“ESTABLISHED BY THE STATE” Four Words That May Cripple The Affordable Care Act

The U.S. Supreme Court is hearing arguments this week in the case King v. Burwell.  It is a highly anticipated case challenging the legality of subsidies available for individuals purchasing health insurance on the federal exchange under the Affordable Care Act.

And even though you may have your health insurance via a group employer plan, or have a grandfathered plan, or have an individual plan directly through the insurance carrier, this case and how the Supreme Court rules on it will impact you in some form.

At issue are four words within the law…“established by the state.”  A major component of the law is the availability of subsidies, usually in the form of tax credits, to be available to citizens based on their income.  And these subsidies are available only if the person purchases the health insurance program through an exchange.

But only a very few states established their own exchange.  The majority of the states, including Missouri, use the federal exchange, also known as healthcare.gov.  And so the argument by the plaintiffs is that if the subsidy was not obtained via a state based exchange, then the subsidies are invalidated.

The implications could be far reaching.  What happens to the 7.5M individuals that have purchased coverage on the federal exchange and received a subsidy?  Will the rest of the public have to pick you the additional costs for those individuals?  And would it be different from state to state?  The Supreme Court is due to have a ruling by late June.  Stay tuned.