This article is more than 5 years old. Information may no longer be current.
SCOTUS hears arguments over tax credits for subsidies under ACA
Click Here to Manage Email Alerts
The U.S. Supreme Court today began hearing oral arguments in King vs. Burwell, a case that will determine whether the Internal Revenue Service may extend tax-credit subsidies for health insurance purchased through federal exchanges established by the Affordable Care Act.
The ACA was passed by Congress and signed into law in 2010. In 2012, the Supreme Court upheld a provision of the ACA requiring everyone to purchase health insurance or pay a fee or penalty.
“Although there’s no grand constitutional showdown, the stakes are nearly as high as they were 3 years ago, because a ruling in favor of the challengers could gut how the [ACA] functions,” Amy Howe, of SCOTUSblog, wrote.
According to Howe, the ACA allows subsidies whenever someone buys health insurance on any exchange, whether it is set up by the federal government or a state.
“The challengers in King disagree,” Howe said. “They point to the fact that in announcing the formula used to calculate the amount of the subsidies, the Act refers to ‘an Exchange established by the State.’ So, they contend, the subsidies are not available to people who purchase their health insurance through an exchange operated by the federal government.”
More than 5 million people bought health insurance in 2014 through exchanges created by the federal government, Howe said.
The plaintiff, David King, 64, a Vietnam veteran from Virginia, is eligible to purchase health insurance with a monthly premium of $678 for $275; the remaining $373 is covered by a subsidy.
“But King doesn’t want that subsidy,” Howe wrote. “In fact, he doesn’t want to have to buy health insurance at all. And without the subsidy, he wouldn’t have to, because the health insurance would cost him enough that he would qualify for an exemption from the individual mandate,” Howe wrote. “Defending the availability of subsidies for all, the federal government counters that the challengers’ focus on the four words ‘established by the State’ is too narrow.”
The defendant is Sylvia Mathews Burwell, Secretary of Health and Human Services.
King and three other Virginia residents filed a lawsuit challenging the government’s interpretation of the ACA to allow subsidies for anyone who purchases health insurance through an exchange. The lower federal courts rejected their argument and, last November, the Supreme Court Justices agreed to hear the case.