The Supreme Court on Thursday denied a petition to stay the implementation of a rule by the Obama administration to keep millions of low-income people from receiving subsidies under the Affordable Care Act.
The court sided with the government, which said that states have the right to set their own income limits for tax credits.
The ruling means the subsidies will be phased out for those who earn less than 300 percent of the federal poverty level.
The decision comes just a few weeks before the November election.
“The decision to deny the petition raises serious questions about the proper balance between providing the subsidies to individuals with incomes below 300 percent and providing subsidies to those with incomes above that level,” Justice Anthony Kennedy wrote for the court.
“The Court should take a step back and look at the facts before deciding on whether to stay a rule that would deprive millions of Americans of access to crucial benefits.”
The ruling was the latest setback for the administration, which had appealed the decision to the Supreme Court.
In a decision issued late Tuesday, Kennedy said that the federal government had failed to show that it could be justified in imposing the subsidies on people who have incomes of more than 300% of the poverty line.
The federal government argues that the subsidies are necessary to help people afford coverage.