Supreme Court of the United States to Decide Fate of Federal ACA Subsidies

by MDM&C Attorney

The Affordable Care Act’s future is again before the U.S. Supreme Court. Today, the Court agreed to review the Fourth Circuit’s decision in King v. Burwell, which this past July upheld the provision of taxpayer-funded subsidies for low income families and individuals seeking to purchase health insurance on one of the thirty-four federally-run exchanges. Approximately 4.7 million people, or 86 percent of all enrollees, qualified for a subsidy in 2014.  The sixteen state-run exchanges will not be affected by this decision.

King was decided the same day as Halbig v. Burwell.  In that case, a three-judge panel of the D.C. Court of Appeals found that the IRS exceeded its authority by establishing the federal exchanges.  This split between the D.C. and Fourth Circuits was resolved in September when the D.C. Circuit vacated the three-judge panel’s ruling and agreed to rehear the case with all eleven judges of the court on December 17, 2014.

As we previously discussed, at issue in both cases is the ACA’s statutory language that authorizes subsidies in the form of tax credits for health insurance bought “through an exchange established by the State.” (emphasis added).

Four justices must agree for a case to be reviewed by the Supreme Court.  In this situation where there is no obvious split among the lower courts on the issue, the fact that four justices voted to take this case may indicate skepticism of the Fourth Circuit’s decision upholding the subsidies.   A decision is expected by June 30, 2015 when the Court’s term officially ends.