- Round and Round and Round She Goes, and Where She Lands, Nobody Knows: The Future of Obamacare and Why King v. Burwell Matters - A Five-Part Series
- March 25, 2015 | Authors: Matthew J. Goldman; Lauren Lee Tarantello; Ken Yood
- Law Firms: Sheppard, Mullin, Richter & Hampton LLP - Los Angeles Office ; Sheppard, Mullin, Richter & Hampton LLP - Costa Mesa Office ; Sheppard, Mullin, Richter & Hampton LLP - Los Angeles Office
- Last week, on Wednesday, March 4, the U.S. Supreme Court heard oral argument in the highly publicized case of King. v. Burwell-a lawsuit challenging the Affordable Care Act or “Obamacare” based upon what many would call the most pernicious of statutory problems - poor drafting.
The exact issue presented to the Supreme Court by the King petition is “whether the IRS may permissibly promulgate regulations to extend tax-credit subsidies to healthcare coverage purchased through Exchanges established by the federal government under section 1321 of the ACA.” At first glance (and maybe even at the second, third, and fourth glance), this may seem to be a highly-technical issue of tax and administrative law. However, for every professional and armchair constitutional law pundit out there, the issue - Federalism - goes to the core of who we are as a country.
Putting aside King’s larger historical/political context and its legal niceties, the real issue in King is whether qualifying low-income individuals and families who obtain healthcare coverage through a federal Exchange (an Exchange created by the federal government for the residents of states that have decided not to create their own state Exchanges) are eligible to receive federal premium subsidies. Without access to such premium subsidies, millions of low income individuals and families would be unable to afford healthcare coverage under the ACA. As a result, many argue that one of the primary purposes of the ACA - increasing access to high quality, cost effective healthcare services by increasing access to healthcare coverage - would be substantially thwarted if the Court’s ultimate decisions were to side with the petitioners.
Given the stakes, it is not surprising that political commentators on both sides of the aisle have employed sensationalist rhetoric to describe the King case and the potential consequences of a ruling for the petitioners and against the availability of premium subsidies for coverage provided on the federal Exchanges. On the left, commentators warn of millions of Americans losing insurance coverage, with some claiming that nearly 10,000 Americans would needlessly lose their lives each year if the Supreme Court were to uphold the petitioners’ challenge. Such pro-ACA commentators argue that a ruling for the petitioners—combined with continued Congressional dysfunction—would send the United States’ health care system into the so-called “Death Spiral” resulting in skyrocketing premiums that would not only (1) push currently-subsidized beneficiaries out of the ACA healthcare coverage marketplace, but would also (2) negatively impact individuals who currently have ACA healthcare coverage without the need for federal premium subsidies.
Other ACA supporters mock the substance of the legal arguments themselves, characterizing the petitioners’ case as one built on right wing sound bites and fabricated history. For their part, conservative pundits decry the left-wing’s “scare tactics” and claims that “the sky will fall” if the Court finds for the health law’s challengers. They urge Americans not to be bamboozled by ACA supporters’ dramatic predictions of catastrophe, and argue that a ruling for the petitioners will simply force the Obama administration to negotiate with Congress and allow major changes to the currently unworkable healthcare law.
As evidenced by last week’s comments from the bench, the Justices themselves seemed to be taking a more moderate view. Justice Scalia, for example, acknowledged the potential for such “disastrous consequences” but placed some degree of trust in Congressional action to address them. Indeed, some prominent Republican legislators have already announced their intention to find a legislative solution to the potential fallout from a ruling for the petitioners. There is also the possibility-floated by Justice Alito-that the fallout from a ruling in favor of the King petitioners might persuade states to establish their own Exchanges so as to allow their residents undisputed access to the federal premium subsidies.
To both engage and edify our faithful readers and to keep the Sheppard Mullin healthcare team from biting their nails to the quick while waiting for the Court’s ruling, we are preparing a short series of blog posts to examine the possible impacts a King Supreme Court decision could have on the various stakeholders in the U.S. healthcare marketplace. More specifically, in the coming weeks, you will be consuming and be consumed by the following commentaries on the King case:
- Week 1 will address the possible effects of the Supreme Court’s decision on healthcare consumers including those individuals who currently access healthcare coverage through the federal Exchanges;
- Week 2 will focus our attention on how the King decision may impact healthcare providers and suppliers;
- Week 3 will address the concerns of employers who are subject to the ACA’s “employer mandate”; and
- Week 4 will conclude our series with King-related predictions from members of the Sheppard Mullin healthcare team and other U.S. healthcare legal and policy thought leaders. Although we have told our prognosticators that there will be no prizes for the pundit with the most accurate prediction, we have no doubt that the usual contest of egos will provide some insightful and thought provoking possibilities to ponder. Perhaps.
 Oral Argument, King v. Burwell at 47:15-19, 54:9-55:3.
 Id. at 52:2-10.