The Affordable Care Act was front and center at the Supreme Court once again yesterday, but this time the health law’s fate may be dependent on just four words.
The case before the Supreme Court, King v Burwell, is not on whether the law is constitutional or not – the Supreme Court already decided that in 2012. This time, the Court is taking on a case about statuatory interpretation, something that the Supreme Court tends to do when there’s an argument over the meaning of a piece of legislation. In this case, the Supreme Court is deciding what Congress meant when it wrote a key portion of the Affordable Care Act.
By now, most people are familiar with the individual mandate to have health insurance and the state-based insurance exchanges that individuals who do not otherwise have access to health insurance can use to purchase coverage. In order to assist people to afford health insurance, the federal government is providing subsidies based on an individual’s or family’s income. At issue in this case is the particular wording of how those subsidies can be awarded.
When the Affordable Care Act was written, Congress and the President intended for each of the states to run their own insurance exchanges, but realizing that some states would be unable or unwilling to run their own exchange, the federal government would run the exchange for those states. The law clearly states that subsidies can only be used to purchase insurance on exchanges “established by the State”. However, more than 36 states are using the federal exchange – and the plaintiffs in King v Burwell claim that individuals in those states shouldn’t be able to use subsidies in those states, saying that Congress intended to do this in an effort to pressure states to create their own exchanges. On the other hand, the government and the people who wrote the law say that Congress always intended for the tax credits to be available to everyone regardless of whether the exchange was established by a state or the federal government.
So what are the consequences? From a legal perspective, if the Court agrees with the plaintiffs, it would be one of the few times (if not the only time) the Court would quite so literally interpret what Congress’s intentions truly were and not go with a “gestalt”.
From a health policy standpoint, a decision in favor of the plaintiffs would be a disaster and likely the death of the Affordable Care Act. True, there are those would be cheer at seeing the law be ripped to pieces, now that so many portions of the law have been put into place, and people have signed up for a second round on the exchanges, the ripple effects would be enormous.
An estimated 7.5 million people would likely lose their subsidies in the states utilizing the federal exchange. Without subsidies, most of these people would not be able to afford insurance, and because of the way the law is written, if insurance costs more than 8 percent of income, it’s not required to buy it. So most of those people would not buy insurance as they wouldn’t have to. Estimates are that premiums would go increase between 35 to 45 percent, and estimates would likely increase even in states running their own exchanges. The resulting loss of income to insurance companies, hospitals, and health care providers would be staggering.
Ultimately who is affected the most? Most of the people likely to be affected are white, employed, low- to middle-class, and Southern – some of the groups of people the law was specifically designed to help the most. Of those estimated to lose coverage, 61% are non-Hispanic whites, 62% live in the South, 71% work at least part time and 82% are considered, by federal measures, to be low- or middle-income rather than poor. The tax credits are available for people with incomes between 100 percent and 400 percent of the federal poverty level. For a family of four, the eligible income range is between $23,850 and $95,400. Florida in particular would be hardest hit, where more than 1.6 million people have signed up for insurance plans approved by the federal exchange.
If the Supreme Court sides with the plaintiffs, the question then becomes – what happens next? Certainly, Congress could write in a fix to the law. Despite polls indicating the public would want Congress to step in, however, given the GOP’s relentless endeavors to overturn the law, no one believes that Republicans and Democrats will be able to come to an agreement. The Obama Administration had indicated that there is no back up plan currently in place or in the works. The states could step in, but there are several barriers to achieving that goal. For one, some states have passed legislation prohibiting the creation of a state exchange. Republicans governors and/or legislatures in many of the Southern states still object to taking any steps to support the ACA. In Florida, for example, Governor Rick Scott has indicated that a ruling against the ACA is “not his problem.” Furthermore, starting a state-run exchange is expensive; the ACA provided nearly $5 billion in assistance for states to build their own exchanges, and that money is no longer available. Finally, the states would be hard pressed to get their exchanges ready. If the Supreme Court rules in June, the states would only have 5 months to build their exchanges and websites – and that didn’t go so well the first time around for many states likes Oregon and even Massachusetts.
Some worry that the Affordable Care Act, which was designed to provide affordable health care coverage to the vast majority of Americans, would collapse if the federal tax subsidies are not available everywhere.