Why is the King v. Burwell case important?
Big stakes—both human and political.
What is the case about?
Who gets federal subsidies to help pay for health insurance
How is the court likely to rule?
It's a close call.
Who could lose subsidies?
Six million people immediately. Up to 10 million over time.
Would other people be affected too?
Yes, a decision for the plaintiffs could disrupt insurance markets.
What are the two sides' arguments?
They disagree on the meaning of one phrase in the health law.
If the plaintiffs win, what will the Obama administration do?
Make it as easy as possible for states to establish exchanges.
Why would Republicans want to help save the subsidies?
It could help them obtain other concesssions on the health law.
How is this case different from the 2012 Obamacare case?
It’s narrower, but still significant.
Which states are most likely to respond?
A few are close to running their own exchanges.
Who is bringing this case?
Four individuals, backed by an advocacy organization.
When will the case be decided?
Probably in June.
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Why is the King v. Burwell case important?
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The case is one of this year's most
important news subjects. It has the potential to roll back a major
portion of Obamacare — the subsidies that some 6 million middle-income
people, across more than 30 states, now receive to buy health insurance.
Without those subsidies, many people would not be able to afford health
insurance. And without those people in the insurance markets, prices
are likely to rise for everyone else. A victory for the plaintiffs would
represent a major blow to the health law.
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What is the case about?
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The Affordable Care Act — the
official name for the heath law — sets up marketplaces in every state
where people who don’t have insurance can shop for individual health
plans. Most blue states set up their own marketplaces, known as
exchanges. Most red states did not, instead allowing the federal
government to do so. Across all states, about 85 percent of customers
qualify for federal subsidies to help pay for the coverage, based on
their income.
One section of the law says that subsidies should flow to customers.
Plaintiffs argue that language means that only people in the state-run
marketplaces--and not those in federally run marketplaces--can get the
subsidies.
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How is the court likely to rule?
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The fact that the court agreed to
hear the case suggests that at least four justices are already giving
serious consideration to rolling back those subsidies. (For the court to
hear a case, four justices must vote to accept it.)
Legal
experts assume that the four justices appointed by Democratic presidents
will all rule for the government; the question is whether any of the
five appointed by Republicans will join them and preserve the subsidies.
In 2012, Chief Justice John Roberts sided with the four Democratic
appointees and ruled the health-care law constitutional. He — along with
Associate Justice Anthony Kennedy — remains the Republican appointee
most likely to side with them again this time.
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Who could lose subsidies?
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Precise answers are hard, because
exchanges take several forms – not simply federal- or state-based -- and
both the Court and the federal government may have leeway in defining
what it means for an exchange to be “established by the state.” But the
subsidies could disappear in as many as 37 states, meaning about 6.2 million people would most likely lose their tax credits.
A decision for the plaintiffs would probably cancel the subsidies for a
majority of people nationwide with exchange plans so far. And more
people are expected to sign up for coverage through the exchanges in the
next few years, so the current estimates undercount the long-term effect of a ruling. Those affected would be predominantly white, Southern, employed and middle-aged.
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Would other people be affected too?
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Beyond the immediate cancellation of subsidies, a decision for the plaintiffs would also have secondary effects on insurance markets.
As subsidies disappear and most lower-income customers drop out of the
market, only the sickest such patients are likely to keep paying for
insurance. That, in turn, will lead to higher prices for everyone,
pricing out even people who don't now need subsidies.
A recent analysis
suggests that 1.4 million people who could otherwise pay their whole
premium themselves might lose coverage because they would no longer be
able to afford it.
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What are the two sides' arguments?
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The plaintiffs argue that the clear
language in one section of the law means that only residents of
state-run exchanges are allowed to receive subsidies. The exchanges
being managed by the federal government, they say, do not count as
“established by the state” under the law.
The Obama
administration says that the phrase is a term of art, which Congress
intended to mean both state and federally run marketplaces. They further
argue that many other parts of the law suggest that Congress intended
the money to go to people in every state. And there is a long history of
courts ruling that, if Congress says something confusing, then
interpreting the law falls to regulators and not courts.
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If the plaintiffs win, what will the Obama administration do?
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Obama administration officials are
keeping mum about any possible contingency planning around the case. But
if the court rules for the plaintiffs, the administration will most
likely do everything it can to help states that haven’t yet established
their own exchanges do so. Possibilities include loosening requirements
for what states must do to get an exchange approved and shifting
deadlines to make the process more flexible. Whatever the administration
does, it won’t be easy for states to set up exchanges quickly.
The broadest solution would involve working with Congress on a
legislative solution. A relatively simple change to the law — changing
just one phrase — would remove the legal doubt around the case. Of
course, most of these responses require cooperation from Republicans, in
states or in Congress.
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Why would Republicans want to help save the subsidies?
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Many Republicans have fought the law
at every turn and still favor repealing it. It's possible that
Republicans in Congress and in states would prefer to let the law
shrivel than to address any issues created by a Court decision.
But some legal experts think cooperation isn't out of the question.
Republican politicians may be sensitive to a situation in which millions
of their constituents lose their health insurance coverage. And some
Obamacare opponents recognize that the resulting crisis might create an
opportunity for negotiation with the White House, which has vowed to
veto most major legislative changes to the health law. It's likely that
insurers, fearing a breakdown in the marketplace, will lobby for a fix.
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How is this case different from the 2012 Obamacare case?
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The first case focused on
constitutional challenges: particularly, whether Congress could require
people to buy insurance or pay a penalty. The court ruled 5-4 that
Congress could. The King case concerns a more technical legal question
of how to interpret the law.
Another major difference is that the
King challenge is focused only on the question of premium subsidies. A
ruling against the government would have substantial effects. But it would not risk overturning the Affordable Care Act in its entirety.
The Medicaid expansions in many states would stand, as would
regulations of insurance company profits, changes to Medicare payments,
requirements that chain restaurants publish calorie counts, and the
requirement that young adults be offered coverage on their parents’
policies, among many other provisions of the complex law.
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Which states are most likely to respond?
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The states using the federal exchange are not uniform in their opposition to Obamacare. Eleven
of the states that could be affected have gone so far as to ask the
Supreme Court to preserve the subsidies. Seven states, including
Illinois and Arkansas, are currently splitting management duties with
the federal government, in a kind of partnership. If subsidies were at
stake, those states might be more likely to take over the rest of
exchange management, though it would take a lot of work.
There are also three states, Nevada, New Mexico and Oregon, that
planned to run their own exchanges, but then switched to parts of the
federal system after their computer systems failed. They could
potentially try to fix those systems to keep their subsidies Of course, many other states have shown little enthusiasm for exchange-building. Some big states, including Florida and Texas, are in this category. Seven states, including North Carolina and Missouri, have even passed laws preventing their governors from pursuing exchange-building activities.
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Who is bringing this case?
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Four individuals — David King,
Douglas Hurst, Brenda Levy and Rose Luck — are suing to challenge the
federal government’s offer of subsidies to them. All four live in
Virginia, a state that did not set up its own exchange. The plaintiffs
object to a provision of the law that requires everyone who can afford
insurance to obtain it or pay a tax penalty. If subsidies in Virginia
were cut off, the plaintiffs would no longer be required to buy coverage
because it would no longer be considered affordable under the law.
They
are not the only people to challenge the law — cases in other states
were brought by people with similar circumstances — but theirs is the
one the Supreme Court took. The case has been funded by an organization
called the Competitive Enterprise Institute. The lead lawyer on the case, Michael Carvin,
from the law firm Jones Day, also worked on the 2012 challenge to the
Affordable Care Act. The Obama administration defendants — including
Sylvia Mathews Burwell, Mr. Obama’s Secretary of Health and Human
Services — are represented by the Justice Department.
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When will the case be decided?
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The Supreme Court has agreed to hear
oral arguments on the case on March 4, which means it won’t rule before
then. Typically, the Court announces its opinions in its biggest cases
at the very end of its term, in late June. There’s no hard and fast rule
that it has to save this case for last, but given the intense public
interest, it is likely to be one of the final decisions of the term.
In
the meantime, both sides in the case, and many interested outside
parties, will be filing written briefs with the courts. The website
SCOTUSblog is compiling them.
Correction: February 3, 2015
An earlier version of this article misstated the source of funding for lawsuits challenging the Affordable Care Act’s rules on subsidies. Two of them, including King v. Burwell, have been funded by the Competitive Enterprise Institute; the institute has not funded all such cases.
An earlier version of this article misstated the source of funding for lawsuits challenging the Affordable Care Act’s rules on subsidies. Two of them, including King v. Burwell, have been funded by the Competitive Enterprise Institute; the institute has not funded all such cases.
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