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Nationwide Healthcare Subsidies Supported by the U.S. Supreme Court
In a 6 to 3 ruling on Thursday, June 25, 2015, the U.S. Supreme Court decided that citizens in 34 states, who did not establish their own insurance exchanges, are eligible for premium subsidies which take the form of a tax credit, under President Obama’s Affordable Care Act (ACA) healthcare law. This historic ruling has taken place on the 5th anniversary of the ACA.
Although certain states set up their own exchanges, about 3 dozen allowed the federal government to manage their exchanges. On average, about 85% of customers around the nation using the exchanges qualify for subsidies to help pay for coverage, based on their income. According to the U.S. Department of Health and Human Services, 10.2 million Americans were actively covered under an ACA exchange plan, 8.7 of these individuals nationwide and 6.4 million in states with a federally established exchange had received a premium tax credit averaging $272 monthly.
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The Internal Revenue Service (IRS) interpreted that the law is intended for qualifying citizens in those 34 states to receive subsidies. ACA critics challenged that policy in numerous federal lawsuits— arguing that the government should follow the letter of the law, limiting subsidies to people obtaining coverage through a state established exchange. When the Obama administration defended the IRS ruling in those cases, it said that the law treated federally established exchanges as substitutions for those created by states.
Individuals, who could not afford insurance coverage without the availability of subsidies, would not be eligible under the law’s mandate to buy a policy. Therefore, the favorable decision by the Supreme Court allows 6.4 million Americans in those 34 states who have purchased private coverage with the help of subsidies to exhale a sigh of relief.
“As the dust has settled there can be no doubt that this law is working, it has changed, and in some cases, saved American lives. It set this country on a smarter, stronger course. And today, after more than 50 votes in congress to repeal or weaken this law, after a presidential election based in part on preserving or repealing this law, after multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay, ” President Obama said in a press conference with CNN.—Alessia D’Anna
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