Obamacare is here to stay--and some entrepreneurs are thrilled.
In a 6 to 3 decision, the Supreme Court on Thursday ruled that health insurance subsidies granted under the Patient Protection and Affordable Care Act are legal, even when the people claiming them are using the federal health care exchange instead of state-run ones.
The court had been asked to rule on the significance of the four words “established by the state,” buried in the 906-page law better known as Obamacare. In one instance, the law says that subsidies are available to those who qualify and buy insurance "established by the state." The issue before the court was whether or not that meant that people who bought their insurance on the federal exchange could therefore not get a subsidy. About 6.4 million people receive subsidies for health insurance bought on the federal exchange.
In this case, known as King v. Burwell, the court opted to look at the law as a whole rather than focus narrowly on the four words in question. The majority opinion, written by chief justice John Roberts, states that "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 consistent with the former, and avoids the latter."
The opinion also notes that the law "contains more than a few examples of inartful drafting." In his dissent, Justice Antonin Scalia calls his colleagues' reading of the law "quite absurd."
The decision is mostly bad news for many business owners. Some were hoping the court would abolish the subsidies, throwing the future of the exchanges into turmoil and emboldening Republican efforts to overturn the law. Many entrepreneurs who did not previously offer health insurance to their workers suddenly found that the law required them to do so, often at significant cost.
But for others, notably those who are just getting going and dealing with the shock of quitting their day jobs and leaving their health insurance plans behind, the health insurance exchanges, imperfect as they are, have been a boon.
Crystal Beasley, founder of Portland, Oregon-based custom denim startup Qcut, with four employees, says that in the first year of starting her business, her health care was subsidized under Obamacare. "I had no paycheck," she says, "but I knew that if I got sick I would at least have that safety net."
Susan Scrupski, founder of Lake Mary, Fla.-based Big Mountain Data, which uses big data to try to prevent domestic violence, was even more worried. She lives in Florida, where governor Rick Scott is an outspoken opponent of Obamacare. She buys her health insurance through the federal exchange, and didn’t expect the state to come up with a plan B if the court had outlawed her subsidy.
"One of the reasons I can launch a new business as a single-mom entrepreneur is because my income is so low in the startup phase, health care [is] wonderfully affordable," Scrupski says.
Without those subsidies, she says, she’d have two choices: go back to a full-time job with benefits, or continue to work on her startup without health insurance, and hope that neither she nor her son get sick.
Neither of those options would be good for her, her son, or job creation in her state--so for Scrupski, and entrepreneurs like her, the Supreme Court ruling is actually good for business.