Obamacare Wins Second Big Supreme Court Victory

In a 6-3 decision, the Supreme Court handed President Barack Obama his second major win on his signature health care law, upholding nationwide tax subsidies for millions of Americans.

Chief Justice John Roberts, again siding with the court's liberal wing, said in the majority opinion that Obamacare allows for residents of states that did not set up their own insurance exchanges to still receive subsidies to pay for their health coverage.

"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them," Roberts wrote.

Affordable Care Act supporters hold up signs outside the Supreme Court as they wait for the court's decision on Obamacare, Thursday, June 25, 2015. (Bill Clark/CQ Roll Call)

Section 1311 of the Patient Protection and Affordable Care Act says customers should receive subsidies through an exchange "established by a state," leaving the Supreme Court to decide how literal those words are: whether tax credits are restricted to customers in state-run exchanges, or if the federally run marketplace counts as well.

The plaintiffs had contended that the legislative language clearly means that tax subsidies to buy health insurance may only be available to states that established their own health exchanges, excluding residents in 37 states that didn’t set up an Obamcare marketplace, while the Obama administration argued the language broadly meant that all exchanges were eligible for federal tax subsidies.

Roberts, like the first time Obamacare survived a major Supreme Court challenge, sided with the court's liberals, as well as Justice Anthony Kennedy, to preserve subsidies for all Americans. Justices Antonin Scalia, Clarence Thomas and Samuel Alito dissented, as they did in the 2012 challenge.

Scalia, reading part of his dissent from the bench, said, "We should start calling this law SCOTUScare."

Nationally, 10.2 million people have signed up for health insurance under the Obama health overhaul. That includes the 8.7 million people who are receiving an average subsidy of $272 a month to help pay their insurance premiums.

Of those receiving subsidies, 6.4 million were at risk of losing that aid because they live in states that did not set up their own health insurance exchanges.

The health insurance industry breathed a big sigh of relief, and a national organization representing state regulators from both political parties said the court's decision will mean stable markets for consumers.

"This decision allows (state officials) to move forward with a level of confidence that their markets will not see significant disruption due to a paradigm shift," said Ben Nelson, CEO of the National Association of Insurance Commissioners and a former Democratic senator from Nebraska.

Shares of publicly traded hospital operators including HCA Holdings Inc. and Tenet Healthcare Corp. soared after the ruling relieved those companies of the prospect of having to deal with an influx of uninsured people. Investors had worried that many patients would drop their coverage if they no longer had tax credits to help pay.

Republicans said the ruling would not mean the end of the political fight over Obamacare.

Sen. Lindsey Graham of South Carolina, a Republican presidential contender, said that for 2016 candidates for Congress or the White House health care will be the "most dominant issue in the country."

And Senate Majority Leader Mitch McConnell said Democrats who support the law "now have a choice: crow about Obamacare's latest wobble toward the edge, or work with us to address the ongoing negative impact of a 2,000-page law that continues to make life miserable for too many of the same people it purported to help."

Republican National Committee Chairman Reince Preibus said the court's ruling "makes it clear that if we want to fix our broken health care system, then we will need to elect a Republican president with proven ideas and real solutions that will help American families."

"Hillary Clinton supports big government mandates and expanding the government’s reach into our health care system, maneuvers that have made our healthcare system worse off. What you will not hear from Democrats today is any information on how to make health care more affordable at a time when premiums are getting more expensive," Priebus said.

The challenge devised by die-hard opponents of the law relied on the four words "established by the state" in the more than 900-page law.

The law's opponents argued that the vast majority of people who now get help paying for their insurance premiums are ineligible for their federal tax credits. That is because roughly three dozen states opted against creating their own health insurance marketplaces, or exchanges, and instead rely on the federal healthcare.gov to help people find coverage if they don't get insurance through their jobs or the government.

In the challengers' view, the phrase "established by the state" demonstrated that subsidies were to be available only to people in states that set up their own exchanges.

The administration, congressional Democrats and 22 states responded that it would make no sense to construct the law the way its opponents suggested. The idea behind the law's structure was to decrease the number of uninsured. The law prevents insurers from denying coverage because of "pre-existing" health conditions. It requires almost everyone to be insured and provides financial help to consumers who otherwise would spend too much of their paycheck on their premiums.

The point of the last piece, the subsidies, is to keep enough people in the pool of insured to avoid triggering a disastrous decline in enrollment, a growing proportion of less healthy people and premium increases by insurers.

Several portions of the law indicate that consumers can claim tax credits no matter where they live. No member of Congress said that subsidies would be limited, and several states said in a separate brief to the court that they had no inkling they had to set up their own exchange for their residents to get tax credits.

The 2012 case took place in the midst of Obama's re-election campaign, when Obama touted the largest expansion of the social safety net since the advent of Medicare nearly a half-century earlier. But at the time, the benefits of the Affordable Care Act were mostly in the future. Many of its provisions had yet to take effect.

In 2015, the landscape has changed, although the partisan and ideological divisions remain for a law that passed Congress in 2010 with no Republican votes.

The Associated Press contributed to this report.