Today’s Supreme Court ruling on the Affordable Care Act means tax credits are still available for people who buy health insurance on the federal exchange.
Rhode Island set up its own exchange, HealthSource RI. And because of that, the ruling would not have affected the Ocean State either way. Rhode Islanders who qualify for subsidies to help pay for health insurance will continue to receive them.
Some state lawmakers wanted to scrap HealthSource and default to the federal exchange. But the recently passed state budget preserves it, in part with a tax on health insurance premiums to help pay for HealthSource going forward.
Rhode Island’s congressional delegates are praising the Supreme Court’s ruling. Sen. Jack Reed (D-RI) says the decision preserves access to affordable health care for millions of Americans. Rep. David Cicilline (D-RI) credits the Affordable Care Act for lowering the uninsured rate in Rhode Island.
Gov. Gina Raimondo's administration is also applauding the ruling, citing Rhode Island's early embrace of the Affordable Care Act in establishing a state-based exchange. According to HealthSource RI director Anya Rader Wallack, about 35,000 Rhode Islanders "have gained coverage through the exchange with the help of tax credits and cost sharing reductions."
What SCOTUS Decided
You can read the U.S. Supreme Court decision here. But here's a summary:
At issue in King v. Burwell was whether federal tax subsidies could be offered to people who bought insurance on the federal exchange to help offset the cost of insurance. The petitioners in the case argued that the law specified the tax credits were available only to people who bought plans on state exchanges. Those arguing against said the subsidies were allowable on any exchange, and that they're a key part of the Affordable Care Act, which requires everyone to have health insurance or pay a penalty.
But essentially, the Court found that the context and structure of the law "compel the conclusion" that an exchange created by "the state" should be taken to mean any exchange. The Court acknowledged the wording of the law was "inartful," but that the rest of the law makes it clear that federal and state-based exchanges are the same thing, for all intents and purposes. Taking away the possibility of subsidies to help people pay for insurance they are now mandated to have, the Court said, would dismantle the law and send insurance markets into a so-called "death spiral." That's when healthy people avoid buying insurance until they're sick, and the cost of covering just the sickest people who are left in an insurer's pool sends insurance prices higher. Then more healthy people drop insurance because it's too expensive, and that leaves just the sick people, and insurance rates go up again, etc. That's the theory, anyway, and today's ruling may have avoided its becoming a reality.