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Michael Petruzzelli

, National Council for Mental Wellbeing

Supreme Court Hears Case on Affordable Care Act Subsidies

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Today, the Supreme Court of the United States heard oral arguments in the King v. Burwell case, the second major challenge to the Affordable Care Act (ACA) since its enactment in 2010. For the second time, the fate of the law hangs in the balance. In this case, the court is being asked to rule on whether the law allows the federal government to offer premium subsidies to consumers who purchase health insurance in the federal marketplace, If the federal subsidies are found to be against the terms of the law, consumers in 37 states would lose financial assistance for their insurance plans, potentially making plans unaffordable to millions.

Critics argue that the plain text of the law only allows for subsidies to be offered to state-run exchanges. Proponents argue that the law was clearly intended to make subsidies available to all consumers. Most experts agree that ruling against the ACA would fundamentally undermine the law and could require urgent congressional action to fill the gap.


So how did we get here?


The Supreme Court agreed to hear this case after lower courts issued divergent decisions over the last year. In July, two federal appeals courts issued conflicting decisions on whether the ACA allowed for the federal government to offer this type of assistance for plans run on the federal exchanges. In September, a third court weighed in on the legality of the subsidies, ruling that subsidies cannot go to consumers who obtained their health coverage through the federal marketplace.


What happens if the Court rules against the ACA?


The Obama Administration says there are no available options to fix the problem.

Last week, Secretary of the Department of Health and Human Services (HHS) Sylvia Burwell wrote to Congress and stated that there are currently no administrative actions available to fix the problems that would arise. In a letter released last Tuesday, Burwell repeated her warnings that if the court invalidates the subsidies, there would be “widespread damage” to the nation’s health care system. She says that’s because millions of people won’t be able to afford coverage, and costs for everyone else’s insurance would increase. “We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision,” Burwell wrote.

new analysis from Avalere Health found that premiums could increase an average of 225 percent for those receiving subsidies in affected states. With nearly 87 percent of federal exchange customers currently receiving a subsidy, average monthly premium contributions for enrollees could increase between 122 and 774 percent.

Speculation has now emerged from today’s arguments, as to when a potential adverse decision from the Court would take effect. The Administration raised the issue of the dire consequences associated with ruling against the ACA. Justice Alito was cited as saying the Court could mitigate that problem by delaying the implementation of such a ruling so that states could get their own exchanges up and running.


An act of Congress could be required to address the situation. But which one would it be?

In the buildup to today’s hearing, GOP members of Congress have offered a number of ACA alternatives, with little consensus yet evident for any one plan in particular. To date, members of House and Senate committee leadership have introduced or announced three separate alternatives to the Affordable Care Act. Last month, key Republicans from both chambers of Congress unveiled legislation that would repeal and replace the ACA. Earlier this week, Senator committee leadership announced a Senate-only backup plan with specific details said to be coming later in the week. Finally, just yesterday, members of the House GOP committee leadership described their ACA alternative in an op-ed in the Wall Street Journal. While the ideas remain plentiful on how best to move forward, today’s complex political climate could complicate the passage of any replacement legislation, even if the Supreme Court’s decision makes one absolutely necessary.

The Supreme Court now has until the end of its session in June to issue a ruling in this case. Some states participating in the federal marketplace have already begun preparing alternatives should the Supreme Court rule to end the federal subsidies to consumers who purchased insurance on the federal exchanges. Be sure to stay tuned to the Capitol Connector for more policy news.