King v. Burwell

Following is the case brief for King v. Burwell, 135 S. Ct. 2480 (2015)

Case Summary of King v. Burwell:

  • The Affordable Care Act (ACA) requires each State to establish health “exchanges” through which people could obtain health insurance.  If a State fails to do so, the federal government provides the health exchange for people in those States.
  • The law also provides for tax credits to individuals who have limited means to pay for insurance.
  • The Internal Revenue Service (IRS) created a regulation to enforce the ACA that provides tax credits for those in both the State and federal exchanges.
  • People seeking to undermine ACA sued, claiming that the IRS regulation was wrong because the ACA only allowed for tax credits to be given to those in State exchanges only.
  • The District Court dismissed the suit, and the Fourth Circuit affirmed.
  • The U.S. Supreme Court affirmed as well, holding that the language of the ACA was clearly meant to include credits for those in both federal and State exchanges.

King v. Burwell Case Brief

Statement of the Facts:

The Affordable Care Act (ACA) provides that each State should set up an “exchange,” which is a health insurance marketplace from which individuals seeking health insurance can shop for, and select, coverage.  If a State fails to set up an “exchange,” then health insurance consumers in that State can use the federally created exchange.  In addition, the ACA provides for tax credits to those poorer individuals who need assistance in paying for insurance premiums when signing up for a policy through “an Exchange established by the State.”

The IRS created an administrative regulation that allowed for the tax credit for people who were either enrolled in a State or federal exchange.  The State of Virginia refused to set up a State exchange, so consumers in that State use the federal exchange.  Some Virginia citizens filed a lawsuit claiming that the IRS regulation was wrong to give tax credits to those in Virginia.  They argued that the “Exchange established by the State” language in the ACA meant that those who used federal exchanges were not eligible for the tax credit.

Procedural History:

  • The District Court dismissed the lawsuit.
  • The Fourth Circuit affirmed the District Court’s decision.
  • The U.S. Supreme Court granted certiorari.

Issue and Holding:

Was the IRS correct in allowing a tax credit for people in both State and federal health exchanges?  Yes.


The Fourth Circuit Court of Appeals decision is affirmed.

Rule of Law or Legal Principle Applied:

When the language of a statute is ambiguous, a court may look to the structure of the law and the legislative history to determine the intent of the legislation.


The phrase “Exchange established by the State” is ambiguous. Therefore, the Court may look at the ACA as a whole to determine whether the IRS’s regulation is a permissible reading of the statute.  The Court need not, as the Fourth Circuit did, rely solely on Chevron deference to an administrative agency (the IRS in this case).

The central purpose of the ACA was to make health care more affordable for all Americans.  Accordingly, it does not make rational sense to provide a benefit (like a tax credit) to only those enrolled in State exchanges, when many people are not able to enroll in State exchanges because their State refused to create one.

Looking at the main purpose of the ACA – affordable health care for all – it is only logical that the statute meant to provide tax credits for people in both State and federal exchanges.  To do otherwise would undermine the purpose of the statute, and destabilize the insurance markets in States using the federal exchange, which Congress did not intend when drafting the law.

Concurring and Dissenting Opinions:

Dissenting Opinion (Scalia):

The phrase in question is not ambiguous.  Therefore, a plain reading of the statute must be followed because the law does combine the federal and State exchange in some places, but not in others.


King v. Burwell is important not because of the legal principles behind it, but more because it was a win for supporters of the ACA.  Indeed, the legal principle here is one of basic statutory construction – i.e., if a statute is ambiguous, a court can look to other sources, like legislative intent, to resolve the ambiguity.  But at the time the case was decided, the ACA was under constant assault and it looked like a conservative-leaning Court may have used this case as an excuse to limit, or destroy, its effectiveness.  Two conservative think tanks funded two of the four lawsuits that resulted in this case.  Thus, it was a surprise that Chief Justice Roberts, who authored the majority opinion, would decide to allow the ACA to function.

Student Resources:

Read the Court Opinion

Listen to the Oral Arguments

Read a recent N.Y. Times Op. Ed. regarding the future of cases like King v. Burwell