: Why was the King v. Burwell case important? ↖ Back to top

The case was one of this year's most important news subjects. It had the potential to roll back a major portion of Obamacare: the subsidies that more than 6 million middle-income people, across more than 30 states, now receive to buy health insurance. Without those subsidies, many people would not have been able to afford health insurance. And without those people in the insurance markets, prices would have risen for everyone else. The government's victory means that the health care law will continue unchanged by the court.

: How did the court rule? ↖ Back to top

In a 6-3 decision, the Supreme Court ruled that subsidies could continue to be distributed to insurance customers in every state of the country, regardless of who ran its marketplace. "Congress passed the Affordable Care Act to improve health insurance markets, not destroy them," wrote Chief Justice John Roberts in the court's majority opinion.

: What was the case about? ↖ Back to top

The Patient Protection and Affordable Care Act (the health law's official name) sets up marketplaces in every state where people who don’t have insurance can shop for individual health plans. Most blue states set up their own marketplaces, known as exchanges. Most red states did not, instead allowing the federal government to do so. Across all states, about 85 percent of customers qualify for federal subsidies to help pay for the coverage, based on their income.

One section of the law says that subsidies should flow to customers “through an Exchange established by the state.” Plaintiffs argued unsuccessfully that the language meant that only people in the state-run marketplaces – and not those in federally run marketplaces – could get the subsidies.

: When was the case decided? ↖ Back to top

The court decided the case on June 25, 2015, near the end of the term, but not on its last day.

: What does this mean for states? ↖ Back to top

States using the federal exchange, HealthCare.gov, no longer need to worry about losing health insurance subsidies for their residents. But now states that are managing their own health insurance exchanges may think twice about whether it's worth the continued expense and difficulty. Already, several state exchanges have switched to the federal platform, and others are considering it.

: Who could have lost subsidies? ↖ Back to top

Precise answers were hard, because exchanges take several forms – not simply federal- or state-based – and both the court and the federal government could have had leeway in defining what it means for an exchange to be “established by the state.” But the subsidies could have disappeared in as many as 37 states, meaning around 6.6 million people could have lost their tax credits.

: Would other people have been affected, too? ↖ Back to top

Beyond the immediate cancellation of subsidies, a decision for the plaintiffs would have also had secondary effects on insurance markets. As subsidies disappeared and most lower-income customers drop out of the market, only the sickest such patients would have been likely to keep paying for insurance. That, in turn, would have led to higher prices for everyone, including people who didn't use subsidies.

: What were the two sides' arguments? ↖ Back to top

The plaintiffs argued that the clear language in one section of the law meant that only residents of state-run exchanges were allowed to receive subsidies. The exchanges being managed by the federal government, they said, did not count as “established by the state” under the law.

The Obama administration successfully argued that the phrase had to be read in the context of the full Affordable Care Act. Given the overall structure of the law, the administration's argument went, it was clear that Congress intended tax credits to be made available in every state.

Correction: Feb. 3, 2015

An earlier version of this article misstated the source of funding for lawsuits  challenging the Affordable Care Act’s rules on subsidies. Two of them, including King v. Burwell, have been funded by the Competitive Enterprise Institute; the institute has not funded all such cases.

Because of a coding error, part of a phrase was omitted in the section answering the question “What is the case about?” It should say “One section of the law says that subsidies should flow to customers in an ‘Exchange established by the state,’” not “One section of the law says that subsidies should flow to customers.”