July 15, 2015 – It is a decision that directly affects about 6.4 million people and their ability to afford health care coverage, says Barabara J. Zabawa of the Center for Health Law Equity, LLC, McFarland.
King v. Burwell was a challenge to a core part of the Affordable Care Act (ACA) that might have ultimately been its undoing.
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Health Insurance Options for Members
Check out this series of articles from the State Bar Insurance and Member Benefits Committee designed to help State Bar members better understand and evaluate their health insurance options in light of the changes coming under the federal Patient Protection and Affordable Care Act.
And on June 25, the U.S. Supreme Court decided that the ACA’s premium tax credits will continue to be available in all states, regardless of how the exchanges were established.
Oral arguments in the case were heard on March 4, 2015. The case challenged whether it is permissible for the Internal Revenue Service (IRS) to regulate and provide tax credit subsidies for health insurance purchased by taxpayers through the federally facilitated health care exchanges.
The main issue in King v. Burwell was whether the federal tax subsidy established by the IRS is available to individuals in those states who declined or failed to establish their own exchanges, and where instead, the federal government has established such an exchange on a state’s behalf. There are about 34 such exchanges in the U.S. – with about 90 percent of those who signed up receiving subsidies that make the coverage more affordable.
“In the ACA, the statutory language says subsidies will be available for participants in exchanges established by ‘the state,’” Zabawa said.
Because they were not established by a state, the exchanges that were facilitated or operated federally should not qualify for the subsidies, the challengers argued.
The Supreme Court, in its 6-3 decision authored by Chief Justice Roberts, did not agree. The decision states that the subsidies would be available to participants in both state and federally-operated exchanges.
The majority opinion stated, “Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation. But those requirements only work when combined with the coverage requirement and the tax credits. So it stands to reason that Congress meant for those provisions to apply in every State as well.”
“The fear was a decision in the opposite direction would make insurance for all those about 6.4 million nationally ineligible for subsidies, and many more people would now be uninsured. That will not happen now,” Zabawa said.
The Supreme Court has interpreted the language to encompass both federal and state exchanges, an interpretation that has safeguarded those subsidies for those who need them in the future.
“A future administration would be unable to undo that interpretation,” Zabawa said.
Barbara Zabawa presented "Employee Benefits - The New Landscape/Rights and Remedies" at the State Bar of Wisconsin's 2015 Annual Meeting & Conference.
