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Monday, February 2, 2015

State Support of the ACA in King v. Burwell: How the Tide Has Turned

Ron Pollack

Executive Director

This blog is part of a weekly series—one that analyzes the political, legal, and social issues and ramifications of King v. Burwell, a lawsuit before the Supreme Court that threatens to undermine the Affordable Care Act (ACA). The case challenges the government’s provision of tax credits to help consumers buy health insurance in states where the federal government runs the marketplace. Learn about what’s at stake in King v. Burwell


In 2012, when the Supreme Court decided the constitutional challenge to the Affordable Care Act (ACA), a majority (26) of states participated as plaintiffs in the lawsuit (NFIB v. Sebelius). 

Today, however, state support for the pending King v. Burwell litigation (which is intended to undermine implementation of the Affordable Care Act) is virtually non-existent. This time around, only seven states—Alabama, Georgia, Indiana, Nebraska, Oklahoma, South Carolina, and West Virginia—joined in friend-of-the-court (amicus) briefs supporting the plaintiffs’ position that premium subsidies should be withdrawn in states with federally run health insurance marketplaces.

The states in King v. Burwell case fully understand that the ACA is working and helping their citizens. Their involvement in this litigation is in marked contrast with the litigation in 2012.

Significantly, more than three times as many states—22 states plus the District of Columbia—filed an amicus brief supporting the government’s position that premium subsidies should continue to be provided in all states, regardless of whether the state or the federal government runs the marketplaces. 

These states vary in their governance of marketplaces. Six—Maine, Mississippi, North Carolina, North Dakota, Pennsylvania, and Virginia—elected to forgo establishing their own marketplaces. Four of the states—Delaware, Illinois, Iowa, and New Hampshire—have federally facilitated marketplaces through a “partnership model” (one in which the state plays a role in marketplace implementation). The remaining states created their own marketplaces.

Regardless of the type of exchange that they have, all of these states agree on one key point that is central to the King litigation: They never had any notice that the decision to run a marketplace directly, or to delegate it to the federal government, would have any impact on their citizens’ abilities to obtain premium subsidies. 

Two significant points that states make in King v. Burwell

1. States were never told that declining to set up state-run marketplaces was tantamount to forgoing premium subsidies for their residents.

ACA opponents creatively—albeit erroneously—argue that Congress sought to induce states to run their marketplaces directly by providing premium subsidies on the condition that the state chooses to run the marketplace directly

If this conditionality were true, it should and would have been communicated to the states from the start—given its enormous ramifications for premium tax subsidies in federally facilitated marketplaces. But, as the states’ amicus brief makes clear, none of the states ever heard of this conditionality.     

The states’ amicus brief provides numerous illustrations of this. In Virginia, for example, then-Republican Governor Bob McDonnell emphasized that the state was unaware of any “clear benefits of a state-run exchange to our citizens.” When New Hampshire opted for a federally facilitated exchange, the state, by statute, created an advisory board that required membership by a person “who can reasonably be expected to purchase individual coverage through the exchange with the assistance of a premium tax credit.” These are just two examples of many. 

Even among the few states that filed a friend-of-the-court brief supporting the plaintiffs, the evidence makes clear that they, too, were unaware that subsidies would be withheld if they didn’t run their own exchanges. For example, when Nebraska Governor Dave Heineman opted for a federally run marketplace, he noted that, “there is no real operational difference between a federal exchange and a state exchange.” Similarly, Georgia Governor Nathan Deal was advised by his advisory committee that “Georgians will be eligible for these subsidies whether the [exchange] in Georgia is established by the state or federal government.” 

2. There are well-established Supreme Court precedents requiring any conditions limiting a state’s ability to receive federal funds to be clear and upfront.

The states (in the amicus brief) cite key Supreme Court precedents requiring that any significant conditions that relate to funds being provided in a state must be stated clearly. In the landmark case on this issue (Pennhurst State School and Hospital v. Halderman), the Court notes that, “if Congress intends to impose a condition on the grant of federal moneys, it must do so unambiguously. By insisting that Congress speak with a clear voice, we enable the states to exercise their choice knowingly, cognizant of the consequences of their participation.” This, the states assert, simply never happened. 


Hear from Americans whose health and financial stability are at risk in King v. Burwell.

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