The Supreme Court in March will hear oral arguments in King v. Burwell, which challenges subsidies to help U.S. residents purchase health coverage through the federal exchange. At issue in the case is that while the Affordable Care Act says subsidies are available to help certain U.S. residents purchase coverage offered "through an exchange established by the state," a May 2012 IRS rule allows the subsidies to be used in an exchange administered either by a state or the federal government. The plaintiffs argue that the IRS rule should be invalidated because it contradicts what Congress originally wrote in the ACA. The court will release a decision by the end of June.
If the court strikes down the subsidies, the ruling would eliminate about $28.8 billion in subsidies to 9.3 million individuals in 34 states in 2016, according to an Urban Institute analysis.
A number of advocacy groups have filed briefs urging the court to uphold the subsidies, despite the plaintiffs' arguments.
What the plaintiffs say: The plaintiffs argue that the ACA intentionally limits subsidies to individuals who purchase coverage through state-run exchanges as a way to convince states to create them instead of relying on the federal exchange.
What ACA supporters say: Rep. Sandy Levin (D-Mich.), who chaired the House Ways and Means Committee when the ACA was drafted, called the plaintiffs' argument "nonsense." He continued, "That issue was never part of the discussion. It was never mentioned, never discussed, even by the opponents" of the ACA. He added, "It's a figment of [the plaintiffs] imagination" and "was never whispered [in committee]." Former Rep. George Miller (D-Calif.) echoed Levin, saying, "This fiction that the opponents of the legislation have developed is simply not plausible." He added that such arguments are "inconsistent" with ACA supporters' beliefs in offering universal health care.
Our Take: It will be difficult for the Supreme Court to determine Congress' true intent when drafting and passing the law based on advocates arguments. Instead, the Court will have to judge what Congress intended by reading the law and determine whether the subsidies were intended for all U.S. residents, or just those who live in states that created their own exchanges.
by Ashley Fuoco
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When talking about and the potential effect of the upcoming Supreme Court case, King v. Burwell, most of the focus tends to be on the potential loss of subsidies to help individuals purchase coverage through the federal exchange.
If the high court rules for the plaintiffs in King, the sudden lack of those subsidies could make plans unaffordable for millions of individuals in the 34 states that use the federal exchange.
However, there's more to affordability than premiums. Out-of-pocket costs also are an important consideration. That's where another oft-forgotten type of subsidies comes in: cost-sharing reductions.
The Other Subsidies at Stake in King v. Burwell