U.S. Supreme Court upholds Obamacare tax subsidies

n a major win for President Barack Obama, the U.S. Supreme Court has upheld a lower-court decision that allows the federal government to issue health care subsidies to states.

The 6-3 decision means that Americans who get their health insurance through exchanges set up by the federal government will continue to be eligible for tax subsidies.

The plaintiffs in the case before the court had argued that these subsidies were illegal because Obama's Affordable Care Act, widely known as Obamacare, allows online health care exchanges to be set up only by states and not by the federal government on their behalf.

The ruling upholds a critical part of the health-care legislation and is proof that "this law is working," Obama said in reaction to the decision.

"This was a good day for America," the president said at a news conference in the Rose Garden at the White House.

After more than 50 votes in Congress to repeal or weaken the health-care law and multiple court challenges, "the Affordable Care Act is here to stay," Obama said.

"This is not an abstract thing anymore. This is not a set of political talking points. This is reality," he said after listing off examples of how the law has made health care more accessible and affordable for millions of Americans.

"This law is working, and it's going to keep doing just that," Obama said.

Thursday's decision marks the second time in three years that the high court has ruled against a major challenge to the law brought by conservatives seeking to gut it.

"We should start calling this law SCOTUS care," Justice Antonin Scalia wrote in his dissenting opinion, referring to the common abbreviation for the Supreme Court of the United States.

The decision means the subsidies will remain not just in the 13 states that have set up their own exchanges and the three states that have state-federal hybrid exchanges, but also in the 34 states that use HealthCare.gov, the exchange run by the federal government.

Obama told media that had the challenge been successfull, millions of Americans would have lost thousands of dollars in tax subsidies and many would have become uninsured.

"America would have gone backwards, and that's not what we do," he said.

Federal insurance exchange legitimate

The case centred on the tax credits offered under the law, passed by Obama's fellow Democrats in Congress in 2010 over unified Republican opposition, that help low- and moderate-income people buy private health insurance. The exchanges are online marketplaces that allow consumers to shop among competing insurance plans.

Since the federal government can't compel states to set up exchanges, in some cases where states failed to do so or had trouble running their own exchanges, it stepped in and created them on their behalf through HealthCare.gov and passed on the subsidies to the states' residents.

The point of the subsidies is to keep enough people in the pool of insured to avoid triggering a spiral of declining enrolment, a growing proportion of less healthy people and premium increases by insurers.

The question before the justices was whether a four-word phrase in the expansive law saying subsidies are available to those buying insurance on exchanges "established by the state" had been correctly interpreted by the administration to allow subsidies to be available nationwide.

While the plaintiffs argued for a strict interpretation of this part of the law, several states told the court that they had no inkling they had to set up their own exchange in order for their residents to get tax credits.

Chief Justice John Roberts wrote that although the conservative challengers' arguments about the plain meaning of the statute referring to exchanges being "established by the state" were "strong," the "context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase."

"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," he wrote in the majority opinion.