Magazine article Parks & Recreation

King V. Burwell: An Explainer

Magazine article Parks & Recreation

King V. Burwell: An Explainer

Article excerpt

June 25, the Supreme Court upheld one of the central tenets of the Affordable Care Act (ACA). The Court ruled that the federal government can legally provide tax credits to help low- and middle-income individuals purchase health insurance. The Court's decision leaves the current health system intact, which means that nothing should change for you, your family, friends or coworkers. The law still requires Americans to have health insurance and large employers - those with more than 50 full-time employees - to provide health insurance for their employees. What follows is a summary of the decision.

Background: King v. Burwell

The ACA created marketplaces, known as exchanges, where individuals can shop for health insurance. Under the ACA, the IRS provides tax credits to purchase health insurance through exchanges for individuals and households with incomes between 100 percent and 400 percent of the federal poverty threshold. The law allows states to create their own exchanges, and it also allows the federal government to step in and run exchanges when states refuse to create their own. Currently, the federal government runs exchanges in 37 states that declined to create or run their own exchanges. King v. Burwell focused on five words in the ACA - "exchange established by the State"- and was filed to determine whether the federal government can legally provide tax credits to purchase health insurance through federally created exchanges. The plaintiffs argued that no one in these 37 states should be eligible for tax credits because the exchanges were created by the federal government and are not an "exchange established by the State."

Supreme Court's Rationale

The ACA contains four primary provisions (see table). If any of these four provisions were removed or struck from the law, the fundamental structure of the ACA would become compromised. Premiums would increase and insurers would leave the marketplace, destabilizing the entire health insurance system.

Where statutory/legislative language is clear, the Supreme Court is required to enforce that language as stated. However, in instances of ambiguity - as in the ACA language under scrutiny here - the Court must read words "in their context and with a view to their place in the overall statutory scheme." This small portion of the ACA is ambiguous, so the Court had to look at the broader structure of the bill to determine its compatibility with the rest of the law and the intent of Congress. …

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