What You Need to Know about King v. Burwell

Later this month the Supreme Court will announce its decision in King v. Burwell, a case that threatens the health coverage of millions. This overview will bring busy readers up to speed on what’s at stake in the case and what the fallout will be if the justices rule against the government (the case specifically names U.S. Department of Health and Human Services Secretary Burwell).

What’s King v. Burwell about?

The case challenges the federal government’s provision of tax credits (also known as “subsidies”) to help low- and middle-income people afford their health insurance premiums in states that didn’t set up their own health insurance marketplace (exchange). The plaintiffs claim that Congress never meant to extend premium tax credits to consumers in states that didn’t establish their own marketplaces directly but use marketplaces set up by the federal government (federally facilitated marketplaces).

How could King v. Burwell affect people’s health insurance coverage?

This case will affect the cost of health coverage for those who rely on premium tax credits, but will also have ramifications throughout the private health insurance market.

A ruling in favor of the plaintiffs would throw the health insurance system into chaos.

The scale of the problem is large. In the second open enrollment period (for 2015 health plans), around 6.4 million people in the federally facilitated marketplaces received premium tax credits. All of these individuals would lose their tax credits, and most of them would become uninsured. Millions more people would not be able to apply for these tax credits in the future should they lose their jobs, grow their families and have more members who need coverage, or otherwise find that they need access to health insurance. The financial impact for these individuals would be significant: In the states affected by this lawsuit, tax credits reduced consumers’ premiums by an average of $268 each month in 2015.

Premium tax credits create a stronger and more robust health insurance market by increasing and diversifying the pool of enrollees so that healthy people, in addition to sicker people, are included. In doing so, they help keep down health insurance premiums for everyone.

By ending the credits, a ruling in favor of the plaintiffs would throw the health insurance system into chaos. A recent report by the American Academy of Actuaries only reinforces this concern, noting that the concentration of people with “high-cost health needs” who would remain in the insurance market as healthier people exit would cause average health costs, and therefore premiums, to rise. A study by the Urban Institute estimated that premiums would spike by an estimated 35 percent in 2016. This is one reason whydoctors, insurers, and hospitals all weighed in to support the government’s position.

Who supports the government in King v. Burwell?

Groups representing a diverse set of stakeholders – from people with serious health conditions to hospitals – filed legal briefs supporting the view that Congress always intended to bring affordable health insurance to people in every state through the provision of premium tax credits.

Included among supportive stakeholders are members of Congress who wrote the ACA and the governments of 22 states plus the District of Columbia. (See Families USA’s amicus brief.)

Why must the court rule in favor of Burwell (the U.S. government)?

The court is expected to announce its verdict in King v. Burwell during the last 10 days of the month. To prevent serious ramifications and devastation for consumers, hospitals, providers, and insurers, the court must rule in favor of the government. This is the verdict that upholds the law. When considering the Affordable Care Act in its entirety, as well as the fact that states were never told that access to subsidies depends on creating a state-based marketplace, it is clear that premium tax credits were always meant to be available to consumers in every state.

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