Health insurance subsidies provided by the Affordable Care Act will continue to be available regardless of whether states establish their own health care exchanges or rely on the federal government to establish a health care exchange in the state, the U.S. Supreme Court recently ruled. The Court’s 6-3 ruling in King v. Burwell ensures that the ACA will continue intact without judicial interference, and specifically ensures that the 6.4 million people who currently have subsidized insurance through healthcare exchanges established by the federal government will continue to receive those subsidies.

A key goal of the ACA is to expand health care coverage by making insurance more affordable through the provision of tax credits to individuals who have household incomes between 100 percent and 400 percent of the federal poverty line. In addition to these tax credits, the ACA requires that a healthcare exchange — an online marketplace that allows individuals to compare and purchase insurance plans — be created in each state. The ACA gives the states two options when setting up its exchange: 1.) establish a healthcare exchange, or 2.) rely on the federal government to establish one in the state. As it stands, there are 34 states that have federally established healthcare exchanges. The issue in this case was whether the ACA’s tax credits would be available in those states that have a federally established exchange rather than one established by the individual state.

The Court’s decision ultimately turned on its interpretation of a single phrase in the law: “established by the State.” Although petitioners claimed these words limited the availability of the ACA’s tax credits only to those states that have established an exchange, the Court did not agree. Chief Justice John Roberts, writing for the majority, recognized that excluding those states that have federally established healthcare exchanges could send a state’s individual insurance market into a “death spiral.” Some studies estimated that if these tax credits were removed, a state’s insurance premiums could increase by 47 percent, ultimately leading to a decrease in enrollment by an estimated 70 percent. Combined with the fact that 34 states have federally established exchanges, the foregoing statistics suggest that an estimated 6.4 million people with subsidized insurance policies would no longer be able to afford health insurance. Furthermore, those who purchase their own private insurance would also feel the effects of this change with their insurance premiums, which would increase when the insurance pool becomes both older and less healthy. With these consequences in mind, Roberts reasoned that an interpretation that would effectively destroy the insurance market ran counter to the purpose and goals Congress had when it passed the ACA. As a result of the Court’s decision in King v. Burwell, individuals will no longer need to worry about losing their health insurance tax credits due to their state’s decision to use federally established health insurance exchanges.