The U.S. Supreme Court ruled on Thursday in a 6-3 vote that Affordable Care Act subsidies are allowed in states that use both the federal insurance marketplace as well as those that operate their own insurance exchanges.
The 6-3 decision written by Chief Justice John Roberts means that about 126,500 Arizonans will continue to collect tax-credit subsidies that help them pay their monthly health insurance bills.
The case, King v. Burwell, examined whether Affordable Care Act subsidies that help offset monthly health insurance premiums are allowed only in marketplaces that are "established by the state."
The challengers contended that the phrase, written into President Barack Obama's signature health-care overhaul, forbade subsidies in at least 34 states that use the health-care law's federal marketplace, www.healthcare.gov.
The outcome is the second time President Barack Obama secured a Supreme Court win over the politically-charted health-care law.
Chief Justice Roberts again sided with his liberal colleagues in support of the law. Roberts also was the key vote to uphold the law in 2012. Justice Anthony Kennedy, a dissenter in 2012, was part of the majority on Thursday.
"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Roberts wrote in the majority opinion.
These monthly subsidies are at the heart of the health law's attempt to make insurance affordable for moderate- to middle-income families who purchase health coverage. One analysis predicted a 132 percent average increase in the monthly health-insurance tab for Arizona residents enrolled in subsidized marketplace plans, according to Kaiser Family Foundation, a non-profit health foundation.
Many would have found no-subsidy plans too expensive and dropped their coverage, experts say.
But the impact could have been more dramatic than higher health-insurance bills for working-class Arizonans. Without subsidies, experts predicted it would ripple through the individual health-insurance market as healthy people dropped coverage rather than pay more costly insurance bills. That could have sent monthly premiums soaring in 2016 as the insurance pools became dominated by sicker people who use more prescription drugs and visit doctors more frequently, a phenomenon called the death spiral.
The Urban Institute estimated that 8.2 million people nationwide would have lost their health insurance as non-subsidized enrollees dropped coverage, insurance pools shrank and plans became more expensive.
Republicans in Congress floated a number of proposed health-reform fixes ahead of the decision, but House Speaker John Boehner said he wouldn't make a decision about how to proceed until after the ruling. Fearing blowback in the 2016 elections from consumers seeing their premiums spike, most GOP plans included extending federal subsidies at least temporarily.
A proposal introduced by U.S. Rep. Paul Gosar, R-Ariz., would prevent an extension of subsidies.
Gosar instead wants to repeal parts of the health-care law that he says keep premiums high.
"Too many people are focusing on the subsidies. That's not the best way to look at this," Gosar spokesman Steven Smith said. "This is a solution that is more encompassing and sets the foundation for a free-market approach to phase out 'Obamacare' completely."