By the end of June 2015 the Supreme Court of the United States will hand down their decision in King v Burwell that will impact around 8 million Americans who are currently receiving tax subsidies to help pay insurance premiums for policies they have bought in their state marketplaces. Either those 8 million will sleep easily knowing that all is as it was and they will continue to get help paying for their subsidies OR they may be quite a bit more agitated with lots of unknowns.
The issue is whether or not the language of the Affordable Care Act (aka Obamacare) that permits subsidies for residents only in those in states running their own Exchanges/marketplaces is the way the law must be interpreted and enacted OR if the intent was indeed broader.
In a large sense all of the Exchanges/marketplaces are “state” Exchanges since the insurance policies approved for sale in those are set up for each state specifically. The sticking point is that some states (34 of them) had the federal government facilitate the operation of their marketplaces. Those are called “federally-facilitated” exchanges/marketplaces and are considered, by the challengers, to be non-state marketplaces.
The challenge about the wording has been an attempt to gut one of the main provisions of the law that makes insurance policies offered in those Exchanges/marketplaces more affordable. In some cases, it is very much more affordable with individuals near 138% federal poverty line ($16,242 for one in 2015) paying ~$20/month for a policy.
Depending on whom you ask the law’s reference to state Exchanges 1) was sloppy wording, but seen in context of the whole law, could not have intended to cut off from subsidies residents of states not operating their own Exchanges OR 2) the intent was not to give subsidies to states not operating their own Exchanges, perhaps as an incentive to get the states to operate their own Exchanges. The SC Justices are either going to assume the language was sloppy within the full context of the law thereby allowing the subsidies to exist in all states OR they will be true to the language of the law and say: if Congress intended subsidies to be for residents of all states then Congress has to fix the wording. There exists concern that Congress is not in any position to agree upon new wording. Certainly, there are many legislators who would welcome the damage a ruling in favor of the plaintiffs would do to the ACA. However, since those directly impacted negatively would be residents of many states, and these are their legislators, some are looking to temporary fixes including:
- extending the tax subsidies through the end of the year so there would be less disruption (this would leave no good alternative for affordable policies going forward), and
- Governors are considering taking on the responsibility of running their own Exchanges (but this is a huge undertaking, as evidenced by the fact that some states tried and decided to let the federal government takeover: e.g. Maryland)
I spoke to this issue on Nov 19, 2014 and in depth in a July 22, 2014 post when the issue about ACA tax subsidies was just heating up with circuit and district court rulings. The specifics remain relevant.
How do American’s feel and what do they understand about this judicial case? “A brand spanking new Kaiser Family Foundation poll finds a broad majority of Americans wants Congress to pass a law to make subsidies available in all states if the Supreme Court guts them…about 6 in 10 (63 percent) say Congress should pass a law so that people in all states can be eligible for financial help from the government while about a quarter (26 percent) say Congress should not act on the issue.” (Washington Post, Sargent, June 16, 2015).