Supreme Court Hears Arguments on ACA Tax Subsidies

March 4, 2015

supreme-court-stock-photo_1Today, the U.S. Supreme Court will hear arguments in the case, King v. Burwell, a challenge to the provision in the Affordable Care Act (ACA) whereby individuals in states that do not have their own exchange and instead use the federal exchange currently are qualifying for income-based subsidies to pay for health insurance.

The case could land a major blow to the ACA if the Supreme Court rules against Burwell (Health and Human Services Secretary Sylvia Mathews Burwell) and the administration which has interpreted the law as intending all state residents to receive the subsidy, regardless of whether or not they are in a federal or state exchange.

The challengers, backed by the conservative Competitive Enterprise Institute, have challenged the law citing the actual phrasing of the subsidy provision in the law refers to subsidies for people buying coverage on exchanges “established by the state.” There has been a great deal of back-and-forth on whether that phrasing was an inadvertent typo, or crafters of the law intentionally narrowed the subsidies as a “stick” to incentivize states to establish their own exchanges.

Just 16 states and the District of Columbia have set up their own exchanges or use some kind of state-federal hybrid, while 34 states use the federal exchange. Based on past court cases over the ACA, Chief Justice John Roberts and Justice Anthony Kennedy, both conservatives, are the most likely swing votes in the new case. A ruling isn’t expected until June.