King v. Burwell

On Wednesday, the Supreme Court will begin hearing arguments in King v. Burwell.  The plaintiffs argue that the Affordable Care Act (i.e., Obamacare) does not permit subsidies to individuals if they receive health insurance from a federally-run health insurance exchange.

  • Why would they argue this?  Well, Section 1401(a)(2)of the law says that subsidies would go only to those who purchased coverage on “an exchange established by the state.” As Vox reports, there was no similar provision, or call out, for people who got their coverage on a marketplace that the federal government set up.
  • Will it affect a lot of people?  Yes.  Currently, there are only 14 state-run exchanges and 7 state partnership exchanges.  People living in the remaining 30 states with federally administered or federally supported exchanges  (including large states like Texas, Florida, Pennsylvania, Ohio, Georgia, North Carolina) would not be eligible for subsidies.
  • How much would premiums increase?  Overall, the affect on premiums is unclear.  However, the share of premiums for which consumers are responsible would rise “an average …of 255 percent…if the Court ultimately rules in favor of the plaintiffs in King v. Burwell.”
  • Did Congress really mean to may enrollees on federal exchanges ineligible for subsidies?  That is the crux of the issue that the supreme court will decide.
  • How did we get here? Vox has a nice overview of the history of King v. Burwell.  An excerpt is below.

“He had been talking about how states shouldn’t cooperate. And I responded to him with something like, ‘If they don’t create an exchange, they can’t get the tax credits,'” Adler recalls. “He said, ‘What?’ And I told him, ‘Read the statute.'”

“I don’t think Jonathan understood the significance of the feature when he told me, maybe because he wasn’t a health-care wonk who talked about three-legged stools all the time,” Cannon says.

Cannon did: he’s a health wonk who knew immediately that taking away subsidies would leave Obamacare with a giant hole.

“What I recognized was that this allowed states to block one of the three legs of Obamacare’s three-legged stool: the subsidies,” he says. “And they could do so in a way that would increase pressure on Congress to re-open the law. So I started adding that into my list of reasons states shouldn’t establish exchanges.”

Even Michael Cannon states that the Vox review is a good one, although with a few errors.  The Health Care Blog gives 3 different scenarios of potential outcomes of King v. Burwell.

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