Supreme Court to Decide Important Case on the Affordable Care Act

On March 3, 2015, the Supreme Court will hear an appeal in a case styled King v. Burwell that could have a large impact on the Affordable Care and Patient Protection Act (commonly referred to as “Obamacare” or “ACA”). At issue in this case and others pending before the lower federal courts, is an IRS regulation authorizing the federal government to provide subsidies for health insurance premiums purchased on all healthcare exchanges, regardless of whether a particular exchange was established by a State or whether it was established by the Federal government.

The petitioners maintain that the plain language of the statute as enacted by Congress permits federal subsidies only in respect of policies purchased on an exchange established by a State, and that this represents a specific choice by Congress to make health insurance premium subsidies available only through state-run exchanges. In nine different locations, the ACA includes the statement “enrolled in through an Exchange established by the State under section 1311.” (Emphasis added.) Accordingly, they argue that the IRS regulation authorizing subsidies regardless of whether a policy was purchased on an exchange established by a State or on an exchange established by the Federal government is void and invalid because it contravenes the law enacted by the Congress.

The government argues that the language in the relevant statute is “ambiguous,” and that therefore, deference should be accorded to the IRS regulation because any other interpretation would make the entire law unworkable and financially unsupportable. As petitioners argue, the language of the law regarding the subsidies refers specifically to an “exchange established by a State under section 1311.” As the Government argues, if the law is indeed applied as it is written, then the financial and operational consequences to the ACA would be devastating because only 14 of the 50 States established an exchange, and the Federal government established exchanges for the 36 States that did not establish an exchange.

In 2014, over 4.6 million people received premium subsidies from federally established exchanges in the 36 States that declined to establish their own exchanges, but that number is expected to reach 13 million by the end of 2016. Without federal subsidies, many if not most of these individuals would likely refuse to purchase health insurance policies. Thus, a decision by the Supreme Court invalidating the IRS regulation would effectively mean that many millions of persons living in states that did not establish an exchange would not purchase health insurance policies because, without the subsidies, the premiums would be too costly for them.

The Supreme Court’s acceptance of this appeal follows the release of statements made by one of, if not the key, architects of the ACA, Jonathan Gruber, during seminars and presentations he made about the ACA several years ago. When asked about the issue of subsidies, Gruber candidly answered in one video,  “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.” In another video other he said, “if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens.” After these recordings surfaced, Gruber described these statements as “just a speak-o – you know, like a typo.”

In other videos, Gruber admitted that the bill was misleadingly crafted and marketed, while in others he called American voters “stupid.” In one, Gruber admitted that the bill was intentionally written “in a tortured way” to disguise the fact that it creates a system by which “healthy people pay in and sick people get money.” He went on to explain that “the stupidity of the American voter,” coupled with the bill’s “lack of transparency is a huge political advantage” in getting it enacted into law. In another video, Gruber expressed doubt that the ACA would actually reduce health care costs, and admitted that it was just a way of promoting the bill.

The Supreme Court, after hearing the oral argument in early March, will render its decision by late June or early July of this year.  After previously upholding the constitutionality of the law – and caveating in that case that it is not the role of the Supreme Court to overturn an unwise law – only time will tell whether the Supreme Court holds that the law should be applied exactly as it was enacted by Congress or whether the President and agencies of the Executive Branch are free to apply the law any way they choose to interpret it.

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