High Court Upholds Health Law Subsidies

CAL/AAEM News Service calaaem.news.service1 at gmail.com
Wed Jul 8 21:54:05 PDT 2015



 

June 25, 2015

 

High Court Upholds Health Law Subsidies

 

 

 
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Kaiser Health News

 

 

By Jay Hancock

The Affordable Care Act made it through its second do-or-die Supreme Court
test in three years, raising odds for its survival but by no means ending
the legal and political assaults on it five years after it became law.

 

The 6-3 ruling, a major win for the White House, stopped a challenge that
would have erased tax-credit subsidies in at least 34 states for individuals
and families buying insurance through the federal government's online
marketplace. Such a result would have made coverage unaffordable for
millions and created price spirals for those who kept their policies, many
experts predicted.

 

"Congress passed the Affordable Care Act to improve health insurance
markets, not to destroy them," Chief Justice John Roberts wrote in the
majority opinion for the court. Abolishing the subsidies, he said, "could
well push a State's individual insurance market into a death spiral. It is
implausible that Congress meant the Act to operate in this manner."

 

Democrats and consumer advocates praised the result.

 

"If the partisan challenge to this law had succeeded, millions of Americans
would have had thousands of dollars worth of tax credits taken from them,"
President Barack Obama said at the White House. With Thursday's ruling, he
said, "the Affordable Care Act is here to stay."

 

Arkadi Gerney, senior vice president at the liberal Center for American
Progress, called the decision "incredibly important" and "a repudiation of
what has been this five-year campaign by conservatives . to try to undo this
law."

 

Republicans lamented the ruling and attacked the law that has been a
conservative target from the day it took effect.

 

"Today's ruling won't change Obamacare's multitude of broken promises,
including the one that resulted in millions of Americans losing the coverage
they wanted to keep," said Majority Leader Mitch McConnell, R-Ky., said on
the Senate floor. "Today's ruling won't change the skyrocketing costs of
copays, deductibles and premiums that have hit in the last few years."

 

But even a victory for the law closely identified with Obama in the case
known as King v. Burwell leaves the health system with incomplete insurance
coverage, rising costs and other uncertainties. The ACA itself still faces
several lawsuits, although some believe Thursday's decision will discourage
judges from advancing the cases.

 

One threat the law doesn't seem to face is the possibility that future
administrations could reverse the high court's decision through regulation.
The King case was partly about whether the Internal Revenue Service could
grant subsidies on its own authority in the face of mixed signals from
Congress.

 

But Roberts wrote that "this is not a case for the IRS."

 

Such language "binds this administration and any future administration,"
said Kevin Russell, a partner in the Maryland law firm Goldstein & Russell
who has argued before the court.

 

Tom Miller, a lawyer at the American Enterprise Institute, said Robert's
decision "made it much more uphill" for a future administration or other
legal challengers to dismantle the law.

 

Republicans controlling Congress are likely to advance legislation amending
or repealing the law, analysts said.

 

Even so, the only bills likely to go anywhere before Obama leaves office in
2017 are those with bipartisan support that change relatively minor parts,
said John Feehery, a Republican strategist at Quinn Gillespie.

 

Such measures might include repealing a tax on medical devices such as
artery stents and artificial knees and scrapping or changing the "Cadillac
tax" on high-benefit health plans, he said.

 

"A comprehensive alternative" to the health law "is just not going to
happen," thanks to the threat of an Obama veto, Feehery said. "If
[Republicans] want to do anything about the ACA, they need to help make the
next president a Republican."

 

Even that might prove challenging. By then the health law will be almost
seven years old and deeply entwined in American life.

 

"With another year and a half of business as usual under the ACA, if it's a
Republican as the next president, it'll be that much more difficult to make
changes," said Joseph Antos, a health care economist at the American
Enterprise Institute.

 

The case hinged on tax credits created by Congress to help middle-income
consumers buy insurance through online marketplaces, also known as
exchanges.

 

The subsidies are available through an exchange "established by the state,"
according to the law.

 

Thirty-four states did not set up their own exchanges and rely instead on
healthcare.gov, run by the federal government. Lawyers for the plaintiffs
argued that, as a result, millions of consumers in those states should not
receive tax credits to pay premiums.

 

Justice Antonin Scalia agreed. "Today's interpretation is not merely
unnatural; it is unheard of," he wrote in the dissenting opinion. "Who would
ever have dreamt that 'Exchange established by the State' means 'Exchange
established by the State or the Federal Government'?"

 

The Supreme Court of the United States has shown such partiality to the
health law, he added, that "we should start calling this law SCOTUScare."

 

Pulling the subsidies would have undermined the insurance market in those
states to the point of likely failure, experts said. Unable to afford the
coverage, many consumers would have dropped out. Those remaining would
probably have been older and sicker, driving up premiums to unsustainable
levels.

 

Eighty-five percent of those who bought insurance through healthcare.gov
qualified for subsidies averaging $272 per month. The Department of Health
and Human Services predicted 6.4 million people would have lost subsidies if
the court ruled for the plaintiffs.

 

Those subsidies are effectively revenue for hospitals and health insurers,
financing premiums and the cost of care. Both industries are relieved they
were upheld.

 

"The possible loss of the subsidies would have been chaotic for millions of
people and for the health care providers who are trying to play by the
rules," said Alan Levine, CEO of Mountain States Health System in Johnson
City, Tenn.

 

"I'm ecstatic and extremely pleased," said George Masi, CEO of Harris Health
System, a Houston agency that cares for the poor at two public hospitals and
numerous clinics.

 

A loss for the administration would have affected employer-based coverage as
well, although not nearly as much, benefits lawyers said.

 

For large employers not offering health insurance, penalties are triggered
when workers obtain subsidies in the marketplaces. No subsidies, no
penalties, so employers could have dropped coverage without fearing fines.

 

Although employers are focused on complicated, health-law reporting
requirements that take effect this year, their situation changes little in
the wake of the decision, said Edward Fensholt, a benefits lawyer with
brokers Lockton Companies.

 

"The working assumption has been, 'We need to offer this coverage to our
full-time employees or we're going to risk these penalties,'" he said. "And
that's not going to change."

 

ACA supporters said the lack of a reference to tax credits for the federal
exchange was a drafting error and that Congress intended for subsidies to be
available regardless of the platform. Lawyers for the plaintiffs said the
government must follow the letter of the law.

 

The health law faces other legal cases, including objections from religious
institutions to their role in providing birth control coverage and a suit by
the House of Representatives contending that Obama's delay in requiring
employers to offer coverage was illegal.

 

But even if legal challenges to the law disappear, health insurers, doctors
and hospitals face broad uncertainty.

 

Signups for 2015 exchange coverage were lackluster. At the end of March, a
little more than 10 million people had enrolled and paid for insurance, less
than the 13 million the nonpartisan Congressional Budget Office was
projecting last year.

 

Supporters of the law are pushing for more states to expand Medicaid,
renewed enrollment efforts for exchanges and new measures address coverage
affordability.

 

"Everyone who is involved with it knows there are issues where it can be
improved," Linda Blumberg, a senior fellow at the Urban Institute, said
after the ruling. "Having this litigation behind us allows us to look at the
law very carefully at which areas can be improved and what's the best way to
do it."

 

Health costs seem to be creeping up again in a system that is already the
most expensive in the world, although there is partisan disagreement on
whether the health law is containing expenses or fueling them.

 

In recent years large, self-insured employers have seen decades-low
health-spending increases of 4 or 5 percent a year, said Dale Yamamoto, an
independent actuary who works closely with such companies. So far this year
those companies are seeing 6 or 8 percent, he said.

 

"Everyone I'm talking to - it sounds like they've started to go up this
year," he said. "If it's going up for them, it's probably going up on the
individual side as well."

 

Jordan Rau, Julie Appleby, Phil Galewitz, Lisa Gillespie, Anna Gorman,
Shefali Luthra and Alana Pockros contributed to this story.

 

 

 

Jeff Wells
Deputy Editor, CAL/AAEM News Service

 

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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