Affordable Care Act Subsidies Under Attack

If the Supreme Court rules against the ACA's subsidies in King v. Burwell, many Americans could lose their health insurance.

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This article is the second in a three-part series on the most recent Affordable Care Act case to be heard by the U.S. Supreme Court, King v. Burwell. You can read Part One here.

Today the U.S. Supreme Court will hear oral arguments in King v. Burwell and decide the fate of the Affordable Care Act’s health insurance subsidies.  The Burwell case challenges the 2012 IRS ruling allowing individuals access to premium health care subsidies through federal exchanges instead of the statute-mandated state-based exchanges.  The challengers in the Burwell case are four Virginians who argue that the IRS illegally interpreted the ACA to authorize subsidies through federally-run exchanges.  Specifically, they allege that without those subsidies, they would be exempt from the requirement to purchase health insurance because they do not earn enough income.

If the Supreme Court rules in the challengers’ favor, the premium subsidies that are run through federal exchanges would be discontinued, leaving many people without health insurance.  Congress or the Obama Administration would then have to find alternatives to allow people to obtain health insurance.

Those alternatives include three options: (1) do nothing, (2) change the language of the ACA to reflect IRS’s interpretation, or (3) take a middle ground by directly offering states the option to move forward with state-run exchanges or set up an alternative system.  While doing nothing would effectively “blow up” the federal exchange, legalizing the language of the ACA to accommodate federal exchanges would take too long.  However, the third option, or the middle ground, would offer an opportunity for states to set up “liberalized insurance marketplaces” while gaining access to federal tax credits.

Better known as “transcending Obamacare,” the third option would allow Americans to freely choose from a broader range of health insurance plans, instead of being forced by the government to choose from a narrow set of federally-certified options.  Specifically, this approach grants insurers greater flexibility in providing policies that attract consumers at a lower cost.  This option also grants flexibility to states by allowing them to “abandon exchanges entirely” and offer tax credits to their lower-income residents.

The aftermath of the decision rests on how the justices will rule.  In 2012 four justices from the Court’s conservative wing were ready to throw out the ACA entirely had it not been for the swing vote of Chief Justice John Roberts to narrowly uphold the individual mandate.  However, “it is widely thought that Chief Justice Roberts’ decision to uphold the ACA in 2012 was driven by his ‘political unwillingness’ to take responsibility for the disruption that would [have] ensue[d].”  Yet, if the ACA is not to be disrupted then Congress needs to have its alternative actions prepared soon after oral arguments are concluded.

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About Snehal Trivedi, Former Senior Staff Writer (16 Articles)
Snehal Trivedi served as a Senior Staff Writer for the Campbell Law Observer. She is originally from New Jersey and received her Doctorate in Pharmacy from the University of the Sciences in Philadelphia. Following her first year of law school, Snehal worked as a Summer Associate for K&L Gates and assisted a local attorney researching relevant case law pertaining to interlocutory appeals. She graduated from Campbell Law School in May 2015.
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