keeping the health insurance markets somewhat stable.
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