King v Burwell: Subsidizing US Health Insurance for Low- and Middle-Income Individuals
In King v. Burwell, the U.S. Supreme Court once again saved the Affordable Care Act (ACA) by upholding subsidies (tax credits) offered to low- and middle-income individuals for insurance bought on federal exchanges. A contrary opinion would have put at risk health insurance for 6.4 million Americans and threatened to destabilize insurance markets for millions more.
The ACA is supported by four interlocking reforms, each of which are necessary to realize its promise of expanding health care coverage: (1) guaranteed issue (prohibiting discrimination based on pre-existing conditions), (2) community rating (barring insurers from imposing higher premiums based on health status and prohibiting lifetime caps), (3) tax subsidies to offset the cost of premiums for low- and middle-income individuals, and (4) Medicaid expansion. King v. Burwell threatened to undermine the third pillar. Buried deep within the law, the ACA states that subsidies are available to “Exchange[s] established by the State.” Not imaging that their residents could be denied subsidies, 34 states chose to allow the federal government to run their exchanges. The Supreme Court ruled in favor of the government, recognizing that Congress would not have given states the option of having the federal government run their exchanges, while simultaneously dooming those exchanges to dysfunction.
With the ACA now safe from its latest—and it is to be hoped last—existential judicial challenge, attention must now turn to the law’s unfinished business. First, a confluence of judicial interpretation and political impasse has created a new Medicaid “donut hole,” with many earning too much to qualify for Medicaid but too little to receive ACA subsidies. States should close this hole, both to protect their most vulnerable citizens and to boost their own economies. Second, the law has left out approximately 11 million undocumented immigrants to the U.S. More than half are uninsured, leading to poor health outcomes, needlessly straining emergency services and safety-net hospitals, and endangering public health. Some localities have experimented with ways of expanding coverage, but national action is needed to guarantee universal health coverage.
Gostin, Lawrence O.; DeBartolo, Mary C.; and Hougendobler, Daniel, " King v Burwell: Subsidizing US Health Insurance for Low- and Middle-Income Individuals" (2015). O'Neill Institute Papers. 86.