In King v. Burwell, the United States Supreme Court had to decide on the newest challenge to the Affordable Care Act (“ACA”).  As stated in my first post, King argued that, as written, the ACA only provides support to states that set up their own exchange.  On the other hand, Burwell argued that the ACA meant to treat all health exchange markets the same, whether state-managed or not.

On July 25, 2015, the Court issued their opinion and ruled in favor of Burwell, saying that Congress meant to treat all exchanges the same.  This ruling means that those Hoosiers who received aid from the government to help purchase a health plan under the Federal Exchange will be able to keep this aid.

The 6 Justices who ruled in favor of Burwell explained that the words “established by a state” really meant to include Federal Exchanges as well.  Their 21-page ruling argued many points to help build their case, but one of their most basic points was that the ACA would fall apart if they read those words in favor of King.

King v. Burwell Broken Down

To help clarify this case, let’s think of the ACA as a 3-legged stool.  Each of the 3 legs, which are listed below, relies on the other in order hold the ACA up.  If one leg falls, however, then the entire stool will also fall over.   There are three key points, or legs, which make the ACA stand up:

1. People are given government aid (tax subsidies) to purchase a health plan.
2. The ACA says people must have insurance or pay a fee;
3. Insurance groups must accept every person in the State that applies for a plan, even if sick;

The Court said that if the ACA was read in favor of King then the ACA would collapse.  The points below make up what the Court called the “death spiral” of King’s argument.

1. No person in a federal exchange state would get any government aid in buying a plan.
2. If no one got any government aid, then many would not have to purchase any insurance at all, since the ACA says it would cost too much (over 8% of income).
3. If no one bought insurance, then insurance groups would have to a lot charge more money and many more people would lose coverage.

Conclusion

The Court said that Congress would not have meant for this “death spiral” to happen.  Congress would only pass the ACA in order for it to work; they would not have passed it if it was doomed to fail.  This is one of the many key reasons that the Court again found the ACA legal.  This was the second time the ACA has been in front of the Supreme Court, and the second time that it has been upheld.

Post by Dan Wegg

What does this mean for Indiana?
If the court agrees with King, over 200,000 Hoosiers may lose the money they received to help purchase their health plan, along with millions of Americans.[iii]  If the court agrees with Burwell, then all money that was received to help buy a health plan will be seen as legal and no one will be at risk for losing their support.

What will happen if King wins?
If King wins, Congress could slightly change the law to fix the problem. Although not likely, this would be the fastest option.  It could also fall on each state to fix the problem, for example, by setting up a new exchange. This, however, could cost a lot of money. We will hear a lot more about a fix in the coming months if the court rules in favor of King.[iv]

How will the Supreme Court decide?
The Supreme Court is made up of 9 Justices.  So far, 4 Justices seemed to side with the Burwell, while 2 seemed to side with King.  If this is the case, then Burwell only needs the support of one more Justice in order to save the ACA as it is written.[v]  Though this seems a bit more likely than not, it is very hard to say how this court will rule. We are looking for the ruling in late June; I’ll provide an update once more news is received.

Post by Dan Wegg, Corporate Affairs Manager