Supreme Court Hears Opening Arguments in King v. Burwell Case

On Wednesday, the Supreme Court heard opening arguments in King v. Burwell, which challenges the Affordable Care Act's subsidies for U.S. residents to purchase health plans through the federal exchange, the AP/San Francisco Chronicle reports (Sherman, AP/San Francisco Chronicle, 3/4).

Case Details

At issue in the case is that while the ACA says subsidies are available to help certain U.S. residents purchase coverage offered "through an exchange established by the State," a May 2012 IRS rule allows the subsidies to be used in an exchange administered either by a state or the federal government.

The plaintiffs argue that the IRS rule should be invalidated because it contradicts what Congress originally wrote in the ACA. Further, the plaintiffs argue that the ACA's subsidies harm them by making them subject to the law's individual mandate and that without the subsidies, they would be able to receive an affordability exemption (California Healthline, 1/23).

Meanwhile, the Obama administration argues in the case that Congress would not have set up such an intricate connection between the law's individual mandate and the subsidies if it intended for the subsidies to not be available in certain states (AP/San Francisco Chronicle, 3/4).

The high court is expected to release a decision in the case by the end of June. If the court strikes down the federal exchange subsidies, the ruling would eliminate about $28.8 billion in subsidies to 9.3 million individuals in 34 states in 2016, according to an Urban Institute analysis (California Healthline, 2/27).

Most U.S. Voters Want Congress To Act if Subsidies Ruled Illegal

In related news, a majority of voters said they would want Congress to act to continue the subsidies if they are struck down, according to a Wall Street Journal/NBC News poll, the Wall Street Journal reports.             

The poll surveyed 800 registered voters between Feb. 25 and Feb. 28.

According to the poll, 54% of respondents said Congress should pass legislation to make sure low- and moderate-income individuals are eligible for government assistance to help them purchase health coverage if the subsidies are struck down. About 35% of respondents said Congress should not pass such legislation.

However, respondents were split on their overall views of the ACA, with 51% saying the law should be majorly changed or repealed (Radnofsky, Wall Street Journal, 3/3).

Insurers Say Ruling Striking Down Subsidies Could Raise Premiums

Meanwhile, insurers have said a ruling striking down the subsidies could drive up health plan premiums across the country, the Wall Street Journal reports.

According to the Journal, insurers must submit their regulatory filings for their 2016 offerings before the anticipated Supreme Court decision in the King case in June. Some insurers have said they could propose various plan designs in the spring and then, after the ruling, void some of the offerings before they are finalized. In addition, insurers said they might submit two different rates sets for 2016 to take into account a ruling either for or against the subsidies.

Insurance industry officials have said that a ruling striking down the subsidies could cause turmoil in the individual insurance market because many people are likely to drop coverage without subsidies to offset the costs. That dropped coverage would likely leave insurers' risk pools with sicker individuals, which could cause premiums to increase.

Tom Snook, an actuary at Milliman consulting firm, added that the effect of a ruling invalidating the subsidies "would be substantial enough that I would expect many carriers to consider pulling from" the exchanges because it would present the question of whether there is "an insurable market."

Insurers in advance of the ruling are pressing federal and state regulators on how they should move forward if the subsidies for federal exchange coverage are ruled illegal. According to the Journal, federal regulators have not yet offered insight on what could happen in such an instance (Wilde Mathews, Wall Street Journal, 3/3).

Providers, Patients Formulating Alternative Treatment Plans Ahead of SCOTUS Ruling

Also in related news, providers and patients are working to form alternative treatment plans ahead of the Supreme Court's King ruling in case individuals lose coverage if the federal exchange subsidies are invalidated, Reuters reports.

Physicians have said they are working to find no-cost clinics that could treat patients with chronic illnesses if they lose their coverage. In addition, the providers said they are requesting discounted drugs from pharmaceutical companies, stockpiling certain medications and rescheduling preventive care visits and complicated procedures to occur before the ruling.

Further, Jeff Huebner, who chairs the National Physicians Alliance's policy committee, said physicians are urging patients to check if they are eligible for Medicaid or other state health programs. They also are suggesting patients find a primary care source "that accepts payment on a sliding scale" based on individuals' abilities to pay (Begley, Reuters, 3/4).