The text of King v. Burwell — with a twist: Annotations and reactions have been added by the host of shift’s “The Docket”: Seema Iyer.
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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
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 creation of an “Exchange” in each State—basically, a market- place 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 the Exchange if the State does not.
This case is about whether the Act’s interlocking reforms apply equally in each State no matter who establishes the State’s Exchange. Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.
The Patient Protection and Affordable Care Act, 124 Stat. 119, grew out of a long history of failed health insurance 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 person because of his health, and a “community rating” requirement, 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 requirements 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 consequence—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 consequence 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 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 individual market raised premiums by roughly 40 percent. By 1996, these reforms had “effectively eliminated the commercial 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’ Individual 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 combination of these three reforms—insurance market regulations, 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 Pensions, 111th Cong., 1st Sess., 9 (2009).
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 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 maintain 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 coverage 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, 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.
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].”
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 Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.
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. 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).
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 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 insurance 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 expressly. 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 Congress 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 enforce it according to its terms. Hardt v. Reliance Standard 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).
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 “established 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 qualifies 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).
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 Section 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, Section 18031 provides that all Exchanges “shall make available 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.
As we just mentioned, the Act requires all Exchanges to “make available qualified health plans to qualified individuals”—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 individuals 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 natural 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 American Health Benefit Exchange established under section 18031.” §300gg-91(d)(21). If we import that definition 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 requirements would apply to them. Finally, the Act repeatedly 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 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 impartial 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 premium 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, 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 Congress meant to extend tax credits to both State and Federal 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 specifically 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 examples 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 Procedure 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,
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.” Utility 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.
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 statutory scheme … because only one of the 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 (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
As discussed above, Congress based the Affordable Care Act on three major reforms: first, the guaranteed issue and community rating requirements; second, a requirement 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 percent 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 “minimize … 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 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 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, approximately 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, Competition, 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 enrollment 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 insurance 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 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 refuse.” 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 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.
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 specified 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. §18031],” §36B(b)(2); and then says that the term “coverage 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 fundamental 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 winding path of connect-the-dots provisions about the amount of the credit.5
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 isolation,” 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.
Reliance on context and structure in statutory interpretation 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 Legislature, 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 consistent with the former, and avoids the latter. Section 36B can fairly be read consistent with what we see as Congress’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. 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., dissenting). 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.
2. The dissent argues that the phrase “such Exchange” does not suggest 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 Regulations.” 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 Exchange cannot differ from a State Exchange.
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 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.
4. The dissent argues that our analysis “show[s] only that the statutory 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 guaranteed 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 laterenacted 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 communityrating requirements, but without an individual mandate or subsidies.” Post, at 14. True enough. But the fact that Congress was willing to accept the risk of adverse selection in a comparatively minor program 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).
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 comprehensive 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.