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2015 just got exciting because of these four words: “Established by a State”

Friday November 7th, 2014

Estimated time to read: 45 seconds

During the Supreme Court’s conference November 7, 2014, they decided to hear the King vs. Burwell case.  In this case, the Fourth Circuit upheld allowing subsidies to individuals in an exchange other than one that is state run.  Interesting decision by the Supreme Court, considering the Fourth Circuit was not split in their decision.

What’s at stake here is the letter of the law (PPACA) vs. the intent.  The law states, “An Exchange shall be a governmental agency or nonprofit entity that is established by a State.”  All discussion regarding tax credits and cost sharing link the eligibility for such back to qualified plans in the Exchange.  There is no mention of subsidies or cost sharing in the federally facilitated Marketplace (34 of them).  One of the key points that the public links back to assistance only being available in state run Exchanges (16 of them), is tied to the primary author of the law.  He insisted that making subsidies available only in the state run Exchange would encourage states to create the Exchange without relying on the federal government.  It was a sort of inducement for the states.

The advancement of this case to the Supreme Court for 2015 is probably not what this administration wanted, regardless of the outcome.  If the Supreme Court rules that subsidies are not available in Exchanges/Marketplaces outside of state run, millions of individuals would lose the ability to afford the plans they’ve selected.  The average subsidy is $4,700.

Do you think the Supreme Court will rule in favor of the law or the intent?