King V. Burwell

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King v. Burwell

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Supreme court case based on whether or not government subsidies are legally allowed to be given to states that defaulted to a federal exchange option

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Section 1311

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States get to establish their own insurance exchanges

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Section 1321

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If states don't put in the time to make their own exchanges, they get the default, federally run exchange (can also be hybrid - state runs part, federal runs another part)

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Liberal or conservative states and health exchanges

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Liberal states: typically opted to make their own state exchanges

Conservative states: opted for the federal option

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Section 1401

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tax credits (subsides) should go to individuals that live in a state that enrolled them through a state exchange referred to in section 1311

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2011 IRS ruling (in relation to King v. Burwell)

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IRS ruled that subsidies should go to both, however opponents of this ruling are saying that the IRS broke the law set out by section 1401 of the ACA

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Consequences if the Supreme Court rules that the IRS broke the law

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1. Huge increase in premiums in states with federal exchanges

2. Big drop in coverage

3. No more individual mandate for people who coverage is deemed "unaffordable"

4. No more employer mandate where there is no individual mandate

Will basically erase the ACA

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Insurance consequences of King v. Burwell

Insurance regulation of the ACA that will live on

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1. Community rating

2. Guaranteed issue

3. coverage for pre-existing conditions

4. No lifetime limits (on coverage)

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How could King v. Burwell cause a DEATH SPIRAL??

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A combination of insurance regulations plus no individual mandate is unsustainable (only the sickest people will sign up for coverage, because those who are healthy will not want to spend money to pay for a plan)

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How do the conservative "plaintiffs" of King v. Burwell interpret the TEXT of the ACA?

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*Section 1401 says that exchanges must be set up "by the states" to get subsidies.

*State is defined elsewhere in the law as the 50 states, plus Washington, D.C.

*States that are on federal exchanges should NOT get subsidies

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How do the conservative plaintiffs of King v. Burwell interpret the INTENT of the ACA?

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ACA framers wanted to incentivize all 50 states to set up their own exchanges, but did not anticipate the depth of the opposition

*Was supposed to be an incentive scheme where those who accept the plan get the subsidies and those who do not get nothing. It SHOULD have been a no brainer to states to want to make their own exchanges

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How do the liberals/Obama administration say that they meant the TEXT of the ACA to be interpreted?

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"By the state" was unfortunate choice of wording, they believe that the implication of the law is clear: that all exchanges (even those created FOR states by the federal government) should be allowed to get the subsidies

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What would the liberals say about the INTENT of the ACA?

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*They argue that there is no way that they would have excluded FBE when the whole point of the ACA was to make health care more affordable for all Americans

*If Congress wanted to have a penalty to states on the federal exchange they would have made it much more clear than hiding it in 1401

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What did Justice Kennedy have to say about King v. Burwell?

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*The case was thought to be about the "statutory" interpretation of the law (who gets to decide if the text is unclear?)

*What are the constitutional consequences? (If there were penalties for being on a federal exchange that would have been a coercive choice)

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What will happen if the courts rule in favor of the plaintiffs?

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HUGE DISASTER!! "Massive damage to our healthcare system in the event of an adverse decision" - Burwell

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What would Congress do in the case that the courts rule in favor of the plaintiffs in King v. Burwell?

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Straight legislative fix: give subsidies to all

Do nothing: HUGE consequences for the ACA and health care in America

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How might negotiations in Congress work in light of a King v. Burwell ruling?

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*Leverage by the bad status quo

*Leverage by Obama to extract concessions

*Why do the republicans even want this? They have to be able to get something less than withdrawing subsidies from 34 states

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What would a Red state do if the courts rule in favor of the Plaintiffs?

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They might add or drop state exchanges, depending on the incentives that are drawn up by Congress in the wake of the decision.

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What would a blue state do if the courts ruled in favor of the plaintiffs?

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They would quickly adopt state exchanges (they do NOT want to lose their subsidies) or adopt a partnership exchange (for example, they would be able to do the bare minimum on their end and still have their exchange run through healthcare.gov)