King v. Burwell facts for kids

Quick facts for kids King v. Burwell
Supreme Court of the United States
Argued March 4, 2015 Decided June 25, 2015
Full case name	David King, et al., Petitioners v. Sylvia Burwell, Secretary of Health and Human Services, et al.
Docket nos.	14-114
Citations	576 U.S. 473 (more) 135 S. Ct. 2480; 192 L. Ed. 2d 483
Prior history	King v. Sebelius, 997 F. Supp. 2d 415 (E.D. Va. 2014); affirmed sub. nom., King v. Burwell, 759 F.3d 358 (4th Cir. 2014); cert. granted, 135 S. Ct. 475 (2014).
Argument	Oral argument
Opinion Announcement	Opinion announcement
Holding
Section 36B of the ACA provides for subsidies under both federally run and state-run exchanges. The wording "...established by the State" was superfluous when read within "the broader structure of the Act".
Court membership
Case opinions
Majority	Roberts, joined by Kennedy, Ginsburg, Breyer, Sotomayor, Kagan
Dissent	Scalia, joined by Thomas, Alito
Laws applied
Patient Protection and Affordable Care Act

King v. Burwell was an important case decided by the Supreme Court of the United States in 2015. The Court had to figure out what a part of the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, really meant. This law helps people get health insurance.

The main question was about financial help, called premium tax credits. These credits help people pay for their health insurance. The law said these credits were for insurance bought through an "Exchange established by the State."

Some people argued that this meant only states that set up their own health insurance marketplaces could offer these credits. But the government said the credits should be available everywhere, even in states where the federal government set up the marketplace.

The Supreme Court decided that the tax credits should be available in all states. This included states with their own marketplaces and states where the federal government ran the marketplace. This decision was very important for millions of Americans.

Why the Law Was Challenged

Several lawsuits, including King v. Burwell, challenged a rule made by the Internal Revenue Service (IRS). This rule said that tax credits for health insurance could be given out in both state-run and federal-run marketplaces.

The people who challenged the rule argued that the ACA law only allowed these tax credits in marketplaces set up by states. They believed the IRS went too far by allowing credits in federal marketplaces too.

If the challengers had won, about 6.4 million Americans could have lost their financial help for health insurance. This would have made health insurance much more expensive for them. Many people might have lost their health coverage entirely.

This could have also caused big problems for the health insurance market. Insurers would still have to cover everyone, even those with existing health problems. But without the tax credits, fewer healthy people would buy insurance. This could make insurance prices go up a lot for everyone else.

Some people who supported the challenge believed it was important to stop what they saw as unauthorized government spending. They also thought it would show people the true cost of the ACA without the tax credits.

How the Law Was Written

The ACA law included a specific phrase: "enrolled in through an Exchange established by the State under 1311". This phrase appeared in several places in the law.

The IRS, however, created a rule that defined "Exchange" more broadly. Their rule included both marketplaces set up by states and those set up by the United States Department of Health and Human Services (HHS), which is a federal agency.

The main disagreement was whether the words "established by the State" meant only state-run marketplaces, or if they could also include federal ones.

Understanding Legal Interpretation

The Supreme Court often uses rules to figure out what a law means. One important rule is called the Chevron test. This test helps courts decide if a government agency's interpretation of a law is correct.

• Step 1: Is the law's meaning clear? If Congress wrote the law clearly, then everyone must follow that clear meaning.
• Step 2: If the law is not clear, is the agency's interpretation reasonable? If the law is confusing, the court usually allows the agency to interpret it, as long as their interpretation makes sense.

In the King v. Burwell case, the Supreme Court also thought about something called the major questions doctrine. This idea says that if a government agency makes a decision that has huge economic or political effects, Congress must have given them very clear permission to do so. If the permission isn't clear, the agency probably doesn't have that power.

The Supreme Court decided that the question of health insurance tax credits was a "major question." They felt that Congress would have been very clear if it wanted the IRS to decide such a big issue. Because it wasn't clear, the Court decided to interpret the law itself, rather than just accepting the IRS's interpretation.

What Each Side Argued

Legislative Intent

The people challenging the law argued that Congress meant to limit the tax credits. They thought Congress wanted to encourage states to set up their own marketplaces. If a state didn't, its citizens wouldn't get the credits.

The government argued that the law was meant to help people in all states get affordable insurance. They said it wouldn't make sense for millions of people to lose their credits just because their state didn't set up its own marketplace.

Some experts, like Jonathan Gruber, who helped design the ACA, had made comments that seemed to support the challengers' view. He once said that if a state didn't set up an exchange, its citizens wouldn't get tax credits. However, he later said his comments were a mistake and that he was thinking about early uncertainties.

Former Senator Ben Nelson, who was involved in writing the law, also denied that Congress intended to limit the credits. He said he always believed tax credits should be available in all states.

Possible Drafting Error

Another argument was that the confusing language in the law was simply a mistake. The ACA was passed in a very complicated way. Different parts of the bill were written by different committees. When these parts were combined, some language might have been left in that didn't quite fit the final plan.

This happened because of a special process called "reconciliation." This process limits how much a bill can be changed. It meant that some parts of the law couldn't be fixed or "cleaned up" as easily as they normally would be.

Who Could Sue?

The people who sued had to show they were actually harmed by the IRS rule. This is called having "standing" to sue.

The plaintiffs argued that without the tax credits, health insurance would be too expensive for them. This would mean they wouldn't have to buy insurance or pay a penalty under the ACA. But with the tax credits, insurance became affordable enough that they would have to buy it or pay a penalty. This difference gave them a reason to sue.

Court Decisions Before the Supreme Court

Fourth Circuit Court of Appeals

One of the first major courts to hear the King v. Burwell case was the Fourth Circuit Court of Appeals. This court decided that the law's wording was confusing. But they also said that the IRS's interpretation of the law was reasonable. So, they sided with the government.

The court admitted that the challengers' argument, based on a literal reading of the law, made "common-sense appeal." However, they still upheld the IRS rule.

D.C. Circuit Court of Appeals (Halbig v. Burwell)

Another similar case, Halbig v. Burwell, was heard by the D.C. Circuit Court of Appeals. On the same day the Fourth Circuit ruled, the D.C. Circuit came to the opposite conclusion. This court ruled that the ACA clearly limited tax credits to state-established marketplaces. They sided with the challengers.

However, the D.C. Circuit later decided to hear the case again with more judges. This canceled their first ruling. This meant there was no longer a direct disagreement between the two courts.

The Supreme Court's Final Decision

On June 25, 2015, the Supreme Court announced its decision in King v. Burwell. The Court ruled 6-3 in favor of the government. Chief Justice John Roberts wrote the main opinion.

The Court explained that earlier attempts to reform health insurance often failed. This was because people waited until they were sick to buy insurance. This led to a "death spiral" where prices went up and insurers left the market.

The ACA was designed to fix this by requiring people to buy insurance and offering tax credits to make it affordable. The Court noted that the law's goal was to make these reforms work in all states.

The Court looked at the law's words "in their context and with a view to their place in the overall statutory scheme." They found the phrase "an Exchange established by the State" to be confusing. It could mean only state exchanges, or it could mean all exchanges (state and federal).

The Court decided that if tax credits were only available in state-run exchanges, it would "destabilize the individual insurance market" in states with federal exchanges. This would create the "death spirals" the law was designed to avoid. Therefore, the Court concluded that the law intended for tax credits to be available in all exchanges, whether state or federally run.

This decision meant that millions of Americans continued to receive financial help to buy health insurance.

Dissenting Opinion

Justice Antonin Scalia wrote a strong disagreement, called a "dissent," which was joined by two other justices. He argued that the Court's decision was "quite absurd." He said that when the law says "Exchange established by the State," it means only state-established exchanges, not federal ones.

Scalia pointed out that the rest of the ACA law carefully distinguishes between state and federal exchanges. He argued that the Court was rewriting the law instead of interpreting it. He even jokingly called the ACA "SCOTUScare," suggesting the Supreme Court had changed the law itself.

Scalia believed that the Court should have stuck to the clear meaning of the words, even if the outcome was difficult.

See also

• List of United States Supreme Court cases, volume 576
• National Federation of Independent Business v. Sebelius (2012)
• Sebelius v. Hobby Lobby (2014)
• Federalism in the United States