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King v. Burwell

Supreme Court of the United States · 2015 · Constitutional Law

Statutory InterpretationAdministrative LawHealth Care ReformAffordable Care ActACASection 36Btax creditsFederal Exchange

Facts

The Affordable Care Act created interlocking reforms in the individual insurance market: guaranteed issue and community rating requirements, a coverage requirement, and refundable tax credits to make insurance affordable. The Act required an Exchange in each State, with the State given the chance to establish its own Exchange and the Federal Government directed to establish and operate the Exchange if the State did not. Section 36B ties tax credits to enrollment through "an Exchange established by the State under" 42 U.S.C. § 18031, and the IRS issued a rule making tax credits available on both State and Federal Exchanges. Petitioners lived in Virginia, which used a Federal Exchange, and argued that without credits they would be exempt from the coverage requirement because insurance would cost more than eight percent of their income.

Issue

Whether the Affordable Care Act authorizes tax credits for individuals who purchase health insurance on an Exchange established by the Federal Government for a State, rather than on an Exchange established by the State itself. Also, whether that question should be resolved by deference to the IRS or by the Court's own interpretation of the statute.

Rule

When a question involving an agency's interpretation concerns a matter of deep economic and political significance that is central to the statutory scheme, the Court will not presume Congress implicitly delegated that question to the agency absent express authorization. In interpreting a statute, courts must read contested language in context and with a view to its place in the overall statutory scheme, and where a provision is ambiguous, adopt the reading that fits the structure of the Act and avoids undermining the statute's operation.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Congress creates a nationwide housing-assistance program built around state housing portals, with a federal fallback portal if a State declines to create one. A disputed Treasury regulation determines whether monthly affordability credits are available on federal fallback portals, affecting millions of renters and billions of dollars each year.

If a court reviews the regulation, which approach is most consistent with the governing doctrine?

Explanation. When the disputed agency interpretation concerns a question of deep economic and political significance that is central to the statutory scheme, the Court will not presume Congress implicitly delegated that question to the agency. Instead, the court must determine the correct reading itself. That is so even if the issue arises in a tax or benefits provision.