Obamacare Upheld – Patients, Health Systems, Anesthesiologists and Many Others Relieved
The United States Supreme Court has again upheld the Affordable Care Act (ACA). The Court announced its decision in a 6-3 ruling in King v. Burwell on Thursday, June 25, 2015.
Some 6.4 million Americans were at risk of losing their “Obamacare” health insurance coverage had the Court invalidated the ACA and eliminated the subsidies that made the insurance affordable. The cost of insurance was predicted to rise dramatically for millions of others as the pool of participants in the individual markets shrank.
Six words provided the basis for the challenge brought by four individual plaintiffs in Virginia: “an Exchange established by the State.” The statute provides for a premium tax credit (i.e., a subsidy) for “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.” The defining issue was whether tax credits would only be available under the ACA for policies purchased through exchanges established by the state, or whether they would also be available in the 34 states that had relied on the Federal government to establish and run their exchanges. The plaintiffs contended that by inserting the six key words, Congress had deliberately made a distinction to encourage states to create their own exchanges.
Chief Justice John Roberts, writing for the majority, stated that while the phrase “established by the State” was ambiguous, its meaning in the context of the entire ACA was clear. To limit the availability of subsidies to the residents of the District of Columbia and the 16 states that had established exchanges would launch the ACA on a “death spiral,” he stated, adding, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”
Going forward, changes that would limit ACA subsidies, i.e., tax credits, to state-operated exchanges will require action on the part of Congress. The Supreme Court is not going to undo its decision, and neither, of course, is the Administration. The Court went farther than simply deferring to the Obama Administration’s statutory interpretation. Had the Court stopped at upholding the current Administration’s view of the meaning of “established by the State,” a future Administration could have re-interpreted the state-exchange language. The Court foreclosed that possibility, however, writing that this was one of those “extraordinary” cases in which it would not be reasonable to assume that Congress had intended to leave “key reforms involving billions of dollars and affecting the price of health insurance for millions of people” to a government Agency, in this case, the IRS. Instead, the Court laid down a definitive interpretation and ruled once and for all that “tax credits are available in States that have a Federal Exchange.”
As Timothy S. Jost, Professor of Law at Washington and Lee University, wrote for the Commonwealth Fund blog,
The court’s decision is also likely to send a message to the lower courts that it is time to bring the curtain down on ACA litigation. Dozens of cases have been filed over the half-decade that the ACA has been in force, challenging the constitutionality of the ACA itself as well as the way in which it has been implemented. Few of these cases have succeeded, although while the 2012 Supreme Court’s decision in NFIB v. Sebelius rejected the plaintiffs’ primary claim that the individual responsibility provision was unconstitutional, the Court crippled the ACA’s Medicaid expansion in almost half of the states.
In fact, the appellate courts have dismissed a series of ACA challenges over the past year, mostly on the ground that the individuals bringing the cases had not been personally injured by the ACA. Given the Court’s admonition in King v. Burwell that courts should interpret the ACA to promote Congress’ intention to improve insurance markets and not destroy them, litigation against the ACA is likely to fare no better in the future.
What Happens Now?
Health systems, physicians and other providers who were concerned about a potential uptick in the number of uninsured patients have had their immediate fears allayed. Before the ACA’s major coverage expansions went into effect, 20 percent of working-age adults were uninsured. As of May 2015, the Commonwealth Fund Affordable Care Act Tracking Survey showed that that number had decreased to 13 percent. The Advisory Board calculated that losing the subsidy, with the concomitant increase in uninsured patients, would cost hospitals a rough average of about $1.8 million per year.
Insurance companies won a major victory. Immediately following the issuance of the decision, insurers' and certain providers’ stocks jumped: shares of HCA Holdings and Tenet Healthcare Corp. both rose more than eight percent. Medicaid insurers Centene Corp. and WellCare Health Plans increased two percent and four percent, respectively. UnitedHealth Group and Humana's stocks both had modest increases of two percent while Aetna, Anthem and Cigna shares all rose slightly. The day’s gain amounted to a $3 billion increase in the combined market of the Big Five insurers. (Zweig D. Landmark King v. Burwell ruling: Industry reacts, looks to future. Fierce Health Payer online, June 25, 2015.)
Federal and State legislators and executive branch members can turn to other business rather than scramble to set up new state exchanges and to manage the political fallout averted by the Court’s decision. States that have been contemplating creating their own exchanges may reconsider.
Not everyone is pleased at the outcome of King v. Burwell. Justice Antonin Scalia, writing for himself and fellow dissenters Justices Alito and Thomas, wrote that “the Court’s insistence on making a choice that should be made by Congress both aggrandizes judicial power and encourages judicial lassitude.” Senate Majority Leader Mitch McConnell, who previously called Obamacare “the single worst piece of legislation that’s been passed in the last half century,” is one of 31 co-sponsors of the Preserving Freedom and Choice in American Health Care Act, which would repeal the ACA’s individual and employer mandates but maintain current subsidies through the 2016 elections. Other legislation before the Senate would replace the subsidies with temporary general tax credits or with block grants. The House Republican Study Committee released a plan in early June that would repeal the ACA, create a standard deduction for health insurance, establish high-risk pools and permit the sale of health plans across state lines. The Republican budget proposal for 2016 laid the groundwork for budget reconciliation legislation intended to change the ACA.
There have already been some 50 attempts to repeal the ACA, and it is clear that the President will veto any future attempts that may happen to reach his desk. What is far less predictable is whether the 2016 elections will provide another opportunity to undo some or all of the ACA. Let us hope that the real gains made by both patients and their physicians, nurses and hospitals will remain in place.