Supreme Court upholds Obamacare subsidies

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WASHINGTON -- Obamacare has survived -- again. In a major win for the Obama administration, the Supreme Court held in a 6-3 decision that the Affordable Care Act authorized federal tax credits for eligible Americans living not only in states with their own exchanges but also in the 34 states with federal exchanges.

Chief Justice John Roberts wrote for himself, Justice Anthony Kennedy and the four liberal justices. Justice Antonin Scalia wrote the dissent, joined by Clarence Thomas and Samuel Alito.

The ruling staved off a major political showdown and what would have been a mad scramble in some states to set up their own healthcare exchanges to keep millions from losing healthcare coverage.

Challengers to the law argued that the federal government should not be allowed to continue doling out subsidies to individuals living in states without their own healthcare exchanges and a ruling in their favor would have cut off subsidies to 6.4 million Americans, absent a congressional fix or state action.

The ruling is a huge victory for President Barack Obama who nearly saw those four words in the Affordable Care Act throw his signature achievement into chaos.

The income-based subsidies are crucial to the law's success, helping to make health insurance more affordable and ultimately reducing the number of uninsured Americans, and shutting off the subsidy spigot to individuals in the 34 states that rely on exchanges run by the federal government would have upended the law.

Congress would have had to amend the Affordable Care Act to fix the "established by the state" language -- a politically treacherous and likely untenable action in a Republican Congress -- or governors in the 34 states without their own exchanges, most of them Republicans, would have had to establish their own exchanges -- another tough ask.

Obama's signature law was once again saved by an unlikely hero: Chief Justice John Roberts, a conservative who has now twice shielded the law from being gutted.

Roberts took heat from conservatives in 2012 when he first saved the law from a major constitutional challenge in a decision that stunned pundits and politicos across the ideological spectrum. The Chief Justice on Monday once again joined the court's four liberal justices in upholding the law.

Just 16 states and the District of Columbia have set up their own health insurance marketplaces, which left millions of residents in the 34 states that rely on exchanges run by the federal government vulnerable to the Supreme Court's ruling.

Challengers had argued that the words "established by the State" clearly barred the government from doling out subsidies in the 34 states without their own healthcare marketplaces.

They said that Congress limited the subsidies in order to encourage the states to set up their own exchanges and when that failed on a large scale, the IRS tried to "fix" the law.

"If the rule of law means anything, it is that text is not infinitely malleable, and that agencies must follow the law as written---not revise it to 'better achieve' what they assume to have been Congress's purposes," wrote Michael Carvin, an attorney for the challengers.

But it was Solicitor Generald Donald B. Verrilli, Jr. who won over the justices, arguing that Congress always intended the subsidies be available to everyone -- regardless of the actions of their state leaders.

Verrilli warned in court briefs that if the challengers prevailed, the states with federally-run exchanges "would face the very death spirals the Act was structured to avoid and insurance coverage for millions of their residents would be extinguished."

Lower courts had split on the issue. The U.S. Court of Appeals for the District of Columbia invalidated the IRS rule while the Fourth Circuit Court of Appeals ruled in favor of the Obama administration.