Lee: Covered California Could Be Affected by SCOTUS’ ACA Ruling

If the Supreme Court strikes down subsidies to help U.S. residents purchase coverage through the federal health insurance exchange, it could result in revisions to the Affordable Care Act that also would affect state-run exchanges, according to Covered California Executive Director Peter Lee, the Los Angeles Times reports (Terhune, Los Angeles Times, 6/11).

Details of Case

The subsidies are being challenged in King v. Burwell. 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 receive an affordability exemption.

Meanwhile, the Department of Justice argues 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 (California Healthline, 3/5).

The high court heard oral arguments in the case in March and is expected to release a decision 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, 6/4).

Meanwhile, CMS data released earlier this month show that about 6.4 million U.S. residents could lose the subsidies if the high court rules against them (California Healthline, 6/3).

Lee's Comments

Ahead of the Supreme Court's ruling, Lee in an interview said that striking down the financial aid would "signa[l] that subsidies don't matter."

Lee added, "I think it would set a horrible moral precedent if the Supreme Court was to find that we can leave Americans without that financial leg up. I think it's a fundamental flaw to not understand how every American needs a leg up."

While a decision to strike down subsidies for plans on the federal exchange would not have an immediate effect on Covered California, Lee said such a ruling potentially could lead to a reduction in the amount of federal subsidies available to consumers shopping on state-run exchanges.

Lee said, "Any revisions to the [ACA] that back away from giving folks the financial help they need is backing away from giving people the care they need" (Los Angeles Times, 6/11).