How To Avoid the Horse Race When Following the ACA Supreme Court Case

A little-watched case with a chance to sink Obamacare has turned into the must-watch hearing of this Supreme Court session.

Wednesday’s oral arguments are the culmination of a long legal battle over the legality of the subsidies in the Affordable Care Act’s insurance exchanges.

Of course, a few things have changed since California Healthline profiled Halbig v. Sebelius almost two years ago. The case itself, for one: The high court picked up King v. Burwell, a sister case to Halbig. At the same time, King has gone from fringe long-shot to arguably the most high-profile case of the Supreme Court’s term, with all the trappings — line sitters, protest signs and even the same combatants from 2012’s ACA challenge.

But the implications remain just as large as they initially appeared years ago — when one lawyer warned that the case was “for all the marbles.” If anything, the reality looms even larger now that the exchanges are live, given that subsidies used by as many as 10 million Americans are expected to be directly affected if the court rules for the plaintiffs, and the entire ACA’s future could be in doubt too.

Here’s a look at a handful of late-breaking developments in King that will play a role on Wednesday, and beyond.

What the Plaintiffs Argue

The plaintiffs have argued that the letter of the law is clear: Only the 13 states that established their own insurance exchange can offer subsidies, and that IRS has illegally interpreted the ACA to allow the subsidies in the 37 states with a federally facilitated exchange.

However, the plaintiffs’ argument has essentially taken two somewhat competing forms:

  • That the framers of the ACA deliberately intended this measure in order to induce states to establish their own insurance exchanges; and
  • That if the language is indeed an error, as some defenders of the law have argued, Congress should move to correct it — rather than allow IRS to interpret it.

One reason to make two arguments is to appeal to as many justices as possible, Jonathan Adler, a Case Western Reserve law professor and one of the architects of the challenge, said on a Slate podcast last week.

“To have their strongest day, the challengers in King would need to persuade the court that the law clearly and unambiguously limits subsidies only to certain states,” Sam Baker writes at National Journal. “If the court seems to think the statute is unclear, it’ll be a question of how it settles that ambiguity: through Chevron deference; or by saying, in effect, that the text says what it says, even if it wasn’t meant to.” A lower court upheld the legality of subsidies based on the principle of Chevron deference, meaning that the court deferred to the agency implementing an unclear statute, Baker notes.

What the Government Argues

Beyond the argument that IRS has the authority to interpret the law, the White House may invoke the Pennhurst doctrine, which could be especially palatable to the court’s conservative justices. The doctrine focuses on ensuring that the federal government doesn’t violate state rights.

“This could be an attractive expansion of the Pennhurst principle for the more conservative justices, which is one of the reasons why I think it is potentially a powerful argument for the government,” Samuel Bagenstos, a professor of administrative law at the University of Michigan, told Vox‘s Adrianna McIntyre. “It’s hard to know how far it would extend, but certainly it would breach a major barrier that has contained the principle so far.”

Implications

Nearly every state potentially affected by a ruling in King has failed to move forward with a clear contingency plan, such as proactively establishing its own exchange.

The economic implications could be substantial. While many have focused on what happens to consumers in states with federally facilitated exchanges — with premiums on the federal insurance exchange increasing by as much as 774% — there’s a trickle-down effect on the health care industry, too. The average mid-size hospital in a state with a federally facilitated exchange could see a loss of nearly $2 million in revenue.

Health insurers also are working feverishly to create contingency plans; actuaries for affected plans may decide to come up “with two different sets of rates for next year, one for each potential court outcome,” Anna Wilde Mathews writes at the Wall Street Journal.

The plaintiffs, meanwhile, have begun to make a new economic argument of their own: That if a victory in King leads to the collapse of the ACA, the entire nation will benefit.

“If the King plaintiffs prevail before the Supreme Court, it will mean more jobs, more hours and higher incomes for millions of Americans — particularly part-time and minimum-wage workers,” Michael Cannon, another architect of the King challenge, wrote in USA Today on Tuesday night. “Employers will have more flexibility to structure their health benefits. States will be able to attract new businesses by shielding employers from Obamacare’s employer mandate.”

Of course, there will be a temptation to overweight the oral arguments on Wednesday — there always is.

“Really hoping we learned from the last [Supreme Court] argument on the ACA,” tweeted Charles Ornstein, a ProPublica reporter and president emeritus of the Association of Health Care Journalists. “Let’s keep tea leaf reading to minimum.”

Around the nation

While the Supreme Court case has overshadowed the industry this week, other stories are making news on the road to reform, too. Here’s a quick look.

An Arizona hospital deal shows hospital pressures. The merger between Banner Health and the University of Arizona Health Network highlights the “new reality” facing academic medical centers in a post-ACA system, Beth Kutscher writes at Modern Healthcare.

Texas Republicans won’t budge on Medicaid. GOP leaders in the state say that they won’t expand Medicaid through the ACA, despite increasing interest by some Republicans across the nation, Edgar Walters writes for the Texas Tribune/Kaiser Health News.

Categories: Covered California, Health Care Costs, Insurance, Road to Reform, The Health Law