King v. Burwell – Will Obamacare Survive?

While a 2012 Supreme Court decision affirmed the constitutionality of the Affordable Care Act (ACA, or if you prefer, Obamacare), the 2015 case of King v. Burwell may have more far reaching significance. The Court heard arguments on the King case in early March, and a decision is expected in June.

The ACA has several main features. To simplify, it requires individuals to acquire medical coverage or pay a tax; prohibits lifetime limits on medical coverage; prohibits denial of coverage for pre-existing conditions; allows sons and daughters to remain covered under their parents’ policies until they are 26. And, of course, there are hundreds of additional pages of legislative language to implement these and other features of the law.

The law provides for the creation of insurance exchanges, which allow someone shopping for medical coverage to choose from among more than one option. There are both insurance exchanges established by states and exchanges created by the federal government where a state did not create their own exchange. Depending on income level, individuals signing up for medical coverage through an exchange may be eligible for a subsidy from the federal government to help pay the premium cost. Here’s where things get sticky.

Since the law went into operation a couple years ago the federal government has been providing those subsidies to people who bought their medical insurance through both federal exchanges and the state exchanges. But while this was going on a tenacious lawyer from South Carolina, sifting through the minutia of the law, noticed that subsidies, according to the law, were to be provided to people who bought their coverage through insurance exchanges “established by the state.” There is nothing specific in the law that also says that people who bought their coverage through an exchange established by the federal government can receive a subsidy.

When the law was approved in 2010 the common assumption, even among those who opposed the law, was that the federal government could and would provide appropriate subsidies to eligible people who acquired their coverage through either state or federal exchanges.

As part of the effort to kill or repeal the ACA, four individuals were recruited as part of a law suit challenging the ability of the federal government to provide subsidies to people who acquired their coverage through a federal exchange. There have been questions about whether the four plaintiffs, led by David King, even have standing to sue (must be able to show they were negatively affected by the law) because some of them could have qualified for the coverage because of their incomes and a couple are veterans who might have been able to use Veterans Administration medical services. The hearing at the Supreme Court discussed standing.

The Supreme Court could settle on a strict interpretation of the law deciding that people acquiring coverage through the federal exchange are not eligible for a subsidy to buy their coverage. The Court could decide that the issue about exchanges “established by the state” should be read in the overall context of the law which worked to create coverage opportunities for as many people as possible. While the latter decision would allow the law to continue to work as it has been working, a decision to strictly interpret the “established by the state” language would quickly throw millions of people out of their coverage. Rates might rise substantially for those in states without state exchanges. Chaos would reign.

This whole issue might have been avoided if Congress had gone through the conference committee process to clean up the bill prior to final approval. But Senator Kennedy died prior to the final enactment of the law, jeopardizing (and in the end losing) the 60 vote majority that Senate Democrats held at the time. So final enactment was hurried and editing fell by the wayside.

Some Republican members of Congress have been hinting that they will come up with a fix for that dilemma. Justice Scalia at the Court hearing suggested that Congress would just fix the law. Even with the strict decorum of the Court, that suggested was quietly laughed out of the Court.

If the Court rules in favor of King, etc. and prohibits federal subsidies for individuals who acquired their medical coverage through the federal exchanges, and if Congress fails to promptly act on replacement legislation, then who are the people most negatively affected by the decision?

Sixteen states (including New York) plus the District of Columbia have created their own insurance exchanges and would not be directly affected by the court case. There are 34 states that have declined to create their own exchanges, although seven of those states have a partnership with the federal exchange and could continue operating. Twenty-seven states operate only under the federal exchanges and would be directly impacted by a negative court ruling, with many of their residents losing their medical coverage. The interesting thing is that most of those twenty-seven are red, Republican states.

Here is a list of the states that would lose their subsidies, with a note about whether they have Republican senators who have opposed the ACA:

State                                     Republican Senators

Alabama                              Sessions, Shelby

Alaska                                   Murkowski, Sullivan

Arizona                                 McCain, Flake

Florida                                  Rubio

Georgia                                Purdue, Isakson

Indiana                                 Coats

Kansas                                 Roberts, Moran

Louisiana                             Vitter, Cassidy

Maine                                   Collins

Mississippi                           Cochran, Wicker

Missouri                               Blunt

Montana                              Daines

Nebraska                             Fischer, Sasse

New Jersey

North Carolina                   Burr, Tillis

North Dakota                     Hoeven

Ohio                                      Portman

Oklahoma                           Inhofe, Lankford

Pennsylvania                     Toomey

South Carolina                   Graham, Scott

South Dakota                     Thune, Rounds

Tennessee                          Alexander, Corker

Texas                                   Cornyn, Cruz

Utah                                     Hatch, Lee


Wisconsin                            Johnson

Wyoming                             Enzi, Barrasso

For those keeping score, that’s 41 Republican senators representing states in jeopardy of having tens/hundreds of thousands of their residents lose their medical coverage.

The Robert Wood Johnson Foundation has examined the characteristics of those affected by a Supreme Court finding for the plaintiff in King v. Burwell. The Foundation reports that “if the Supreme Court rules that using federal tax credits to purchase insurance is illegal, here is who becomes uninsured in 2016 because they would not receive tax credits:

  • 61 percent are white, non-Hispanic
  • 62 percent live in the South
  • 81 percent work either full-time or part-time
  • 82 percent are not poor but are low and middle income.”

In other words, the numbers are fairly heavy into the demographics of the Republican party base.

Feel free to draw your own conclusions about the irony of all of this.

So What Will the Court Decide in June?

Who knows? is a fair answer. But a blog is entitled to take an educated guess.

I know someone who believes that courts are required to decide cases strictly on the basis of what is in the law, rather than on any political basis. Many of us, however, see things more politically. And in the case of Supreme Court decisions over the past few years, it is hard to argue that the political tinge of the Justices doesn’t color their decisions. So here is one opinion about the King v. Burwell opinion.

Justices Alito, Scalia, and Thomas will vote Republican; scratch that, will vote in favor of the plaintiffs to overrule the law.

Justices Breyer, Ginsburg, Kagan and Sotomayor will vote Democrat; er, in favor of upholding the law.

Chief Justice Roberts voted with the majority to uphold the constitutionality of the ACA in 2012, allowing the law to go into effect. He will not now want to be the justice who kills one of the major pieces of social legislation in the past 100 years. He will vote to uphold the law.

Justice Kennedy voted against upholding the constitutionality of the law in 2012. But he has raised an issue about whether finding for the plaintiffs will in effect “coerce” the states into needing to provide for the medical insurance for those who would otherwise lose their coverage. On that basis, he will uphold the law.

Bottom line, the Supreme Court will by a vote of six to three uphold the continued operation of the ACA. You read it here first.