Supreme Court rules on Affordable Care Act

June 30, 2015 by Medigroup

The U.S. Supreme Court has ruled 6-3 in favor of the Affordable Care Act.

The case, King v. Burwell No. 14-414 centered around a key passage within the law. The four plaintiffs – all from Virginia – sued President Obama’s administration because they did not believe subsidies from the federal exchange program should be recognized. The passage in question was, “an exchange established by the state.”

According to The New York Times, the plaintiffs believed this passage prohibited the federal government from providing healthcare subsidies in states that have not created their own exchanges. Currently, 16 states and the District of Columbia run their own exchanges.

The case was spurred after the U.S. Internal Revenue Service said subsidies could be allowed whether the exchange was run by the state or federal government. The Supreme Court decided to hear the case after the U.S. Court of Appeals for the Fourth Circuit ruled against the challengers.

Rocky history
The ACA, commonly referred to as Obamacare, has had a tumultuous history. President Obama made healthcare reform a top priority while campaigning for office in 2008. After his inauguration, both houses of Congress began working on legislation that spanned many months of debate. The law was signed March 30, 2010. Key components of the law were gradually rolled out over time. According to Reuters, this legislation represents the most significant overall of the American healthcare system since the 1960s. Various provisions were created, such as allowing children to stay on their parent’s insurance plans until the age of 26. The law also prohibited insurers from denying anyone coverage regardless of pre-existing conditions.

The biggest provision was the exchange created by the law. This online marketplace allowed businesses and individuals to purchase insurance plans starting October 1, 2013. Citizens would be able to compare plans, find ideal rates and see if they would be eligible for subsidies. The New York Times said roughly 85 percent of citizens who enrolled in the exchanges qualified for subsidies.

The law was legally challenged in 2012 in front of the Supreme Court. This case was known as National Federation of Independent Business v. Sebelius. Essentially, part of the ACA created a requirement that U.S. citizens either buy insurance or pay a penalty. In that 5-4 decision, the Supreme Court upheld most of the law after the legality of the individual mandate was challenged, and this was important because most of the law’s regulations were centered around the mandate.

Implications of 2015 decision
When the marketplace opened in 2013, 34 states defaulted to the federal system, according to Vox. June’s decision was anticipated because the implications would have been huge for individuals and the entire healthcare system.

According to the Washington Post, if the justices had ruled in favor of the plaintiffs, approximately 6.4 million people would have lost their premium subsidies. About 10.4 million have signed up through exchanges as of March. The publication also said that subsidies are scaled to income and average about $272 per month.

Many media outlets predicted that if the ruling had gone the other way, insurance costs would have sharply risen after having steadily declined. Likewise, the number of uninsured citizens would have increased after the law has brought the current number of uninsured Americans to its lowest level. Politicians were discussing methods to possibly extend premiums to citizens.

However, that might have only delayed the the effects on the healthcare industry. The American Academy of Actuaries released a report in May 2015 said a temporary extension would delay market disruption. The passage in question – an exchange established by the state – though only six words in length, was the target of much debate. The entire system, from doctors to a group purchasing organization, would have been affected.

“Congress passed the Affordable Care Act to improve health insurance markets, not destroy them,” Chief Justice John Roberts wrote in the majority opinion.