In King v. Burwell, the Supreme Court upheld a provision of the Affordable Care Act making subsidies available for all, whether they used a state or federal exchange. The ruling also affirms the mandate that employers may be subject to potential penalties with respect to the granting of subsidies or tax credits. But, did the court correctly interpret the statute?

At issue was the phrase: “an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act.” The question was whether these words meant taxpayers would receive a credit only if they used an exchange set up by an individual state or did the statute also include Federal exchanges.

There are well known and established rules used in reading statutes and contracts. Typically when interpreting the wording of a contract or statute, there are five canons to keep in mind. The first and most obvious interpretation canon is the ordinary-meaning canon that dictates words are to be understood in their ordinary, everyday meanings unless the context indicates that they bear a technical sense. There is also the negative-implication canon that is the expression of one thing implies the exclusion of others.

Also, statutes can be interpreted through the last-antecedent canon,meaning a pronoun, relative pronoun, or demonstrative adjective generally refers to the nearest reasonable antecedent. An important principle is thesurplusage canon which means if possible, every word and every provision is to be given effect. None should needlessly be given an interpretation that causes it to duplicate another provision or to have no consequence. Lastly, there is the associated-word canon which simply means words bear on one another’s meaning.

These canons are important because they provide predictability as to how what was drafted will be interpreted.  Now, with these canons in your statutory interpretation arsenal, you can be the judge as to whether the Supreme Court correctly interpreted the Obamacare statute.