How Does King vs Burwell Affect Me?

July 14th, 2015

By CHHS Extern Elizabeth Millford

This is the question that many Americans are asking themselves after the Supreme Court’s recent ruling on the second major landmark case to challenge President Obama’s 2010 healthcare law. On Thursday June 25, 2015, the Supreme Court revealed its decision on the most recent case involving Obamacare. The case in question, King v. Burwell, challenged the Affordable Care Act (ACA) on one of its main principles – the federal insurance subsidy. The most important thing to know about this ruling is that does not change anything, at least not in terms of medical insurance prices or the availability of subsidies to eligible individuals.

Burwell challenges the ACA by stating that the guarantee of insurance subsidies to individuals within certain income levels does not apply to all exchange markets. The argument presented by the plaintiffs alleges that the subsidy only applies to exchanges that are “established by the State,” as stated in the law. As such, any states currently using federal exchanges would not be eligible to receive any insurance subsidies. The plaintiffs, who are residents of the state of Virginia and use a federal exchange system, claim that because they are ineligible for insurance subsidies, they cannot afford insurance, and therefore should not be required to obtain it.

The argument hinges on whether or not federal exchanges are equivalent to state exchanges. The ACA specifically states that individuals are eligible for subsidies from an exchange “established by the State,” which prompts the question of whether a federal exchange could possibly fit under that umbrella.

In a major success for the Obama Administration, Chief Justice John Roberts, author of the Majority opinion, has confirmed that federal exchanges are considered “established by the State” within the context of the ACA. The actual text of the law is very ambiguous, he stated, and the Court must instead look to what Congress intended to accomplish with the law. The Court ultimately decided that Congress intended for both state and federal exchanges to be eligible for subsidies. Otherwise, Roberts said, the federal exchanges would significantly weaken and could no longer hold up to the standards that the Act imposes. Chief Justice Roberts was joined by five other Supreme Court Justices.

As a result of this ruling, the ACA remains exactly how it was before, but it still has a lot to prove. The Congressional Budget Office (CBO) estimated that 24 million Americans would be using the exchange by the year 2024, but enrollment numbers are already beginning to dwindle. In order to provide insurance at reasonable prices, more people need to enroll. More importantly, more middle and upper class Americans need to enroll. According to Forbes, only 2% of Obamacare enrollees are above 400% of the federal poverty level (the maximum income to be eligible for the tax credits). In order for the system to succeed, significantly more higher-income individuals need to sign up so that their insurance premiums can help even out the costs.

Furthermore, the ACA’s success is not yet settled. Obama’s statements that the statistics are showing success may not tell the whole story. Obama stated that families are paying an average of $1800 less on healthcare, but alternative statistics claim that families are actually paying an average of $800 more. Obama has also stated that the new system helps the economy, but a recent CBO report estimates that the law will actually “reduce the supply of labor.”

One significant change that may come from the Burwell ruling is that some of the states currently operating under their own exchanges may opt to default to the federal exchange. Costs of maintaining independent state exchanges have surprised many state legislatures, and now that the highest Court in the country has confirmed that federal and state exchanges are, for all purposes of the ACA, equal, states may be more willing to operate under a federal exchange. However, this should not affect the availability of insurance or subsidies – it will only affect the steps necessary to obtain them.

Overall, it is still unclear exactly how effective the ACA has been or will be. The new healthcare system is still in its infancy, and it will take years, maybe even decades, before any long-term benefit analysis can be completed.


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