March 23, 2015

U.S. Supreme Court Hears Affordable Care Act Case

On March 4, 2015, the U.S. Supreme Court heard arguments in King v. Burwell, a case about the federal Affordable Care Act (ACA). At issue is whether the federal government can provide premium subsidies to people who purchase health insurance in states that did not establish their own insurance exchanges. Thirty-four states rely on the federal government to run an exchange for their residents. (Connecticut runs its own exchange and likely will not be affected by the outcome of this case.)

The ACA requires states to create health insurance exchanges, which are online marketplaces where people can shop for insurance. If a state fails to create an exchange, the ACA allows the federal government to establish an exchange within the state. People meeting certain income criteria are eligible for premium subsidies in the form of tax credits to help them afford the insurance.

The ACA states that subsidies are available to people who enroll in an exchange “established by the state.” The Internal Revenue Service (IRS) adopted implementing regulations that allow subsidies in states that use a federally run exchange as well as in states that established their own exchanges.

Plaintiffs in King v. Burwell argue that a federally run exchange is not an exchange established by the state and therefore the IRS exceeded the authority Congress gave it when adopting the implementing regulations.

The Court is expected to issue a ruling in June.

For background on the case, including a look at the legal arguments and the legal test the Court may apply in the case, see this Kaiser Family Foundation Issue Brief.