Supreme Court to hear arguments on ACA subsidies

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Quote:

(Bloomberg) -- The U.S. Supreme Court agreed to consider a challenge to the subsidies that are a linchpin of the Patient Protection and Affordable Care Act (PPACA), accepting a case that suddenly puts President Barack Obama's health-care law under a new legal cloud. Two years after upholding much of the law by a single vote, the justices today said they will hear a Republican-backed appeal targeting tax credits that have helped more than 4 million people afford insurance. A ruling blocking those credits might unravel PPACA, which is also known as the ACA, making other provisions ineffective and potentially destabilizing insurance markets in much of the country. The high court’s decision to hear the case comes days before the start of the law’s second open-enrollment season. A decision will come by June. ..... The justices will consider an appeal filed by four Virginia residents seeking to block the subsidies in 36 states. The appeal says the Obama administration is engaging in a “gross distortion” of the law’s wording by granting billions of dollars in tax credits to people in those states. ..... The legal dispute centers on a four-word statutory phrase. The law says people qualify for tax credits when they buy insurance on an online marketplace “established by the state.” Those words are significant because only 14 states have set up their own marketplaces, known as exchanges. The rest have left the job to the U.S. Department of Health and Human Services (HHS), as the law permits. The question is whether people can collect the subsidies even if they buy policies through an HHS-run exchange. Under a rule issued by the Internal Revenue Service, consumers can claim tax credits no matter where they live. The Obama administration says the IRS approach is consistent with the law’s aims. .... The question would then become how lawmakers would respond. States without exchanges would probably face new calls to set up their own marketplaces. One potential option is that a state could “establish” its own exchange and authorize the federal government to run it. States might also invoke an Obamacare provision that lets them propose alternatives to the exchanges and get waivers from the federal rules starting in 2017. Some Republicans have urged that the law be amended to let states seek waivers sooner. The case is King v. Burwell, 14-114.

Supreme Court to hear arguments on ACA subsidies