The Supreme Court ruled in a six to three divided opinion on Thursday that subsidies to help Americans buy health insurance through the Healthcare Exchanges will remain available in all fifty states.
The Court, in King v. Burwell, concluded that Congress intended to make subsidies available in every state, regardless of whether the exchange in that state is sponsored by the state or the federal government, when it passed the Affordable Care Act. The majority of the Court, in joining Chief Justice Roberts Opinion, found that if the subsidies are not available in every state, it would bring about “the type of calamitous result that Congress plainly meant to avoid.”
Had the ruling gone the other way, premium subsidies in states with federally run insurance exchanges would have been eliminated. This would have resulted in the loss of subsidies in thirty-four states. And, given that the broad scale purchase of insurance supported by the subsidies was the lynchpin of many of the reforms in the law, the cascading effect of the loss of subsidies may have collapsed the entire law – a point that Justice Roberts acknowledged in noting the potential for a “death spiral” for the ACA.
Justice Robert’s Opinion makes it clear that the outcome was heavily influenced by the majority’s acceptance of the centrality of the subsidy scheme to the law as a whole, and found persuasive the dire consequences that the loss of subsidies on the federal exchanges would have had on the ACA. The Opinion acknowledged that the petitioners had strong arguments about the plain meaning of the contested words. But he wrote that the words must be read in the context of a larger statutory plan. “In this instance,” he wrote, “the context and structure of the act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase.” The Court found that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
Rather than applying the plain meaning of the language of the ACA as it defined the system of “exchanges” – marketplaces through which consumers can purchase health insurance coverage using government subsidies, the Court found a variety of reasons for concluding that nationwide availability of the subsidies was necessary to make the entire law work as Congress had intended. The exchanges, it said, were as vital to the law as the curbing of insurance companies’ option of turning away sick people and the mandate that virtually all Americans must obtain health insurance or pay a penalty.
The one negative note regarding the ACA in the Roberts opinion, which virtually all who work with this law will agree upon, was a complaint that Congress had done a sloppy job of composing the ACA, making it very difficult to make sense of all of it. The ruling is unlikely to end opposition that many have to the ACA. It is unlikely that Republican lawmakers can repeal the ACA prior to 2017 because of President Obama’s promise to veto such an act. While there may be some legislative efforts to modify the law, such as any changes that would threaten core parts of the ACA would face the same veto threat.
For employers, this reaffirms the need to continue efforts to comply with the requirements of the Affordable Care Act, including the mandate for employers with more than 50 full-time equivalent employees (100 in 2015) to provide affordable health insurance coverage or face penalties.
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