Why is Obamacare in the Supreme Court Again?

Look who's back... Back again... Obamacare in the Supreme Court.

The Supreme Court already scrutinized the Affordable Care Act in 2012, when it held the law was properly enacted by Congress as part of its taxation powers. Three years later, the Supreme Court Justices will hear another attack based on eight words of the law. This week, the Court heard oral arguments in King v. Burwell, which challenges the law’s subsidies to citizens in the states who use the federal exchange, rather than create their own exchange. Why?

The question turns on one phrase in the law: the law authorizes federal subsidies for eligible folks who buy their health insurance through an “exchange established by the state under Section 1311.” Over half of all U.S. states refused to establish their own exchange and instead use the federal exchange (including Iowa, Nebraska, and South Dakota). Thirty-four states use the federal exchange. If this challenge is upheld, taxpayers who purchase insurance through the exchanges otherwise eligible for federal subsidies would not be able to claim those credits.

Despite the language of the Act, the IRS issued rules which allow credits for eligible purchasers on all state exchanges, including those that use the federal exchange. If this statutory attack is successful, taxpayers in the thirty-four states using the federal exchange would not be subject to the individual and business mandate which forces them to purchase health insurance. This is because the tax penalties are triggered by eligibility for a subsidy. The result is that a ruling from the Supreme Court could practically gut the individual mandate of Obamacare in states without their own exchanges. Critics of the law argue that the Court’s scaleback of the law would benefit employers, who have cut hours and benefits due to the heavy regulatory costs of providing benefits to employees.

You can find more information on Obamacare in the Supreme Court HERE. The Supreme Court’s decision is expected in June.

For more information about employment law or Obamacare and the Affordable Care Act, contact the Goosmann Law Firm at info@goosmannlaw.com or call 712-226-4000.