November 13, 2014
Area(s) of Interest: Advocacy Health Care Reform
Last Friday, the U.S. Supreme Court unexpectedly said it will hear King v. Burwell—a case that questions whether premium subsidies can be provided under the Affordable Care Act (ACA) to individuals purchasing health insurance coverage on exchanges run by the federal government. The lawsuit has the potential to affect 36 states that use the federal health care exchange, but would not change the subsidies in states like California that run their own exchanges.
The decision to hear the case comes just one week before the second exchange open enrollment period begins on November 15. Consumer uncertainty could affect whether those that are eligible, enroll. If the subsidies are struck down, some 5.4 million Americans who signed up for coverage in 2014 through the federal exchange, could be left holding the bag for much higher than anticipated premiums, threatening the future of the ACA in the affected states.
California is one of fourteen states (and the District of Columbia) that are fully running their own exchanges. The other states rely on the federal government for some or all of their exchange operations.
A Rand Corporation study published last month found that of the 5.4 million people who signed up for health insurance on federal-run exchanges last year, 87 percent of them received subsidies. According to the Rand study, without the subsidies, premiums would be 43.3 percent higher on average in the individual market in 2015, while enrollment would drop by 68 percent.
The King v. Burwell case arrived at the Supreme Court after a 4th U.S. Circuit Court of Appeals panel in Virginia in July unanimously ruled in favor of the administration, saying subsidies should be allowed in all 50 states. This case marks the law’s third trip to the high court. In 2012, Chief Justice John Roberts joined four more liberal justices to uphold the constitutionality of the ACA, with four conservative justices dissenting. Earlier this year, Chief Justice Roberts and the four conservative justices carved out an exception to providing contraceptive coverage for employers who object on religious grounds.
Many had speculated that the court would wait to hear King v. Burwell until after the full U.S. Circuit Court of Appeals for the District of Columbia Circuit issues a decision in a separate but similar case, Halbig v. Burwell. Oral arguments in that case are scheduled for Dec. 17.
Arguments at the high court in King v. Burwell are likely in March, with a decision expected before July.