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Supreme Court case could upend Affordable Care Act

BMJ 2015; 350 doi: https://doi.org/10.1136/bmj.h1162 (Published 02 March 2015) Cite this as: BMJ 2015;350:h1162
  1. Michael McCarthy
  1. 1Seattle

The US Supreme Court will hear oral arguments on Wednesday 4 March in a case that, should the justices decide for the plaintiffs, could potentially eviscerate the 2010 Affordable Care Act.

In the case King versus Burwell the plaintiffs argue that federal subsidies that have helped millions of US consumers to purchase health insurance coverage through the federal exchange created by the 2010 act are illegal.1

At issue are five words in the law that state that the subsidies would be made available through an “exchange established by the state.” Unexpectedly, only 13 states and the District of Columbia elected to set up their own exchanges, with the rest opting to let the federal government run their exchanges either out of convenience or because of political opposition to the act within the states. Nevertheless, the Internal Revenue Services (IRS), which disburses the subsidies through tax credits, ruled that the subsidies would be available through both state run and the federal exchanges, a decision, the plaintiffs argue, that the IRS did not have authority to do under a strict reading of the law.

The administration, on the other hand, argues that if the justices read the law in its entirety it was clear that the subsidies were intended for everyone purchasing health insurance on any exchange, not just those run by states. Furthermore, in amicus briefs submitted to the court, legislators who drafted the legislation have stated that it was never their intention to limit subsidies to state exchanges.

A decision in favor of the plaintiffs could throw the US healthcare system into chaos, experts have warned. They said that an estimated 8-10 million people would be forced to drop their insurance; premiums could jump by as much as 35% for individuals purchasing plans outside the exchanges, as young, relatively healthy people who had been covered by the exchange plans dropped out of the insurance pool2; and hospitals, which have spent millions gearing up to care for newly insured people, would see a sharp drop in revenue and be forced to cut staff and services.

The problem could be resolved with a simple, one page bill striking the language in question from the law, but Republicans, who now control both the US House of Representatives and the Senate and who have campaigned against the Affordable Care Act since its passage, are unlikely to do anything that could be seen as saving the law.

Some Republicans in Congress, however, facing the prospect of millions of voters blaming the Republican Party for the loss of their insurance, have proposed providing some form of financial assistance to allow those affected by a court ruling against the subsidies to keep their insurance until new, Republican crafted healthcare legislation could be passed.

For its part the Obama administration has said that it has made no contingency plans should the court rule for the plaintiffs, a signal to the court that should it rule against the subsidies there would be no easy fix. “We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health system that would be caused by an adverse decision,” wrote the health and human services secretary, Sylvia Burwell, last week in a letter to the Senate.

Notes

Cite this as: BMJ 2015;350:h1162

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