CRF Blog

Everything you need to know about King v. Burwell

by Bill Hayes

In 15 short cards, Vox explains Everything you need to know about King v. Burwell. Below is the first card.

Why is this case such a big deal?

King v. Burwell is arguably the Affordable Care Act’s greatest existential threat since the Supreme Court upheld the individual mandate in 2012. The lawsuit, if successful, would rip the subsidies out of 36 of the law’s state insurance exchanges — effectively destroying much of Obamacare in those states.

On July 22, two federal appeals courts issued competing rulings on this issue. On November 7, the Supreme Court decided to take up the case.

According to the challengers, the plain text of the Affordable Care Act limits its financial assistance to states that established their own insurance exchanges. In Obamacare’s first year, only 14 states and the District of Columbia did that.

The plaintiffs argue that the part of the Affordable Care Act that authorizes the subsidies specifies that those subsidies are available to people who enrolled “through an Exchange established by the State under 1311” — the section that sets up state-based exchanges.

Because it’s written that way, the plaintiffs hold that subsidies are only available on state-based exchanges, not on the Healthcare.gov exchanges used by the majority of states.

The staffers who wrote the law think that’s ridiculous. “It was always intended that the federal fallback exchange would do everything that the statute told the states to do, which includes delivering the subsidies,” says Chris Condeluci, who worked as tax and benefits counsel for the Senate Finance Committee Republicans during the Affordable Care Act debate.

Otherwise, they note, Congress would have been setting the law up to fail. Without subsidies, private insurance would become unaffordable for many people who have already enrolled. The judicial process is still playing out, but according to recent analysis from the Robert Wood Johnson Foundation, this decision could end subsidies for over 7.3 million people in 2016. [more]