Obamacare's Big Day In Court Could Change Everything — Here's How
Americans who would like to forgo their healthcare coverage, but can’t, have found an interesting loophole in the Affordable Care Act that’s being heard by the Supreme Court in a case called King v Burwell. (Photo: Getty Images)
On Wednesday, the Supreme Court will hear oral arguments for King v. Burwell, a case that — depending on the ultimate ruling — could completely change how healthcare in this country functions.
Here’s the scoop, as summarized by SCOTUS Blog:
“In 2014, over five million people bought health insurance on exchanges created by the federal government. One of those people was David King, a sixty-four-year-old Vietnam veteran who lives in Virginia and works as a limo driver. Based on his annual income of $39,000, King can purchase a health insurance plan with a monthly premium of $648 for just $275; the other $373 is covered by a subsidy. But King doesn’t want that subsidy. In fact, he doesn’t want to have to buy health insurance at all. And without the subsidy, he wouldn’t have to, because the health insurance would cost him enough that he would qualify for an exemption from the individual mandate.”
We broke down what you need to know to truly understand this case, and what it could mean for you and your insurance coverage under the Affordable Care Act (ACA), known to most as Obamacare.
1. One of the key principles of the Affordable Care Act is the “individual mandate,” which requires that all U.S. citizens have health care coverage.
Those who are able to purchase insurance, but choose not to, must pay a penalty fee. (There are some exemptions available for those who, for example, are homeless, are recent victims of domestic violence, or recently filed for bankruptcy, among other things.) The individual mandate ensures that both healthy and sick people buy insurance, thus balancing out the general population of insured people and keeping premiums lower for everyone.
2. Those who don’t receive health insurance through an employer — such as anyone who’s self-employed — can access insurance via exchanges.
To allow people access to the greatest number of health insurance options, another central component of the Affordable Care Act is the establishment of “exchanges.” Insurance companies can list available plans on those exchanges and consumers can buy these plans directly from them.
3. States are encouraged to run these exchanges themselves, but they cannot be forced to run a healthcare exchange.
When the state decides not to run an exchange, the federal government steps in to run one for it.
4. The government offers subsidies to anyone who falls below a certain income level to make the purchase of insurance more affordable to them.
This is to ensure that the largest number of people are able to purchase insurance and comply with the individual mandate. These subsidies are available only to those who purchase their insurance through an exchange.
5. About 87 percent of people signing up for coverage in the exchanges have been eligible to receive premium subsidies — and millions of consumers were able to afford insurance for the first time because of this financial assistance.
Per a report published on Tuesday by Planned Parenthood, of those receiving federal subsidies vis-à-vis tax credits, one-third (3.2 million) of those are people of color (including 1.5 million Hispanics and 1.2 million African Americans) and about 4.1 million are women.
6. And herein lies the court case: King and three other Virginians are suing because they say they should not have to receive a subsidy — and thus should not have to buy insurance — because of the language of the Affordable Care Act itself.
The bill designates that subsidies themselves are calculated and disseminated to those who purchase their insurance through “an Exchange established by the State.” King says that because Virginia is a state that chose to forgo running its own healthcare exchange — leaving the federal government to maintain the exchange for Virginia residents instead — the subsidies should not apply since the exchange isn’t run by federal officials, not the state. And, thus, the King team argues, without the subsidy, King would be exempt from having to buy the insurance he did not want to have to buy.
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7. The government says that focusing on these select words fails to recognize the overall spirit and purpose of the bill.
The government says it is apparent that subsidies are applicable to all of those who financially qualify, whether their insurance is purchased through a state or a federal exchange.
8. We won’t know how the Supreme Court chooses to rule on King v. Burwell until early this summer.
If the Supreme Court rules in favor of King, it is still unclear what the ramifications will be for those who receive subsidies for plans purchased on federal exchanges. “This is an issue that would be addressed after the case is decided,” explains Christina Postolowski, health policy manager for Young Invincibles, about whether individuals who currently receive subsidies might immediately lose them based on how the court ultimately rules.
9. It could mean that about 9.3 million people in the 34 states that are part of Healthcare.gov will no longer be able to receive tax credits.
(Graphic: Courtesy of Planned Parenthood)
Half of the population at risk for losing their subsidies — and thus, potentially, their access to health insurance — is located in five states: Florida, Texas, North Carolina, Georgia, and Pennsylvania.
“It could mean that consumers in the 34 states that are part of Healthcare.gov will no longer be able to receive tax credits,” explains Postolowski. “As a result, The Commonwealth Fund estimates that 7 million people could find their premiums unaffordable and lose their coverage.”
10. Young people may be hard hit.
“Young adults could be hit particularly hard, since affordability is the key barrier to young adults signing up for coverage, ” says Postolowski. Young Invincibles estimates that more than 6 million uninsured young adults could be eligible for tax credits in the 34 states that are part of the federally run Healthcare.gov exchange. A ruling in favor of King could mean that this population loses the tax credit subsidies that would allow them to become insured.
11. But some conservatives say a ruling in favor of King wouldn’t be so bad.
The Heritage Foundation, a conservative think tank, estimates that the number of those receiving subsidies is closer to 5.5 million individuals total and that people in any of the 34 affected states whose financial circumstances are similar to those of the plaintiffs in this case might qualify for an “affordability” exemption from the individual mandate because their unsubsidized cost of coverage would likely be more than 8 percent of their incomes. Should the court rule in favor of King and against the government, the Heritage Foundation encourages Congress to exempt individuals, employers and insurance plans in states that do not have a state exchange from Obamacare’s rules, regulations and mandates.
12. Americans believe in the subsidies.
New research shows that the majority of Americans believe that subsidies should continue to apply in all 50 states, not just to residents of the 16 states plus the District of Columbia who are able to purchase insurance through their state-run exchanges.
What Do You Think?
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