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Obamacare and the Supreme Court Cases

It’s no secret that the Affordable Care Act (the law more commonly known as Obamacare) has been controversial. In fact, no sooner had President Obama signed the law in March of 2010 than various states and organizations began lining up to challenge it in court.

Over the years, the Obamacare law has faced legal hurdles at both the state and the federal level. Some of these challenges have proven successful in limiting the impact of the law. In other cases the courts have found in favor of the Obama administration and upheld the constitutionality of the Affordable Care Act.

In this article, we’ll examine three major Supreme Court cases in which the Obamacare law, or various aspects of it, were challenged. The intent of this article is not to take a political position on the law or on the decisions made by the Supreme Court, but merely to examine the cases as they were argued and the decisions as they were handed down by the court.

Obamacare and the Supreme Court: The National Federation of Independent Businesses v. Sebelius

The Supreme Court case known as The National Federation of Independent Businesses v. Sebelius was the first major challenge to Obamacare to make its way to the Supreme Court. The case consolidated portions of several different lower-court cases which had called into question the constitutionality of several aspects of the Obamacare law. For the purposes of this article, we’ll focus on:

  • The constitutionality of the “individual mandate,” which is the provision of the law requiring most Americans to have health insurance or pay a penalty
  • The question of severability – that is, whether or not the Obamacare law could remain intact if the individual mandate was found to be unconstitutional or whether the invalidation of the individual mandate would invalidate the law in full

Parties in the case included the National Federation of Independent Businesses (NFIB), the largest small business association in the United States, and the federal Department of Health and Human Services (HHS) which was headed at the time by Secretary of Health and Human Services, Kathleen Sebelius.

The plaintiffs argued that Obamacare’s individual mandate requiring most Americans to purchase qualifying health insurance plans or pay a “shared responsibility payment” was unconstitutional and outside the power of Congress to enact.

Before the case was considered by the Supreme Court, a federal district court had found that the individual mandate was, in fact, unconstitutional and that the individual mandate was not severable from the rest of the Affordable Care Act. As a result, the district court struck down the Affordable Care Act in full.

After hearing an appeal of the decision, the 11th Circuit Court of Appeals agreed that the individual mandate was unconstitutional but was, in fact, severable from the rest of the law – and so the law need not be struck down in full, only the individual mandate.

The Supreme Court heard arguments in the case in March of 2012 and published its decision on June 28, 2012. Though the decision was complex, the court found that the individual mandate and the penalty charged to consumers who did not obtain qualifying health insurance was in fact constitutional, since it fell under Congress’s taxing power. With this determination, the question of severability was rendered moot.

This decision preserved the Obamacare law from a challenge that many felt struck at the root of the law’s viability.

Obamacare and the Supreme Court: Burwell v. Hobby Lobby

In the next major Supreme Court challenge to the Obamacare law, parties included HHS, headed by United States Secretary of Health and Human Services Sylvia Matthews Burwell (who had succeeded Kathleen Sebelius), and a for-profit, privately held arts and crafts company known as Hobby Lobby.

At the federal District Court level, Hobby Lobby had maintained that they should not be required by the Obamacare law to provide access to birth-control contraceptives through the group health insurance plans the company provided to employees, despite the fact that coverage of contraceptives was required of all major medical health insurance plans under Obamacare. The plaintiffs argued that providing contraceptive coverage went against their religious beliefs.

The District Court denied Hobby Lobby an injunction against the coverage requirements of the Obamacare law. However, the US Appeals Court for the 10th Circuit found in favor of Hobby Lobby and ordered the government to cease requiring the company to provide contraceptive coverage through its group health insurance plans.

The government appealed the decision and the Supreme Court heard arguments in the case on March 24, 2014. In its decision dated June 30, 2014, the Supreme Court found in favor of Hobby Lobby and struck down the provision of the Obamacare law requiring companies to provide access to contraceptive coverage, at least in the case of “closely-held” private corporations. The ruling was perhaps the first time a for-profit company was allowed to claim a religiously-based exemption from a federal law.

Obamacare and the Supreme Court: King v. Burwell

In the case of King v. Burwell the Supreme Court was essentially asked to interpret the intention of Congress in the language of the Obamacare law, with consequences that could potentially affect the access of millions of Americans to Obamacare subsidies.

The Obamacare law required the establishment of government-run online health insurance marketplaces as resources consumers might turn to in order to obtain qualifying Obamacare health insurance coverage and access to Obamacare subsidies (also known as premium tax credits).

The Obamacare law envisions states creating their own health insurance marketplaces. For states that have opted not to create their own marketplaces, however, the Obamacare law mandates the creation of a federally-run health insurance marketplace to serve consumers unserved by their own state. This federally-run Obamacare marketplace is known today at and serves the needs of consumers in more than thirty states nationwide.

King v. Burwell hinges on the question of whether the federally-run marketplace could distribute Obamacare subsidies to consumers, or if these were only available through state-run marketplaces. The plain language of the law indicates that subsidies may be distributed through online government-run marketplaces “established by the state.”

Plaintiffs in the case argued that, based on this plain reading, the law prohibited the federal government from disbursing Obamacare subsidies to qualifying consumers through because was established by the federal government and not by the “state” government. HHS and the administration argued that the intent of the law was clear, and that the phrasing in question might be considered a drafting error on Congress’s part.

Lower court rulings had come to contradictory conclusions and so the Supreme Court heard arguments in the case of King v. Burwell on March 4, 2015. In its decision, published on June 25, 2015, the Supreme Court found in favor of HHS and the Obama administration. Despite the loose phrasing of the Obamacare law, the Supreme Court found that it was the intent of Congress to make Obamacare subsidies available not only to consumers enrolling through state-run marketplaces but also through the federally-run marketplace.