Supreme Court Upholds Obamacare Subsidies

Full text of the Supreme Court's decision. PDF may be downloaded. #aca #obamacare
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June 25, 2015 - In a 6-3 decision, the Supreme Court the U.S. Supreme Court sided today with the Obama administration over its major healthcare overhaul, upholding federal subsidies across the country. The ruling holds that the Affordable Care Act authorized federal tax credits for eligible Americans living not only in states with their own exchanges but also in the 34 states with federal marketplaces. It staved off a major political showdown and a mad scramble in states that would have needed to act to prevent millions from losing health care coverage.
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Exchange State tax credit Act insur establish
Full text of the Supreme Court's decision. PDF may be downloaded. #aca #obamacare
About Jack Berlin

About edocr
Exchange State tax credit Act insur establish
<p> 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
(Slip Opinion)
OCTOBER TERM, 2014
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader. 
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 
SUPREME COURT OF THE UNITED STATES 
Syllabus
KING ET AL. v. BURWELL, SECRETARY OF HEALTH
 
AND HUMAN SERVICES, ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 
THE FOURTH CIRCUIT
No. 14–114. Argued March 4, 2015—Decided June 25, 2015
The Patient Protection and Affordable Care Act grew out of a long his-
tory of failed health insurance reform.  In the 1990s, several States
sought to expand access to coverage by imposing a pair of insurance 
market regulations—a “guaranteed issue” requirement, which bars 
insurers from denying coverage to any person because of his health,
and a “community rating” requirement, which bars insurers from
charging a person higher premiums for the same reason.  The re-
forms achieved the goal of expanding access to coverage, but they al-
so encouraged people to wait until they got sick to buy insurance. 
The result was an economic “death spiral”: premiums rose, the num-
ber of people buying insurance declined, and insurers left the market 
entirely.  In 2006, however, Massachusetts discovered a way to make
the guaranteed issue and community rating requirements work—by 
requiring individuals to buy insurance and by providing tax credits to 
certain individuals to make insurance more affordable.  The combi-
nation of these three reforms—insurance market regulations, a cov-
erage mandate, and tax credits—enabled Massachusetts to drastical-
ly reduce its uninsured rate. 
The Affordable Care Act adopts a version of the three key reforms 
that made the Massachusetts system successful.  First, the Act 
adopts the guaranteed issue and community rating requirements.  42
U. S. C. §§300gg, 300gg–1.  Second, the Act generally requires indi-
viduals to maintain health insurance coverage or make a payment to
the IRS, unless the cost of buying insurance would exceed eight per-
cent of that individual’s income.  26 U. S. C. §5000A.  And third, the 
Act seeks to make insurance more affordable by giving refundable 
tax credits to individuals with household incomes between 100 per-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
KING v. BURWELL
Syllabus
cent and 400 percent of the federal poverty line.  §36B.
In addition to those three reforms, the Act requires the creation of 
an “Exchange” in each State—basically, a marketplace that allows
people to compare and purchase insurance plans.  The Act gives each 
State the opportunity to establish its own Exchange, but provides 
that the Federal Government will establish “such Exchange” if the 
State does not. 42 U. S. C. §§18031, 18041.  Relatedly, the Act pro-
vides that tax credits “shall be allowed” for any “applicable taxpayer,”
26 U. S. C. §36B(a), but only if the taxpayer has enrolled in an insur-
ance plan through “an Exchange established by the State under [42
U. S. C. §18031],” §§36B(b)–(c).  An IRS regulation interprets that
language as making tax credits available on “an Exchange,” 26 CFR
§1.36B–2, “regardless of whether the Exchange is established and
operated by a State . . . or by HHS,” 45 CFR §155.20. 
 
 Petitioners are four individuals who live in Virginia, which has a
Federal Exchange.  They do not wish to purchase health insurance. 
In their view, Virginia’s Exchange does not qualify as “an Exchange
established by the State under [42 U. S. C. §18031],” so they should 
not receive any tax credits.  That would make the cost of buying in-
surance more than eight percent of petitioners’ income, exempting
them from the Act’s coverage requirement.  As a result of the IRS
Rule, however, petitioners would receive tax credits.  That would 
make the cost of buying insurance less than eight percent of their in-
come, which would subject them to the Act’s coverage requirement. 
Petitioners challenged the IRS Rule in Federal District Court.  The 
District Court dismissed the suit, holding that the Act unambiguous-
ly made tax credits available to individuals enrolled through a Fed-
eral Exchange.  The Court of Appeals for the Fourth Circuit affirmed.
The Fourth Circuit viewed the Act as ambiguous, and deferred to the
IRS’s interpretation under Chevron U. S. A. Inc. v. Natural Resources 
Defense Council, Inc., 467 U. S. 837. 
Held: Section 36B’s tax credits are available to individuals in States
that have a Federal Exchange.  Pp. 7–21.
(a) When analyzing an agency’s interpretation of a statute, this
Court often applies the two-step framework announced in Chevron, 
467 U. S. 837.  But Chevron does not provide the appropriate frame-
work here.  The tax credits are one of the Act’s key reforms and
whether they are available on Federal Exchanges is a question of
deep “economic and political significance”; had Congress wished to
assign that question to an agency, it surely would have done so ex-
pressly. And it is especially unlikely that Congress would have dele-
gated this decision to the IRS, which has no expertise in crafting
health insurance policy of this sort. 
It is instead the Court’s task to determine the correct reading of
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
3 
Cite as: 576 U. S. ____ (2015) 
Syllabus
Section 36B.  If the statutory language is plain, the Court must en-
force it according to its terms. But oftentimes the meaning—or am-
biguity—of certain words or phrases may only become evident when 
placed in context.  So when deciding whether the language is plain,
the Court must read the words “in their context and with a view to 
their place in the overall statutory scheme.” FDA v. Brown & Wil-
liamson Tobacco Corp., 529 U. S. 120, 133.  Pp. 7–9.
(b) When read in context, the phrase “an Exchange established by
the State under [42 U. S. C. §18031]” is properly viewed as ambigu-
ous.  The phrase may be limited in its reach to State Exchanges.  But
it could also refer to all Exchanges—both State and Federal—for
purposes of the tax credits. If a State chooses not to follow the di-
rective in Section 18031 to establish an Exchange, the Act tells the 
Secretary of Health and Human Services to establish “such Ex-
change.”  §18041.  And by using the words “such Exchange,” the Act 
indicates that State and Federal Exchanges should be the same.  But
State and Federal Exchanges would differ in a fundamental way if
tax credits were available only on State Exchanges—one type of Ex-
change would help make insurance more affordable by providing bil-
lions of dollars to the States’ citizens; the other type of Exchange 
would not.  Several other provisions in the Act—e.g., Section 
18031(i)(3)(B)’s requirement that all Exchanges create outreach pro-
grams to “distribute fair and impartial information concerning . . . 
the availability of premium tax credits under section 36B”—would 
make little sense if tax credits were not available on Federal Ex-
changes.
The argument that the phrase “established by the State” would be
superfluous if Congress meant to extend tax credits to both State and
Federal Exchanges is unpersuasive.  This Court’s “preference for 
avoiding surplusage constructions is not absolute.” Lamie v. United 
States Trustee, 540 U. S. 526, 536.  And rigorous application of that
canon does not seem a particularly useful guide to a fair construction
of the Affordable Care Act, which contains more than a few examples 
of inartful drafting.  The Court nevertheless must do its best, “bear-
ing in mind the ‘fundamental canon of statutory construction that the 
words of a statute must be read in their context and with a view to 
their place in the overall statutory scheme.’ ” Utility Air Regulatory
Group v. EPA, 573 U. S. ___, ___. Pp. 9–15. 
(c) Given that the text is ambiguous, the Court must look to the 
broader structure of the Act to determine whether one of Section 
36B’s “permissible meanings produces a substantive effect that is 
compatible with the rest of the law.”  United Sav. Assn. of Tex. v.
Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 371.
Here, the statutory scheme compels the Court to reject petitioners’
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
 
4 
KING v. BURWELL
Syllabus
interpretation because it would destabilize the individual insurance 
market in any State with a Federal Exchange, and likely create the 
very “death spirals” that Congress designed the Act to avoid.  Under
petitioners’ reading, the Act would not work in a State with a Federal 
Exchange.  As they see it, one of the Act’s three major reforms—the 
tax credits—would not apply.  And a second major reform—the cov-
erage requirement—would not apply in a meaningful way, because so
many individuals would be exempt from the requirement without the 
tax credits.  If petitioners are right, therefore, only one of the Act’s 
three major reforms would apply in States with a Federal Exchange.
The combination of no tax credits and an ineffective coverage re-
quirement could well push a State’s individual insurance market into
a death spiral.  It is implausible that Congress meant the Act to op-
erate in this manner.  Congress made the guaranteed issue and 
community rating requirements applicable in every State in the Na-
tion, but those requirements only work when combined with the cov-
erage requirement and tax credits.  It thus stands to reason that
Congress meant for those provisions to apply in every State as well.
Pp. 15–19. 
(d) The structure of Section 36B itself also suggests that tax credits
are not limited to State Exchanges.  Together, Section 36B(a), which
allows tax credits for any “applicable taxpayer,” and Section
36B(c)(1), which defines that term as someone with a household in-
come between 100 percent and 400 percent of the federal poverty
line, appear to make anyone in the specified income range eligible for
a tax credit.  According to petitioners, however, those provisions are 
an empty promise in States with a Federal Exchange.  In their view,
an applicable taxpayer in such a State would be eligible for a tax
credit, but the amount of that tax credit would always be zero be-
cause of two provisions buried deep within the Tax Code.  That ar-
gument fails because Congress “does not alter the fundamental de-
tails of a regulatory scheme in vague terms or ancillary provisions.”
Whitman v. American Trucking Assns., Inc., 531 U. S. 457.  Pp. 19– 
20.
(e) Petitioners’ plain-meaning arguments are strong, but the Act’s
context and structure compel the conclusion that Section 36B allows 
tax credits for insurance purchased on any Exchange created under 
the Act.  Those credits are necessary for the Federal Exchanges to
function like their State Exchange counterparts, and to avoid the
type of calamitous result that Congress plainly meant to avoid.
Pp. 20–21. 
759 F. 3d 358, affirmed. 
ROBERTS, C. J., delivered the opinion of the Court, in which KEN-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 
Cite as: 576 U. S. ____ (2015) 
Syllabus
NEDY, GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined.  SCALIA,
J., filed a dissenting opinion, in which THOMAS and ALITO, JJ., joined.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_________________ 
 
_________________ 
 
 
 
 
 
 
 
 
 
 
 
1 
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES 
No. 14–114
DAVID KING, ET AL., PETITIONERS v. SYLVIA 

BURWELL, SECRETARY OF HEALTH
 
AND HUMAN SERVICES, ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT
 
[June 25, 2015]

 CHIEF JUSTICE ROBERTS delivered the opinion of the
Court.
The Patient Protection and Affordable Care Act adopts a 
series of interlocking reforms designed to expand coverage
in the individual health insurance market.  First, the Act 
bars insurers from taking a person’s health into account
when deciding whether to sell health insurance or how 
much to charge. Second, the Act generally requires each 
person to maintain insurance coverage or make a payment 
to the Internal Revenue Service.  And third, the Act gives 
tax credits to certain people to make insurance more
affordable. 
In addition to those reforms, the Act requires the crea-
tion of an “Exchange” in each State—basically, a market-
place that allows people to compare and purchase insur-
ance plans. The Act gives each State the opportunity to
establish its own Exchange, but provides that the Federal 
Government will establish the Exchange if the State does 
not. 
This case is about whether the Act’s interlocking re-
 
 
 
 
  
 
 
 
 
 
 
 
 
 
2 
KING v. BURWELL
Opinion of the Court 
forms apply equally in each State no matter who estab-
lishes the State’s Exchange.  Specifically, the question pre- 
sented is whether the Act’s tax credits are available in 
States that have a Federal Exchange. 
I 

A 

The Patient Protection and Affordable Care Act, 124 
Stat. 119, grew out of a long history of failed health insur-
ance reform. In the 1990s, several States began experi-
menting with ways to expand people’s access to coverage.
One common approach was to impose a pair of insurance
market regulations—a “guaranteed issue” requirement,
which barred insurers from denying coverage to any per-
son because of his health, and a “community rating” re-
quirement, which barred insurers from charging a person
higher premiums for the same reason. Together, those 
requirements were designed to ensure that anyone who
wanted to buy health insurance could do so.
The guaranteed issue and community rating require-
ments achieved that goal, but they had an unintended 
consequence: They encouraged people to wait until they
got sick to buy insurance. Why buy insurance coverage 
when you are healthy, if you can buy the same coverage
for the same price when you become ill?  This conse-
quence—known as “adverse selection”—led to a second: 
Insurers were forced to increase premiums to account for 
the fact that, more and more, it was the sick rather than
the healthy who were buying insurance.  And that conse-
quence fed back into the first: As the cost of insurance 
rose, even more people waited until they became ill to
buy it.
This led to an economic “death spiral.”  As premiums 
rose higher and higher, and the number of people buying 
insurance sank lower and lower, insurers began to leave 
the market entirely.  As a result, the number of people 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
3 
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
without insurance increased dramatically.
This cycle happened repeatedly during the 1990s.  For 
example, in 1993, the State of Washington reformed its
individual insurance market by adopting the guaranteed 
issue and community rating requirements. Over the next 
three years, premiums rose by 78 percent and the number
of people enrolled fell by 25 percent.  By 1999, 17 of the
State’s 19 private insurers had left the market, and the
remaining two had announced their intention to do so. 
Brief for America’s Health Insurance Plans as Amicus 
Curiae 10–11. 
For another example, also in 1993, New York adopted 
the guaranteed issue and community rating requirements. 
Over the next few years, some major insurers in the indi-
vidual market raised premiums by roughly 40 percent.  By
1996, these reforms had “effectively eliminated the com-
mercial individual indemnity market in New York with
the largest individual health insurer exiting the market.”
L. Wachenheim & H. Leida, The Impact of Guaranteed 
Issue and Community Rating Reforms on States’ Individ-
ual Insurance Markets 38 (2012). 
In 1996, Massachusetts adopted the guaranteed issue
and community rating requirements and experienced
similar results.  But in 2006, Massachusetts added two
more reforms: The Commonwealth required individuals to 
buy insurance or pay a penalty, and it gave tax credits to
certain individuals to ensure that they could afford the 
insurance they were required to buy.  Brief for Bipartisan 
Economic Scholars as Amici Curiae 24–25. The combina-
tion of these three reforms—insurance market regula-
tions, a coverage mandate, and tax credits—reduced the 
uninsured rate in Massachusetts to 2.6 percent, by far the 
lowest in the Nation. Hearing on Examining Individual
State Experiences with Health Care Reform Coverage
Initiatives in the Context of National Reform before the
Senate Committee on Health, Education, Labor, and 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
KING v. BURWELL
Opinion of the Court 
Pensions, 111th Cong., 1st Sess., 9 (2009). 
B 
The Affordable Care Act adopts a version of the three 
key reforms that made the Massachusetts system success-
ful. First, the Act adopts the guaranteed issue and com-
munity rating requirements.  The Act provides that “each
health insurance issuer that offers health insurance cov-
erage in the individual . . . market in a State must accept 
every . . . individual in the State that applies for such
coverage.”  42 U. S. C. §300gg–1(a).  The Act also bars 
insurers from charging higher premiums on the basis of a 
person’s health. §300gg.
Second, the Act generally requires individuals to main-
tain health insurance coverage or make a payment to the
IRS. 26 U. S. C. §5000A.  Congress recognized that, with-
out an incentive, “many individuals would wait to pur-
chase health insurance until they needed care.” 
42 
U. S. C. §18091(2)(I).  So Congress adopted a coverage 
requirement to “minimize this adverse selection and
broaden the health insurance risk pool to include healthy 
individuals, which will lower health insurance premiums.” 
Ibid.  In Congress’s view, that coverage requirement was
“essential to creating effective health insurance markets.” 
Ibid.  Congress also provided an exemption from the cov-
erage requirement for anyone who has to spend more than
eight percent of his income on health insurance.  26 
U. S. C. §§5000A(e)(1)(A), (e)(1)(B)(ii).
Third, the Act seeks to make insurance more affordable 
by giving refundable tax credits to individuals with
household incomes between 100 percent and 400 percent 
of the federal poverty line. §36B. Individuals who meet 
the Act’s requirements may purchase insurance with the 
tax credits, which are provided in advance directly to the 
individual’s insurer. 42 U. S. C. §§18081, 18082. 
These three reforms are closely intertwined. As noted, 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
5 
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
Congress found that the guaranteed issue and community 
rating requirements would not work without the coverage
requirement.  §18091(2)(I). And the coverage requirement
would not work without the tax credits.  The reason is
that, without the tax credits, the cost of buying insurance
would exceed eight percent of income for a large number of 
individuals, which would exempt them from the coverage 
requirement. Given the relationship between these three 
reforms, the Act provided that they should take effect on
the same day—January 1, 2014. See Affordable Care Act,
§1253, redesignated §1255, 124 Stat. 162, 895; §§1401(e),
1501(d), id., at 220, 249. 
C 
In addition to those three reforms, the Act requires the 
creation of an “Exchange” in each State where people
can shop for insurance, usually online.  42 U. S. C.
§18031(b)(1). An Exchange may be created in one of two 
ways. First, the Act provides that “[e]ach State shall . . . 
establish an American Health Benefit Exchange . . . for 
the State.” Ibid.  Second, if a State nonetheless chooses 
not to establish its own Exchange, the Act provides that 
the Secretary of Health and Human Services “shall . . .
establish and operate such Exchange within the State.” 
§18041(c)(1).
The issue in this case is whether the Act’s tax credits
are available in States that have a Federal Exchange
rather than a State Exchange.  The Act initially provides
that tax credits “shall be allowed” for any “applicable 
taxpayer.”  26 U. S. C. §36B(a).  The Act then provides
that the amount of the tax credit depends in part on 
whether the taxpayer has enrolled in an insurance plan 
through “an Exchange established by the State under 
section 1311 of the Patient Protection and Affordable Care 
Act [hereinafter 42 U. S. C. §18031].” 
26 U. S. C.
§§36B(b)–(c) (emphasis added). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 
KING v. BURWELL
Opinion of the Court 
The IRS addressed the availability of tax credits by
promulgating a rule that made them available on both 
State and Federal Exchanges.  77 Fed. Reg. 30378 (2012).
As relevant here, the IRS Rule provides that a taxpayer is
eligible for a tax credit if he enrolled in an insurance plan 
through “an Exchange,” 26 CFR §1.36B–2 (2013), which is 
defined as “an Exchange serving the individual market . . . 
regardless of whether the Exchange is established and 
operated by a State . . . or by HHS,” 45 CFR §155.20 
(2014). At this point, 16 States and the District of Colum-
bia have established their own Exchanges; the other 34
States have elected to have HHS do so.
D 
Petitioners are four individuals who live in Virginia,
which has a Federal Exchange.  They do not wish to pur-
chase health insurance. 
In their view, Virginia’s Ex-
change does not qualify as “an Exchange established by 
the State under [42 U. S. C. §18031],” so they should not 
receive any tax credits.  That would make the cost of
buying insurance more than eight percent of their income,
which would exempt them from the Act’s coverage re-
quirement. 26 U. S. C. §5000A(e)(1). 
Under the IRS Rule, however, Virginia’s Exchange
would qualify as “an Exchange established by the State 
under [42 U. S. C. §18031],” so petitioners would receive 
tax credits. That would make the cost of buying insurance 
less than eight percent of petitioners’ income, which would 
subject them to the Act’s coverage requirement.  The IRS
Rule therefore requires petitioners to either buy health
insurance they do not want, or make a payment to the 
IRS. 
Petitioners challenged the IRS Rule in Federal District
Court. The District Court dismissed the suit, holding that 
the Act unambiguously made tax credits available to 
individuals enrolled through a Federal Exchange.  King v.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7 
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
Sebelius, 997 F. Supp. 2d 415 (ED Va. 2014).  The Court of
Appeals for the Fourth Circuit affirmed.  759 F. 3d 358
(2014). The Fourth Circuit viewed the Act as “ambiguous
and subject to at least two different interpretations.”  Id.,
at 372. The court therefore deferred to the IRS’s interpre-
tation under Chevron U. S. A. Inc. v. Natural Resources
Defense Council, Inc., 467 U. S. 837 (1984).  759 F. 3d, at 
376. 
The same day that the Fourth Circuit issued its deci-
sion, the Court of Appeals for the District of Columbia 
Circuit vacated the IRS Rule in a different case, holding 
that the Act “unambiguously restricts” the tax credits to 
State Exchanges. Halbig v. Burwell, 758 F. 3d 390, 394 
(2014). We granted certiorari in the present case. 574 
U. S. ___ (2014). 
II
The Affordable Care Act addresses tax credits in what is
now Section 36B of the Internal Revenue Code.  That
section provides: “In the case of an applicable taxpayer, 
there shall be allowed as a credit against the tax imposed 
by this subtitle . . . an amount equal to the premium assis-
tance credit amount.” 26 U. S. C. §36B(a).  Section 36B 
then defines the term “premium assistance credit amount”
as “the sum of the premium assistance amounts deter-
mined under paragraph (2) with respect to all coverage
months of the taxpayer occurring during the taxable year.” 
§36B(b)(1) (emphasis added).  Section 36B goes on to
define the two italicized terms—“premium assistance 
amount” and “coverage month”—in part by referring to an
insurance plan that is enrolled in through “an Exchange
established by the State under [42 U. S. C. §18031].”  26
U. S. C. §§36B(b)(2)(A), (c)(2)(A)(i).
The parties dispute whether Section 36B authorizes tax
credits for individuals who enroll in an insurance plan
through a Federal Exchange.  Petitioners argue that a 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
8 
KING v. BURWELL
Opinion of the Court 
Federal Exchange is not “an Exchange established by the 
State under [42 U. S. C. §18031],” and that the IRS Rule 
therefore contradicts Section 36B.  Brief for Petitioners 
18–20. The Government responds that the IRS Rule is 
lawful because the phrase “an Exchange established by 
the State under [42 U. S. C. §18031]” should be read to
include Federal Exchanges.  Brief for Respondents 20–25.
When analyzing an agency’s interpretation of a statute,
we often apply the two-step framework announced in
Chevron, 467 U. S. 837.  Under that framework, we ask 
whether the statute is ambiguous and, if so, whether the 
agency’s interpretation is reasonable.  Id., at 842–843.
This approach “is premised on the theory that a statute’s 
ambiguity constitutes an implicit delegation from Con-
gress to the agency to fill in the statutory gaps.”  FDA v. 
Brown & Williamson Tobacco Corp., 529 U. S. 120, 159 
(2000). “In extraordinary cases, however, there may be
reason to hesitate before concluding that Congress has
intended such an implicit delegation.” Ibid.
This is one of those cases.  The tax credits are among 
the Act’s key reforms, involving billions of dollars in 
spending each year and affecting the price of health insur-
ance for millions of people.  Whether those credits are 
available on Federal Exchanges is thus a question of deep
“economic and political significance” that is central to this 
statutory scheme; had Congress wished to assign that 
question to an agency, it surely would have done so ex-
pressly. Utility Air Regulatory Group v. EPA, 573 U. S. 
___, ___ (2014) (slip op., at 19) (quoting Brown & William-
son, 529 U. S., at 160).  It is especially unlikely that Con-
gress would have delegated this decision to the IRS, which 
has no expertise in crafting health insurance policy of this
sort. See Gonzales v. Oregon, 546 U. S. 243, 266–267 
(2006). This is not a case for the IRS.
It is instead our task to determine the correct reading of
Section 36B. If the statutory language is plain, we must 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9 
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
enforce it according to its terms.  Hardt v. Reliance Stand-
ard Life Ins. Co., 560 U. S. 242, 251 (2010).  But often-
times the “meaning—or ambiguity—of certain words or 
phrases may only become evident when placed in context.” 
Brown & Williamson, 529 U. S., at 132.  So when deciding
whether the language is plain, we must read the words “in 
their context and with a view to their place in the overall 
statutory scheme.” Id., at 133 (internal quotation marks
omitted). Our duty, after all, is “to construe statutes, not 
isolated provisions.” Graham County Soil and Water 
Conservation Dist. v. United States ex rel. Wilson, 559 
U. S. 280, 290 (2010) (internal quotation marks omitted). 
A 
We begin with the text of Section 36B.  As relevant here, 
Section 36B allows an individual to receive tax credits
only if the individual enrolls in an insurance plan through
“an Exchange established by the State under [42 U. S. C. 
§18031].” In other words, three things must be true: First,
the individual must enroll in an insurance plan through
“an Exchange.”  Second, that Exchange must be “estab-
lished by the State.” And third, that Exchange must be
established “under [42 U. S. C. §18031].”  We address each
requirement in turn.
First, all parties agree that a Federal Exchange quali-
fies as “an Exchange” for purposes of Section 36B. See
Brief for Petitioners 22; Brief for Respondents 22.  Section
18031 provides that “[e]ach State shall . . . establish an
American Health Benefit Exchange . . . for the State.” 
§18031(b)(1). Although phrased as a requirement, the Act 
gives the States “flexibility” by allowing them to “elect” 
whether they want to establish an Exchange.  §18041(b). 
If the State chooses not to do so, Section 18041 provides
that the Secretary “shall . . . establish and operate 
such Exchange within the State.” §18041(c)(1) (emphasis
added). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
10 
KING v. BURWELL
Opinion of the Court 
By using the phrase “such Exchange,” Section 18041 
instructs the Secretary to establish and operate the same
Exchange that the State was directed to establish under
Section 18031. See Black’s Law Dictionary 1661 (10th ed. 
2014) (defining “such” as “That or those; having just been
mentioned”). In other words, State Exchanges and Fed- 
eral Exchanges are equivalent—they must meet the same 
requirements, perform the same functions, and serve the
same purposes. Although State and Federal Exchanges
are established by different sovereigns, Sections 18031 
and 18041 do not suggest that they differ in any meaning-
ful way. A Federal Exchange therefore counts as “an
Exchange” under Section 36B. 
Second, we must determine whether a Federal Ex-
change is “established by the State” for purposes of Sec-
tion 36B. At the outset, it might seem that a Federal
Exchange cannot fulfill this requirement.  After all, the 
Act defines “State” to mean “each of the 50 States and the
District of Columbia”—a definition that does not include 
the Federal Government.  42 U. S. C. §18024(d).  But 
when read in context, “with a view to [its] place in the
overall statutory scheme,” the meaning of the phrase
“established by the State” is not so clear.  Brown & 
Williamson, 529 U. S., at 133 (internal quotation marks
omitted).
After telling each State to establish an Exchange, Sec-
tion 18031 provides that all Exchanges “shall make avail-
able qualified health plans to qualified individuals.”  42
U. S. C. §18031(d)(2)(A).  Section 18032 then defines the
term “qualified individual” in part as an individual who 
“resides in the State that established the Exchange.”
§18032(f)(1)(A). And that’s a problem: If we give the 
phrase “the State that established the Exchange” its most
natural meaning, there would be no “qualified individuals”
on Federal Exchanges.  But the Act clearly contemplates 
that there will be qualified individuals on every Exchange. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
As we just mentioned, the Act requires all Exchanges to
“make available qualified health plans to qualified indi-
viduals”—something an Exchange could not do if there 
were no such individuals.  §18031(d)(2)(A).  And the Act 
tells the Exchange, in deciding which health plans to offer, 
to consider “the interests of qualified individuals . . . in the
State or States in which such Exchange operates”—again, 
something the Exchange could not do if qualified individ-
uals did not exist. §18031(e)(1)(B). This problem arises 
repeatedly throughout the Act. See, e.g., §18031(b)(2)
(allowing a State to create “one Exchange . . . for providing 
. . . services to both qualified individuals and qualified 
small employers,” rather than creating separate Exchanges
for those two groups).1 
These provisions suggest that the Act may not always
use the phrase “established by the State” in its most natu-
ral sense. Thus, the meaning of that phrase may not be as 
clear as it appears when read out of context.
Third, we must determine whether a Federal Exchange
is established “under [42 U. S. C. §18031].”  This too might 
seem a requirement that a Federal Exchange cannot 
fulfill, because it is Section 18041 that tells the Secretary 
when to “establish and operate such Exchange.”  But here 
again, the way different provisions in the statute interact 
suggests otherwise.
The Act defines the term “Exchange” to mean “an Amer-
ican Health Benefit Exchange established under section
18031.” §300gg–91(d)(21).  If we import that definition 
—————— 
1 The dissent argues that one would “naturally read instructions 
about qualified individuals to be inapplicable to the extent a particular 
Exchange has no such individuals.” Post, at 10–11 (SCALIA, J., dissent-
ing).  But the fact that the dissent’s interpretation would make so many
parts of the Act “inapplicable” to Federal Exchanges is precisely what 
creates the problem.  It would be odd indeed for Congress to write such
detailed instructions about customers on a State Exchange, while 
having nothing to say about those on a Federal Exchange. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12 
KING v. BURWELL
Opinion of the Court 
into Section 18041, the Act tells the Secretary to “establish 
and operate such ‘American Health Benefit Exchange
established under section 18031.’ ” That suggests that 
Section 18041 authorizes the Secretary to establish an
Exchange under Section 18031, not (or not only) under 
Section 18041. Otherwise, the Federal Exchange, by
definition, would not be an “Exchange” at all. See Halbig, 
758 F. 3d, at 399–400 (acknowledging that the Secretary 
establishes Federal Exchanges under Section 18031). 
This interpretation of “under [42 U. S. C. §18031]” fits 
best with the statutory context. All of the requirements
that an Exchange must meet are in Section 18031, so it is
sensible to regard all Exchanges as established under that
provision. In addition, every time the Act uses the word
“Exchange,” the definitional provision requires that we 
substitute the phrase “Exchange established under section 
18031.” If Federal Exchanges were not established under 
Section 18031, therefore, literally none of the Act’s re-
quirements would apply to them.  Finally, the Act repeat-
edly uses the phrase “established under [42 U. S. C.
§18031]” in situations where it would make no sense to 
distinguish between State and Federal Exchanges.  See, 
e.g., 26 U. S. C. §125(f)(3)(A) (2012 ed., Supp. I) (“The term
‘qualified benefit’ shall not include any qualified health
plan . . . offered through an Exchange established under 
[42 U. S. C. §18031]”); 26 U. S. C. §6055(b)(1)(B)(iii)(I)
(2012 ed.) (requiring insurers to report whether each
insurance plan they provided “is a qualified health plan
offered through an Exchange established under [42 
U. S. C. §18031]”).  A Federal Exchange may therefore be 
considered one established “under [42 U. S. C. §18031].” 
The upshot of all this is that the phrase “an Exchange
established by the State under [42 U. S. C. §18031]” is
properly viewed as ambiguous.  The phrase may be limited 
in its reach to State Exchanges.  But it is also possible 
that the phrase refers to all Exchanges—both State and 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
Federal—at least for purposes of the tax credits.  If a State 
chooses not to follow the directive in Section 18031 that it 
establish an Exchange, the Act tells the Secretary to 
establish “such Exchange.”  §18041. And by using the
words “such Exchange,” the Act indicates that State and 
Federal Exchanges should be the same. But State and 
Federal Exchanges would differ in a fundamental way if 
tax credits were available only on State Exchanges—one 
type of Exchange would help make insurance more afford-
able by providing billions of dollars to the States’ citizens; 
the other type of Exchange would not.2 
The conclusion that Section 36B is ambiguous is further
supported by several provisions that assume tax credits
will be available on both State and Federal Exchanges. 
For example, the Act requires all Exchanges to create 
outreach programs that must “distribute fair and impar-
tial information concerning . . . the availability of premium 
tax credits under section 36B.”  §18031(i)(3)(B). The Act 
also requires all Exchanges to “establish and make avail- 
able by electronic means a calculator to determine the
actual cost of coverage after the application of any pre-
mium tax credit under section 36B.” §18031(d)(4)(G). And 
the Act requires all Exchanges to report to the Treasury 
Secretary information about each health plan they sell, 
—————— 
2 The dissent argues that the phrase “such Exchange” does not sug-
gest that State and Federal Exchanges “are in all respects equivalent.” 
Post, at 8. In support, it quotes the Constitution’s Elections Clause, 
which makes the state legislature primarily responsible for prescribing
election regulations, but allows Congress to “make or alter such Regu-
lations.” Art. I, §4, cl. 1.  No one would say that state and federal
election regulations are in all respects equivalent, the dissent contends,
so we should not say that State and Federal Exchanges are.  But the
Elections Clause does not precisely define what an election regulation 
must look like, so Congress can prescribe regulations that differ from
what the State would prescribe.  The Affordable Care Act does precisely 
define what an Exchange  must look like, however, so a Federal Ex-
change cannot differ from a State Exchange. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14 
KING v. BURWELL
Opinion of the Court 
including the “aggregate amount of any advance payment 
of such credit,” “[a]ny information . . . necessary to deter-
mine eligibility for, and the amount of, such credit,” and
any “[i]nformation necessary to determine whether a 
taxpayer has received excess advance payments.” 
26 
U. S. C. §36B(f)(3).  If tax credits were not available on
Federal Exchanges, these provisions would make little 
sense.
Petitioners and the dissent respond that the words
“established by the State” would be unnecessary if Con-
gress meant to extend tax credits to both State and Fed- 
eral Exchanges.  Brief for Petitioners 20; post, at 4–5.  But 
“our preference for avoiding surplusage constructions is
not absolute.” Lamie v. United States Trustee, 540 U. S.
526, 536 (2004); see also Marx v. General Revenue Corp., 
568 U. S. ___, ___ (2013) (slip op., at 13) (“The canon 
against surplusage is not an absolute rule”). And specifi-
cally with respect to this Act, rigorous application of the
canon does not seem a particularly useful guide to a fair 
construction of the statute. 
The Affordable Care Act contains more than a few ex-
amples of inartful drafting.  (To cite just one, the Act
creates three separate Section 1563s.  See 124 Stat. 270,
911, 912.)  Several features of the Act’s passage contributed 
to that unfortunate reality.  Congress wrote key parts 
of the Act behind closed doors, rather than through “the 
traditional legislative process.” Cannan, A Legislative
History of the Affordable Care Act: How Legislative Pro-
cedure Shapes Legislative History, 105 L. Lib. J. 131, 163
(2013). And Congress passed much of the Act using a 
complicated budgetary procedure known as “reconcilia-
tion,” which limited opportunities for debate and amend-
ment, and bypassed the Senate’s normal 60-vote filibuster 
requirement. Id., at 159–167.  As a result, the Act does
not reflect the type of care and deliberation that one might
expect of such significant legislation.  Cf. Frankfurter,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
Some Reflections on the Reading of Statutes, 47 Colum. L.
Rev. 527, 545 (1947) (describing a cartoon “in which a
senator tells his colleagues ‘I admit this new bill is too
complicated to understand. We’ll just have to pass it to
find out what it means.’ ”).
Anyway, we “must do our best, bearing in mind the
fundamental canon of statutory construction that the
words of a statute must be read in their context and with a
view to their place in the overall statutory scheme.”  Util- 
ity Air Regulatory Group, 573 U. S., at ___ (slip op., at 15) 
(internal quotation marks omitted).  After reading Section
36B along with other related provisions in the Act, we
cannot conclude that the phrase “an Exchange established
by the State under [Section 18031]” is unambiguous. 
B 
Given that the text is ambiguous, we must turn to the
broader structure of the Act to determine the meaning of
Section 36B. “A provision that may seem ambiguous in
isolation is often clarified by the remainder of the statu- 
tory scheme . . . because only one of the permissible mean-
ings produces a substantive effect that is compatible with 
the rest of the law.” United Sav. Assn. of Tex. v. Timbers 
of Inwood Forest Associates, Ltd., 484 U. S. 365, 371 
(1988). Here, the statutory scheme compels us to reject 
petitioners’ interpretation because it would destabilize the 
individual insurance market in any State with a Federal
Exchange, and likely create the very “death spirals” that
Congress designed the Act to avoid. See New York State 
Dept. of Social Servs. v. Dublino, 413 U. S. 405, 419–420
(1973) (“We cannot interpret federal statutes to negate 
their own stated purposes.”).3 
—————— 
3 The dissent notes that several other provisions in the Act use the
phrase “established by the State,” and argues that our holding applies
to each of those provisions.  Post, at 5–6.  But “the presumption of
consistent usage readily yields to context,” and a statutory term may
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16 
KING v. BURWELL
Opinion of the Court 
As discussed above, Congress based the Affordable Care
Act on three major reforms: first, the guaranteed issue
and community rating requirements; second, a require-
ment that individuals maintain health insurance coverage
or make a payment to the IRS; and third, the tax credits
for individuals with household incomes between 100 per-
cent and 400 percent of the federal poverty line.  In a
State that establishes its own Exchange, these three
reforms work together to expand insurance coverage.  The 
guaranteed issue and community rating requirements
ensure that anyone can buy insurance; the coverage re-
quirement creates an incentive for people to do so before
they get sick; and the tax credits—it is hoped—make 
insurance more affordable. Together, those reforms “min-
imize . . . adverse selection and broaden the health in- 
surance risk pool to include healthy individuals, which
will lower health insurance premiums.”  42 U. S. C. 
§18091(2)(I).
Under petitioners’ reading, however, the Act would
operate quite differently in a State with a Federal Ex-
change. As they see it, one of the Act’s three major re-
forms—the tax credits—would not apply.  And a second
major reform—the coverage requirement—would not 
apply in a meaningful way. As explained earlier, the 
coverage requirement applies only when the cost of buying
health insurance (minus the amount of the tax credits) is
less than eight percent of an individual’s income.  26
U. S. C. §§5000A(e)(1)(A), (e)(1)(B)(ii).  So without the tax 
credits, the coverage requirement would apply to fewer 
individuals. And it would be a lot fewer. In 2014, approx-
—————— 

mean different things in different places.  Utility Air Regulatory Group
 
v. EPA, 573 U. S. ___, ___ (2014) (slip op., at 15) (internal quotation 
marks omitted).  That is particularly true when, as here, “the Act is far
from a chef d’oeuvre of legislative draftsmanship.”  Ibid.  Because the  
other provisions cited by the dissent are not at issue here, we do not 
address them.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
imately 87 percent of people who bought insurance on a 
Federal Exchange did so with tax credits, and virtually all
of those people would become exempt.  HHS, A. Burke, A. 
Misra, & S. Sheingold, Premium Affordability, Competi-
tion, and Choice in the Health Insurance Marketplace 5 
(2014); Brief for Bipartisan Economic Scholars as Amici 
Curiae 19–20. If petitioners are right, therefore, only one
of the Act’s three major reforms would apply in States
with a Federal Exchange. 
The combination of no tax credits and an ineffective
coverage requirement could well push a State’s individual
insurance market into a death spiral.  One study predicts
that premiums would increase by 47 percent and enroll-
ment would decrease by 70 percent.  E. Saltzman & C.
Eibner, The Effect of Eliminating the Affordable Care
Act’s Tax Credits in Federally Facilitated Marketplaces 
(2015). Another study predicts that premiums would 
increase by 35 percent and enrollment would decrease by
69 percent. L. Blumberg, M. Buettgens, & J. Holahan,
The Implications of a Supreme Court Finding for the
Plaintiff in King vs. Burwell: 8.2 Million More Uninsured 
and 35% Higher Premiums (2015).  And those effects
would not be limited to individuals who purchase insur-
ance on the Exchanges.  Because the Act requires insurers
to treat the entire individual market as a single risk pool, 
42 U. S. C. §18032(c)(1), premiums outside the Exchange 
would rise along with those inside the Exchange.  Brief for
Bipartisan Economic Scholars as Amici Curiae 11–12. 
It is implausible that Congress meant the Act to operate 
in this manner. See National Federation of Independent 
Business v. Sebelius, 567 U. S. ___, ___ (2012) (SCALIA, 
KENNEDY, THOMAS, and ALITO, JJ., dissenting) (slip op.,
at 60) (“Without the federal subsidies . . . the exchanges
would not operate as Congress intended and may not
operate at all.”).  Congress made the guaranteed issue and 
community rating requirements applicable in every State 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18 
KING v. BURWELL
Opinion of the Court 
in the Nation. But those requirements only work when
combined with the coverage requirement and the tax 
credits. So it stands to reason that Congress meant for
those provisions to apply in every State as well.4 
Petitioners respond that Congress was not worried
about the effects of withholding tax credits from States
with Federal Exchanges because “Congress evidently
believed it was offering states a deal they would not re-
fuse.” Brief for Petitioners 36. Congress may have been
wrong about the States’ willingness to establish their own 
Exchanges, petitioners continue, but that does not allow 
this Court to rewrite the Act to fix that problem.  That is 
particularly true, petitioners conclude, because the States
likely would have created their own Exchanges in the 
absence of the IRS Rule, which eliminated any incentive
that the States had to do so.  Id., at 36–38. 
Section 18041 refutes the argument that Congress
believed it was offering the States a deal they would not 
—————— 
4 The dissent argues that our analysis “show[s] only that the statu-
tory scheme contains a flaw,” one “that appeared as well in other parts
of the Act.” Post, at 14.  For support, the dissent notes that the guaran-
teed issue and community rating requirements might apply in the
federal territories, even though the coverage requirement does not.  Id.,
at 14–15.  The confusion arises from the fact that the guaranteed issue
and community rating requirements were added as amendments to the
Public Health Service Act, which contains a definition of the word
“State” that includes the territories, 42 U. S. C. §201(f), while the later-
enacted Affordable Care Act contains a definition of the word “State” 
that excludes the territories, §18024(d).  The predicate for the dissent’s
point is therefore uncertain at best. 
The dissent also notes that a different part of the Act “established a
long-term-care insurance program with guaranteed-issue and community-
rating requirements, but without an individual mandate or subsi-
dies.”  Post, at 14.  True enough.  But the fact that Congress was willing 
to accept the risk of adverse selection in a comparatively minor pro-
gram does not show that Congress was willing to do so in the general
health insurance program—the very heart of the Act.  Moreover, 
Congress said expressly that it wanted to avoid adverse selection in the
health insurance markets.  §18091(2)(I).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
refuse. That section provides that, if a State elects not to
establish an Exchange, the Secretary “shall . . . establish
and operate such Exchange within the State.”  42 U. S. C. 
§18041(c)(1)(A). The whole point of that provision is to
create a federal fallback in case a State chooses not to 
establish its own Exchange.  Contrary to petitioners’ 
argument, Congress did not believe it was offering States
a deal they would not refuse—it expressly addressed what 
would happen if a State did refuse the deal. 
C 
Finally, the structure of Section 36B itself suggests that
tax credits are not limited to State Exchanges.  Section 
36B(a) initially provides that tax credits “shall be allowed” 
for any “applicable taxpayer.”  Section 36B(c)(1) then 
defines an “applicable taxpayer” as someone who (among 
other things) has a household income between 100 percent 
and 400 percent of the federal poverty line.  Together,
these two provisions appear to make anyone in the speci-
fied income range eligible to receive a tax credit.
According to petitioners, however, those provisions are 
an empty promise in States with a Federal Exchange.  In
their view, an applicable taxpayer in such a State would 
be eligible for a tax credit—but the amount of that tax 
credit would always be zero. And that is because—diving 
several layers down into the Tax Code—Section 36B says 
that the amount of the tax credits shall be “an amount 
equal to the premium assistance credit amount,” §36B(a);
and then says that the term “premium assistance credit
amount” means “the sum of the premium assistance 
amounts determined under paragraph (2) with respect to 
all coverage months of the taxpayer occurring during the 
taxable year,” §36B(b)(1); and then says that the term
“premium assistance amount” is tied to the amount of the
monthly premium for insurance purchased on “an Ex-
change established by the State under [42 U. S. C. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
20 
KING v. BURWELL
Opinion of the Court 
§18031],” §36B(b)(2); and then says that the term “cover-
age month” means any month in which the taxpayer has 
insurance through “an Exchange established by the State
under [42 U. S. C. §18031],” §36B(c)(2)(A)(i).
We have held that Congress “does not alter the funda-
mental details of a regulatory scheme in vague terms or
ancillary provisions.” Whitman v. American Trucking
Assns., Inc., 531 U. S. 457, 468 (2001).  But in petitioners’
view, Congress made the viability of the entire Affordable
Care Act turn on the ultimate ancillary provision: a sub-
sub-sub section of the Tax Code. We doubt that is what
Congress meant to do.  Had Congress meant to limit tax 
credits to State Exchanges, it likely would have done so in
the definition of “applicable taxpayer” or in some other 
prominent manner. It would not have used such a wind-
ing path of connect-the-dots provisions about the amount
of the credit.5 
D 
Petitioners’ arguments about the plain meaning of
Section 36B are strong.  But while the meaning of the
phrase “an Exchange established by the State under [42 
U. S. C. §18031]” may seem plain “when viewed in isola-
tion,” such a reading turns out to be “untenable in light of
[the statute] as a whole.”  Department of Revenue of Ore. v.
ACF Industries, Inc., 510 U. S. 332, 343 (1994).  In this 
instance, the context and structure of the Act compel us to
depart from what would otherwise be the most natural 
reading of the pertinent statutory phrase. 
—————— 
5 The dissent cites several provisions that “make[ ] taxpayers of all
States eligible for a credit, only to provide later that the amount of the 
credit may be zero.” Post, at 11 (citing 26 U. S. C. §§24, 32, 35, 36). 
None of those provisions, however, is crucial to the viability of a com-
prehensive program like the Affordable Care Act.  No one suggests, for
example, that the first-time-homebuyer tax credit, §36, is essential to 
the viability of federal housing regulation. 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
21
Cite as: 576 U. S. ____ (2015) 
Opinion of the Court 
Reliance on context and structure in statutory interpre-
tation is a “subtle business, calling for great wariness lest 
what professes to be mere rendering becomes creation and 
attempted interpretation of legislation becomes legislation 
itself.” Palmer v. Massachusetts, 308 U. S. 79, 83 (1939).
For the reasons we have given, however, such reliance is
appropriate in this case, and leads us to conclude that 
Section 36B allows tax credits for insurance purchased on
any Exchange created under the Act.  Those credits are 
necessary for the Federal Exchanges to function like their
State Exchange counterparts, and to avoid the type of 
calamitous result that Congress plainly meant to avoid. 
* 
* 
* 
In a democracy, the power to make the law rests with
those chosen by the people. Our role is more confined—“to 
say what the law is.” Marbury v. Madison, 1 Cranch 137, 
177 (1803). That is easier in some cases than in others. 
But in every case we must respect the role of the Legisla-
ture, and take care not to undo what it has done.  A fair 
reading of legislation demands a fair understanding of the
legislative plan.
Congress passed the Affordable Care Act to improve
health insurance markets, not to destroy them.  If at all
possible, we must interpret the Act in a way that is con-
sistent with the former, and avoids the latter. Section 36B
can fairly be read consistent with what we see as Con-
gress’s plan, and that is the reading we adopt.
The judgment of the United States Court of Appeals for 
the Fourth Circuit is 
Affirmed.
 
 
 
 
_________________ 
 
_________________ 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
1 
Cite as: 576 U. S. ____ (2015) 
SCALIA, J., dissenting 
SUPREME COURT OF THE UNITED STATES 
No. 14–114
DAVID KING, ET AL., PETITIONERS v. SYLVIA 

BURWELL, SECRETARY OF HEALTH
 
AND HUMAN SERVICES, ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT
 
[June 25, 2015] 

JUSTICE SCALIA, with whom JUSTICE THOMAS and 
JUSTICE ALITO join, dissenting. 
The Court holds that when the Patient Protection and 
Affordable Care Act says “Exchange established by the
State” it means “Exchange established by the State or the
Federal Government.”  That is of course quite absurd, and 
the Court’s 21 pages of explanation make it no less so.
I 
The Patient Protection and Affordable Care Act makes
major reforms to the American health-insurance market.
It provides, among other things, that every State “shall . . .
establish an American Health Benefit Exchange”—a 
marketplace where people can shop for health-insurance 
plans. 42 U. S. C. §18031(b)(1).  And it provides that if a
State does not comply with this instruction, the Secretary
of Health and Human Services must “establish and oper-
ate such Exchange within the State.” §18041(c)(1). 
A separate part of the Act—housed in §36B of the Inter-
nal Revenue Code—grants “premium tax credits” to subsi-
dize certain purchases of health insurance made on Ex-
changes. The tax credit consists of “premium assistance
amounts” for “coverage months.” 26 U. S. C. §36B(b)(1). 
An individual has a coverage month only when he is cov-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
2 
KING v. BURWELL
SCALIA, J., dissenting 
ered by an insurance plan “that was enrolled in through 
an Exchange established by the State under [§18031].” 
§36B(c)(2)(A). And the law ties the size of the premium
assistance amount to the premiums for health plans which
cover the individual “and which were enrolled in through
an Exchange established by the State under [§18031].” 
§36B(b)(2)(A). The premium assistance amount further 
depends on the cost of certain other insurance plans “of-
fered through the same Exchange.”  §36B(b)(3)(B)(i).
This case requires us to decide whether someone who 
buys insurance on an Exchange established by the Secre-
tary gets tax credits.  You would think the answer would
be obvious—so obvious there would hardly be a need for 
the Supreme Court to hear a case about it.  In order to 
receive any money under §36B, an individual must enroll
in an insurance plan through an “Exchange established by 
the State.”  The Secretary of Health and Human Services 
is not a State.  So an Exchange established by the Secre-
tary is not an Exchange established by the State—which
means people who buy health insurance through such an
Exchange get no money under §36B. 
Words no longer have meaning if an Exchange that is
not established by a State is “established by the State.”  It 
is hard to come up with a clearer way to limit tax credits 
to state Exchanges than to use the words “established by 
the State.” And it is hard to come up with a reason to 
include the words “by the State” other than the purpose of 
limiting credits to state Exchanges.  “[T]he plain, obvious, 
and rational meaning of a statute is always to be preferred 
to any curious, narrow, hidden sense that nothing but the 
exigency of a hard case and the ingenuity and study of an
acute and powerful intellect would discover.” Lynch v. 
Alworth-Stephens Co., 267 U. S. 364, 370 (1925) (internal
quotation marks omitted).  Under all the usual rules of 
interpretation, in short, the Government should lose this 
case. But normal rules of interpretation seem always to
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
  
  
  
3 
Cite as: 576 U. S. ____ (2015) 
SCALIA, J., dissenting 
yield to the overriding principle of the present Court: The 
Affordable Care Act must be saved. 
II
The Court interprets §36B to award tax credits on both 
federal and state Exchanges. It accepts that the “most 
natural sense” of the phrase “Exchange established by the
State” is an Exchange established by a State. Ante, at 11.
(Understatement, thy name is an opinion on the Afford- 
able Care Act!) Yet the opinion continues, with no sem-
blance of shame, that “it is also possible that the phrase 
refers to all Exchanges—both State and Federal.”  Ante, at
13. (Impossible possibility, thy name is an opinion on the 
Affordable Care Act!) The Court claims that “the context
and structure of the Act compel [it] to depart from what
would otherwise be the most natural reading of the perti-
nent statutory phrase.” Ante, at 21. 
I wholeheartedly agree with the Court that sound inter-
pretation requires paying attention to the whole law, not 
homing in on isolated words or even isolated sections. 
Context always matters.  Let us not forget, however, why
context matters: It is a tool for understanding the terms of
the law, not an excuse for rewriting them. 
Any effort to understand rather than to rewrite a law
must accept and apply the presumption that lawmakers 
use words in “their natural and ordinary signification.” 
Pensacola Telegraph Co. v. Western Union Telegraph Co., 
96 U. S. 1, 12 (1878).  Ordinary connotation does not
always prevail, but the more unnatural the proposed 
interpretation of a law, the more compelling the contex- 
tual evidence must be to show that it is correct.  Today’s
interpretation is not merely unnatural; it is unheard of.
Who would ever have dreamt that “Exchange established 
by the State” means “Exchange established by the State or 
the Federal Government”? Little short of an express statu-
tory definition could justify adopting this singular reading.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
KING v. BURWELL
SCALIA, J., dissenting 
Yet the only pertinent definition here provides that “State”
means “each of the 50 States and the District of Colum-
bia.” 42 U. S. C. §18024(d).  Because the Secretary is
neither one of the 50 States nor the District of Columbia,
that definition positively contradicts the eccentric theory 
that an Exchange established by the Secretary has been 
established by the State. 
Far from offering the overwhelming evidence of meaning
needed to justify the Court’s interpretation, other contex-
tual clues undermine it at every turn.  To begin with,
other parts of the Act sharply distinguish between the 
establishment of an Exchange by a State and the estab-
lishment of an Exchange by the Federal Government.  The 
States’ authority to set up Exchanges comes from one
provision, §18031(b); the Secretary’s authority comes from
an entirely different provision, §18041(c). Funding for
States to establish Exchanges comes from one part of the
law, §18031(a); funding for the Secretary to establish
Exchanges comes from an entirely different part of the
law, §18121. 
States generally run state-created Ex-
changes; the Secretary generally runs federally created 
Exchanges.  §18041(b)–(c). And the Secretary’s authority 
to set up an Exchange in a State depends upon the State’s
“[f]ailure to establish [an] Exchange.”  §18041(c) (empha-
sis added).  Provisions such as these destroy any pretense
that a federal Exchange is in some sense also established 
by a State.
Reading the rest of the Act also confirms that, as rele-
vant here, there are only two ways to set up an Exchange
in a State: establishment by a State and establishment by
the Secretary. §§18031(b), 18041(c). So saying that an
Exchange established by the Federal Government is “es-
tablished by the State” goes beyond giving words bizarre
meanings; it leaves the limiting phrase “by the State” with
no operative effect at all. That is a stark violation of the
elementary principle that requires an interpreter “to give
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 
Cite as: 576 U. S. ____ (2015) 
SCALIA, J., dissenting 
effect, if possible, to every clause and word of a statute.” 
Montclair v. Ramsdell, 107 U. S. 147, 152 (1883).  In 
weighing this argument, it is well to remember the differ-
ence between giving a term a meaning that duplicates
another part of the law, and giving a term no meaning at
all. Lawmakers sometimes repeat themselves—whether
out of a desire to add emphasis, a sense of belt-and-
suspenders caution, or a lawyerly penchant for doublets 
(aid and abet, cease and desist, null and void).  Lawmak-
ers do not, however, tend to use terms that “have no oper-
ation at all.” Marbury v. Madison, 1 Cranch 137, 174
(1803). So while the rule against treating a term as a 
redundancy is far from categorical, the rule against treat-
ing it as a nullity is as close to absolute as interpretive
principles get. The Court’s reading does not merely give 
“by the State” a duplicative effect; it causes the phrase to 
have no effect whatever. 
Making matters worse, the reader of the whole Act will
come across a number of provisions beyond §36B that refer
to the establishment of Exchanges by States.  Adopting
the Court’s interpretation means nullifying the term “by 
the State” not just once, but again and again throughout
the Act. Consider for the moment only those parts of the 
Act that mention an “Exchange established by the State” 
in connection with tax credits: 
 The formula for calculating the amount of the tax
credit, as already explained, twice mentions “an Ex-
change established by the State.” 
26 U. S. C.
§36B(b)(2)(A), (c)(2)(A)(i). 
 The Act directs States to screen children for eligibility 
for “[tax credits] under section 36B” and for “any
other assistance or subsidies available for coverage ob-
tained through” an “Exchange established by the
State.” 42 U. S. C. §1396w–</p>