king v burwell: the supreme court, affordable care act, and the real story
TRANSCRIPT
King v. Burwell: Inside the Latest Salvo in the War
over Obamacare
Presented by: Harry Nelson [email protected]
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The ACA aka Obamacare (03/2010)
Patient Protection and Affordable Care Act Amended by Health Care and Education
Reconciliation Act of 2010 one week later Most significant change to US healthcare
regulation since enactment of Medicare and Medicaid in 1965
Messy reconciliation process did not allow include ordinary legislative “clean-up”, paving way for judicial review.
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ACA Battlelines: Access v Autonomy
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Supreme Court Round 1 (2012): The Individual Mandate
National Federation of Independent Business v. Sebelius (132 S Ct 2566, 6/28/12)
Can the government force you to have health insurance or pay a penalty?
Yes (Roberts, 5-4) “The [ACA] requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
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Supreme Court Round 2 (2014): Burwell v. Hobby Lobby, 573 U.S. ____ (2014) Employer objected to providing birth control
to employees under sponsored health plan as required by ACA contraceptive mandate
Does a for-profit corporation have the right to exemption from federal law based on religious belief?
Yes (Alito, 5-4)
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Supreme Court Round 3 (2015):
King v. Burwell (576 U.S. _____, 6/25/15) Are individuals in states that opted not to
build their own exchanges eligible for health insurance subsidies?
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ACA insurance coverage 101
Individual Mandate: get coverage or pay penalty Employer Mandate: 50+ FTEs businesses Expansion of Medicaid for poorest Americans Exchange-based subsidies for those earning too
much to qualify for Medicaid (138-400% FPL) without access to employer-sponsored insurance
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In response to ACA, as of 2015, California and ~15 other states (+DC) set up their own health insurance exchanges.
27+ states declined to set up. Residents in those states participate via healthcare.gov…
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the exchanges:-27 Fed Facilitated-13 State-run Market(+DC)-10 Fed-state Partnership or federally supported---------------------Covered California:2014 –1.4m enrolled
600,000 uninsured owe penalty
2015- goal +500,000
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Implications
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The underlying issue ACA§1311 directs states to establish exchanges §1321 directs HHS Secretary to establish exchanges
in states that fail to do so. Majority of states failed to establish exchanges §1401 (creating IRC§ 36B) authorizes health-
insurance subsidies (i.e. tax credits) “through an Exchange established by the State.”
Beginning January 2014, IRS begins issuing subsidies via state and federal exchanges.
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Circuit Split (on-off-on)
King, 4th Circuit: IRS rule [defining exchange as state-facilitated] is a reasonable interpretation in the face of ACA ambiguity. ACA regs’ subsequent broader definition encompassing both state and federal exchange must be rejected.
Halbig, DC Circuit: Clear intent of ACA is to allow individuals to obtain subsidized insurance irrespective of whether via state or federal exchange. IRS rule is illegal under Chevron.
Halbig vacated, voted for en banc-then dropped
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Understanding the Chevron test
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984): Congress may delegate regulatory authority to an agency, the regulations of which carry the weight of the law if they pass a two-part test:(1) Did Congress speak directly to the precise
question at issue? (2) If not, and the statute is silent or ambiguous
on the issue, is the agency's answer based on a permissible construction of the statute?
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the decision
Majority: Roberts (joined by Kennedy, Ginsburg, Breyer, Sotomayor, Kagan)
Dissent: Scalia (joined by Thomas, Alito) Held: Clear intent of the ACA is to allow
individuals to obtain subsidized insurance regardless of whether through state or federal exchange.
Any other interpretation would kill the subsidies in a majority of states, undermining Congressional intent.
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Roberts for the majority: -"It would be odd indeed for Congress to write such detailed instructions about [] a State Exchange, while having nothing to say about [] a Federal Exchange.“-"The [ACA] contains more than a few examples of inartful drafting. Several features of the Act’s passage contributed to that unfortunate reality. Congress wrote key parts of the Act behind closed doors, rather than through 'the traditional legislative process' ... As a result, the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.“-"The statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very 'death spirals' that Congress designed the Act to avoid."-"In petitioners’ view, Congress made the viability of the entire Affordable Care Act turn on the ultimate ancillary provision: a sub-sub-sub section of the Tax Code. We doubt that is what Congress meant to do.
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Roberts for the majority:
"In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined —'to say what the law is.' ... That is easier in some cases than in others. But in every case we must respect the role of the Legislature, and take care not to undo what it has done. A fair reading of legislation demands a fair understanding of the legislative plan. Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter."
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Scalia dissent: “SCOTUScare”
“We should start calling this law SCOTUScare … [T]his Court’s two decisions on the Act will surely be remembered through the years … And the cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.”
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Scathing Scalia dissent
“Words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.”
“Under all the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved.”
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Scalia dissent: No right to rescue badly written law
“Perhaps sensing the dismal failure of its efforts to show that ‘established by the State’ means ‘established by the State or the Federal Government,’ the Court tries to palm off the pertinent statutory phrase as “inartful drafting.’ This Court, however, has no free-floating power ‘to rescue Congress from its drafting errors.’”
“More importantly, the Court forgets that ours is a government of laws and not of men. That means we are governed by the terms of our laws, not by the unenacted will of our lawmakers.
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Concluding thoughts
Efforts to repeal and defund will go on, but the subsidies’ position as an established benefit seems increasingly secure.
More surgical repeal of unpopular parts of ACA ahead (e.g. Cadillac tax)
More Catholic First Amendment challenges ahead
Care for the undocumented remains a hot issue Market changes wrought by ACA as/more
significant as regulatory changes
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Concluding thought: Medicaid expansion is dwarfing exchange subsidies
N
-Expanded eligibility: 138% FPL
-100% federal funding until 2016 / 90% post-2020
Orange: 31 Expansion StatesBrown: 18 “Not Yets” Utah: July 2017 deal to expand-----------------------------------------California:2009 – 7-8m 2013- <9m2014- >11m2015- 12m2018- 16m (?)
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ACA open big questions:
-Is growth in healthcare costs moderating?-Is underinsurance (high out-of-pocket cost relative to income) any less of a problem?-Is quality of care improving?-Is our healthcare system better or worse than it was in 2009 (or will it be) for those who already had coverage then?
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Questions? Comments? Airing of grievances?
Harry NelsonNelson Hardiman, [email protected]