March 8, 2015

U.S. Supreme Court Takes Up Affordable Care Act Challenge – What’s Next?

The U.S. Supreme Court last week heard arguments in King v. Burwell, the federal case challenging the constitutionality of the Affordable Care Act (ACA) tax subsidies that are currently available to millions of health insurance consumers. 

At issue is whether the ACA, the president’s 2010 health care reform law, allows U.S. taxpayers who buy health insurance over the insurance exchange operated by the federal government to be eligible for the subsidies. (The law clearly states that only consumers who buy health insurance using exchanges operated by individual U.S. states are eligible.) The subsidies are a central component of the law and the primary “carrot” to compel Americans who were previously uninsured to buy health insurance. 

The Court is expected to rule on the matter in June and, in the meantime, The Washington Post said it was impossible to tell based on the justices’ questioning how it will decide. The Post reported, “After nearly 90 minutes of oral arguments Wednesday, there's generally agreement the expected ruling in the case … is too close to call. Chief Justice John Roberts, the pivotal swing vote upholding the Affordable Care Act three years ago, gave away nothing that would show which way he's leaning. Justice Anthony Kennedy, who voted to strike down the entire law last time, asked tough enough questions of both the plaintiffs and the federal government that indicated his vote could be in play.” 

While it’s clear that implementation of the law would continue along its current trajectory if the Court upholds the legality of the subsidies, what happens if it rules against them? 

First, many parts of the ACA would remain in place, including the new taxes imposed by the law and the expansion in Medicaid, but, as National Journal says, a ruling against the ACA could “weaken the law's individual and employer mandate.” 

What happens after a ruling against the law, including to the mandates, is up to Congress. Approximately seven million consumers would lose their ACA tax benefits if the Court strikes down the subsidies. 

According to The New York Times, House Republicans on Capitol Hill are currently assembling a plan that would replace ACA provisions with GOP alternatives. Under the House plan, U.S. “states would be able to opt out of the health law’s individual and employer coverage mandates, and insurance policies would no longer have to meet the minimum coverage standards.” The GOP plan would keep tax credits for those who buy private insurance policies and, according to National Journal, it would also retain or preserve the ban on lifetime benefit caps, the provision that allows children to stay on their parents' insurance until age 26, some protections for people with preexisting conditions and the small business insurance pools. (You can read more about the House Republican plan in this Wall Street Journal column by Reps. Paul Ryan and Fred Upton.) 

In the Senate, lawmakers are considering whether to offer temporary, transitional assistance to the consumers who would no longer be eligible for the subsidies. 

Finally, Congress could also pass legislation affirming that it meant to allow the tax benefits to consumers who purchased health insurance over the federal exchanges, not just to those who purchased insurance through the state exchanges, or it could do nothing. Those outcomes are unlikely, however. The White House, meanwhile, has said it has no contingency plan should the Court rule against the Obama administration. 

Connecting the Dots will have more as legislative options continue to develop.