The Supreme Court Saves PPACA, Again

After weeks of waiting, the Supreme Court released the decision in King et al. v. Burwell,

which is the case addressing the availability of subsidies to residents of states like Nebraska,

which chose not to establish its own state-based exchange.

The Patient Protection and Affordable Care Act (PPACA) states that tax credits,

aka insurance premium subsidies, are available to any “applicable taxpayer”

who has enrolled in an insurance plan through “an Exchange established by the State” under


The Plaintiffs in the Burwell case had a simple argument: “established by the State”

means that citizens in states which chose not to establish their own

exchanges, instead opting to have citizens use the Federal Exchange

(, are prohibited from receiving tax credits and premium

subsidies on the Federal Exchange. They argued that the plain meaning of

the statute meant that only state-based exchange participants were eligible

for governmental subsides.

Chief Justice Roberts wrote the opinion for the Court. He reasoned

that the context of PPACA was important to consider when deciding whether

the phrase “established by the State” was in need of interpretation from the

overall purpose of PPACA. The Chief Justice said things such as, “Congress

passed the Affordable Care Act to improve health insurance markets, not to

destroy them.” He also stated that “The Affordable Care Act contains more

than a few examples of inartful drafting.” The 6-Justice majority ultimately 

found that the phrase “established by the State” was ambiguous, and

reading it to limit subsidies to only state-based exchanges would unravel the

entire purpose of PPACA. Consequently, the Court’s majority upheld the

IRS’s interpretation that the tax credits and subsidies—which are so vital to

PPACA’s existence—are available to all qualifying taxpayers including those

on the Federal Exchange.

This case had the potential to affected Nebraska employers, including

public schools, in a very meaningful way. If the Supreme Court had denied

access to tax credits and subsidies to residents of Nebraska on the Federal

Exchange, it would have removed the main hammer of the “pay or play”

mandates. As we have discussed numerous times at presentations and

workshops, an employer can only be “taxed” for offering unaffordable

insurance or offering insurance to fewer than 95% of full-time employees if

the employees obtain insurance and a tax subsidy or premium credit on the

Exchange. If the Supreme Court had taken away the subsidies and credits,

there would have been no penalties, leaving it to a Republican Congress to

save PPACA. The Chief Justice is correct that it may well have “destroy[ed]”

the marketplace built by PPACA.

This move is not surprising, considering it was the Chief Justice who

saved PPACA in 2013 during the last round of major litigation. We thought

the Court would have used other legal grounds to save PPACA (which are too

boring to talk about here), but the effect of the ruling is the same: thanks to

its third life from the Supreme Court, PPACA is here to stay, at least for now.

As Justice Scalia pointed out, perhaps it’s time to start calling it


If your district has not calculated its “large employer number,”

determined its transition relief, and begun preparing for PPACA’s

implementation, you should begin immediately. Feel free to contact Karen,

Steve, or Bobby or your school district's attorney if you have questions

about PPACA.