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What the Supreme Court ruling in King v. Burwell means for women’s health

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By finding in favor of the Obama Administration, the Supreme Court averted a death knell for the Affordable Care Act—at least until the next presidential election


 

References

In a widely anticipated judgment on the Affordable Care Act (ACA), the US Supreme Court ruled 6-3 in favor of the law on June 26, 2015. The case at hand, King v. Burwell, challenged whether individuals purchasing health insurance through federal exchanges were eligible for federal premium subsidies. This ruling cemented the ACA into law and avoided a potential calamity in the private health insurance market. Let’s take a closer look.

What the case was about
The ACA allows states to set up their own health insurance exchanges or participate in a federally run exchange. Although the drafters of the ACA had expected each state to set up its own exchange, two-thirds of the states declined to do so, many in opposition to the ACA. As a result, 7 million citizens in 34 states now purchase their health ­insurance through federally created exchanges.

The plaintiffs in King v. Burwell argued that, because the legislation refers to those enrolled “through an Exchange established by the State,” individuals in states with federally run exchanges are not eligible for subsidies.

The law states:

PREMIUM ASSISTANCE AMOUNT.—The premium assistance amount determined under this subsection with respect to any coverage month is the amount equal to the lesser of—

(A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act…[emphasis added].

The Supreme Court was asked to decide whether to adhere to those exact words or to honor Congress’ intent to allow individuals to purchase subsidized insurance on any type of exchange.

What might have happened
We’ve explored in previous articles the interconnectedness of many sections of the ACA. Nowhere is that interconnectedness more clearly demonstrated than here. In order to ensure that private health insurers provide better coverage, the law requires them to abide by important consumer protections, including the elimination of “preexisting condition” exclusions. In order to prevent adverse selection and keep insurers solvent under these new rules, all individuals are required to have health care coverage—the individual mandate. If everyone is required to purchase health insurance, it has to be affordable, so lower-income individuals were promised subsidies, paid for 100% by the federal government, to help them cover their premiums when insurance is purchased through an exchange. Take away the subsidies and the whole thing starts to unravel.

The Urban Institute estimated that a Supreme Court ruling in favor of King, which would have eliminated the subsidies in states using a federal exchange, would have reduced federal tax subsidies by $29 billion in 2016, making coverage unaffordable for many and increasing the ranks of the uninsured by 8.2 million people.1

Louise Sheiner and Brendan Mochoruk of the Brookings Institute speculated that healthy individuals would disproportionately leave the marketplace, triggering 35% increases in insurance premiums for those remaining, as well as significant increases in premiums for those who just lost their subsidies.2 Many observers, including these experts, forecast that insurance companies would exit the federal exchanges altogether, triggering a health insurance “death spiral”: As premiums rise, the healthiest customers leave the marketplace, causing premiums to rise more, causing more healthy people to leave, and so on.

Clearly, this Supreme Court decision has had dramatic, long-term, real-world effects on millions of Americans. On the national level, 6,387,789 individuals were at risk of losing their tax credits if the Supreme Court had ruled in favor of King. That number represents more than $1.7 billion in total monthly tax credits. For a look at how a judgment in favor of King would have affected subsidies on a state-by-state basis, see TABLE 1.

What other commentators are saying about the King v. Burwell decision

In his majority opinion, Chief Justice John Roberts noted that the “meaning of the phrase ‘established by the State’ is not so clear.” And as Amy Howe articulated on SCOTUSblog: “if the phrase…is in fact not clear…then the next step is to look at the Affordable Care Act more broadly to determine what Congress meant by the phrase. And when you do that, the Court reasoned, it becomes apparent that Congress actually intended for the subsidies to be available to everyone who buys health insurance on an exchange, no matter who created it. If the subsidies weren’t available in the states with federal exchanges, the Court explained, the insurance markets in those states simply wouldn’t work properly: without the subsidies, almost all of the people who purchased insurance on the exchanges would no longer be required to purchase insurance because it would be too expensive. This would create a ‘death spiral’….”
—Amy Howe,
SCOTUSblog3

“Additional court challenges to other ACA provisions are still possible, but King’s six-member majority shows little appetite for challenges threatening the Act’s core structure. Even Scalia’s dissent recognizes that the ACA may one day ‘attain the enduring status of the Social Security Act.’ Thus, the decision may usher in a new era of policy maturity, in which efforts to undermine the ACA diminish, as focus shifts to efforts to implement and improve it.”
—Mark A. Hall, JD,
New England Journal of Medicine4

“With the Court upholding the administration’s interpretation of the law, the Obama administration has little reason to accede to
Republican proposals. The Court’s decision effectively puts the future of the ACA on hold until the 2016 elections, when the people will decide whether to stay the course or to chart a very different path.”
—Timothy Jost,
Health Affairs5

“A case that 6 months ago seemed to offer the Court’s conservatives a low-risk opportunity to accomplish what they almost did in 2012—kill the Affordable Care Act—became suffused with danger, for the millions of newly insured Americans, of course, but also for the Supreme Court itself. Ideology came face to face with reality, and reality prevailed.”
—Linda Greenhouse,
New York Times6

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