Supreme Court Backs Affordable Care Act, Disparate-Impact Housing Claims

By Mark Walsh — June 25, 2015 4 min read
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The U.S. Supreme Court on Thursday gave major victories to President Barack Obama’s administration on two issues with implications for the schools: health care and housing discrimination.

The justices ruled 6-3 that tax credits under the Affordable Care Act are available to individuals in states that have not set up their own exchanges that allow them to purchase insurance on the federal exchange. That case, King v. Burwell (No. 14-114) was a major test of the future of Obama’s signature legislative achievement. The administration was supported in the case by the National Education Association, while a group of school districts in Indiana supported challengers of the provision and are pressing their own suit against the law’s so-called employer mandate.

Meanwhile, in Texas Department of Housing and Community Affairs v. Inclusive Communities Project Inc. (No. 13-1371), the high court ruled 5-4 that so-called disparate impact claims may be brought under the Fair Housing Act of 1968.

Several civil rights groups had filed briefs stressing the link between housing opportunities and racial diversity in schools, arguing that the unavailability of disparate-impact claims would worsen racial isolation in the nation’s classrooms.

In the Affordable Care Act decision, the impact for schools is mostly that the insurance law will continue without the prospect of being serious hobbled, which is what many predicted had the ruling gone the other way.

One of the challengers of the tax credits in states that do not have their own exchanges was Brenda Levy, a 64-year-old substitute teacher from Richmond, Va. She claimed that absent the availability of tax credits through the federal exchange (since Virginia declined to establish its own) she would not have been forced to buy health insurance or face a tax penalty.

She and other plaintiffs argued that language in the health-care law limited subsidies to those purchasing insurance through, as the law puts it, “exchanges established by the state.”

But writing for the majority today, Chief Justice John G. Roberts Jr. said that while the challengers’ arguments “are strong,” reading the ACA in its full context “leads us to conclude that [the statute] allows tax credits for insurance purchased on any exchange created under the act.”

His opinion was joined by Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor, and Elena Kagan.

Justice Antonin Scalia wrote a dissent joined by Justices Clarence Thomas and Samuel A. Alito Jr. that accused the majority of rewriting the law, just as he accused a five-justice majority (the same lineup minus Justice Kennedy) of doing when it largely upheld the constitutionality of the law three years ago.

“We should start calling this law SCOTUSCare,” Scalia said, using a popular acronym for the high court.

NEA President Lily Eskelsen García said in a statement that the decision “will let millions of Americans breathe a little easier knowing that their health insurance is secure and will remain affordable. The subsidies provided by the Affordable Care Act help increase school children’s access to quality health insurance and medical care.”

Housing Discrimination

In the housing case, the court used a dispute about where a government agency should locate housing for low-income people to decide whether the federal fair-housing law permits claims based on discriminatory effects of such policies.

Writing for the court, Justice Kennedy said the judges had long interpreted the Fair Housing Act to encompass disparate-impact claims, and Congress had reaffirmed that result. He said courts must be cautious in finding disparate impact and tailor remedies to eliminate the offending practice in a race-neutral way.

He said that support for construing the availability of disparate-impact claims in the housing law could be found in, among others, a 1979 Supreme Court decision, Board of Education of the City School District of New York v. Harris, that held a 1972 federal education law as permitted disparate-impact claims.

“Much progress remains to be made in our nation’s continuing struggle against racial isolation,” Kennedy said. “In striving to achieve our historic commitment to creating an integrated society, we must remain wary of policies that reduce homeowners to nothing more than their race.”

But, he said, “the court acknowledges the Fair Housing Act’s continuing role in moving the nation toward a more integrated society.”

His opinion was joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan.

Writing the main dissent, Alito said the Harris decision did not provide the support for disparate-impact claims in the housing context as Kennedy had read it.

“The Fair Housing Act does not create disparate-impact liability, nor do this court’s precedents,” Alito said in a dissent joined by Roberts, Scalia, and Thomas. “And today’s decision will have unfortunate consequences for local government, private enterprise, and those living in poverty.”

A version of this news article first appeared in The School Law Blog.