Last week was a historic week for the U.S. Supreme Court and on Thursday June 25, the Supreme Court issued one of its most anticipated decisions of the term with a 6 to 3 rejection of the latest challenge to the Affordable Care Act.

The Court in King V Burwell rejected the challenge by the opponents of the ACA who were attempting to make the case that a literal reading of one sentence of the ACA meant that customers buying health insurance through the federal health care site rather than a state health care exchange could not qualify for the federal tax credits. If the Court had restricted tax credits to state run exchanges, patients and states could have faced some real financial burdens in continuing health insurance, 6.4 million by general estimates. Through the ACA exchanges people can compare and buy health insurance.  If that person is below 400 percent of poverty then a federal tax credit reduces the monthly premium on a sliding scale.  Generally there are 34 states relying on the federal exchange rather than using their own exchange.  But within the thirty-four states are variations including federal-state partnerships.

Writing for the majority, Chief Justice Roberts indicated that because the language being challenged was somewhat ambiguous the Court had to look to the broader structure of the ACA.  He then wrote:

“The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits. It thus stands to reason that Congress meant for those provisions to apply in every State as well.”   

Roberts was joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan with Justice Scalia writing the opinion for the minority which also included Justices Thomas and Alito.

As a practical matter the decision may have struck down one of the last most significant legal challenges to the law. To a certain extent it offered some relief to the majority party Republicans who had been considering various options to temporarily patch together an extension of the tax credits while also denouncing the law at the same time.  The discussion taking place in the Senate and House would have extended the credits for a period of time such as two years (delaying any major decisions until the next Administration) but a final strategy had not been settled on and it may not have been able to get the support of enough Republicans.

The President praised the Court decision that is likely to ensure that the ACA remains intact for the rest of his term. It also leaves open from a more technical and political aspect the question of what the Republican leadership will do with their budget reconciliation opportunity. They could still use it to attempt a more political statement and repeal of the ACA but last week’s new projections by the Congressional Budget Office (CBO) projects that repealing the law would actually worsen the deficit.

The CBO said in an updated review that repeal of the ACA would increase the deficit by at least $137 billion over the next ten years. That projection was based on a new “dynamic” budget scoring tool with the traditional budget scoring calculating a repeal costing moiré than $350 billion over ten years. The CBO report also calculated that in addition to deficit problems, 19 million people would lose health insurance in 2016 rising to 24 million people losing coverage by the end of the decade.

If congressional leadership attempts to use the reconciliation process the narrow requirements of reconciliation does not allow changes in law that will worsen the deficit.

There is the potential that they could still use the reconciliation process as a tool for other legislation