Obamacare subsidy case will be heard by U.S. Supreme Court

November 11, 2014

The fate of President Barack Obama’s signature Affordable Care Act (ACA) could hinge on a legal technicality now that the U.S. Supreme Court has agreed to hear the case King vs. Burwell concerning the premiums subsidies available to millions of middle- and lower-income patients in the form of tax credits.

The fate of President Barack Obama’s signature Affordable Care Act (ACA) could hinge on a legal technicality now that the U.S. Supreme Court has agreed to hear the case King vs. Burwell concerning the premiums subsidies available to millions of middle- and lower-income patients in the form of tax credits.

The court’s decision, which is expected by the summer of 2015, could have a profound effect on physicians, many of whom are still adjusting to practicing  under the ACA.

Health insurance customers in most states purchase subsidized insurance through the federal Healthcare.gov exchange, in many cases because governors or legislatures in those states refused to establish state-based exchanges.

READ MORE: 5 ways the Affordable Care Act will transform primary care

The legal challenge is that the ACA’s text states that consumers are eligible for subsidies when purchasing insurance from exchanges “established by the state.” In other words, consumers who purchase insurance on the federal exchange are not eligible for the tax credit subsidies.

The debate over the legality of the subsidies has been fought in federal courts across the country, with judges issuing rulings both for and against the subsidies.

According to the Kaiser Family Foundation, 27 states have federally-facilitated exchanges, three states have federally-supported marketplaces, 14 states have their own exchanges and seven have state partnership marketplaces.

Tax subsidies are a major element of the ACA because they enable many  Americans without healthcare insurance to afford it. Individuals who earn up to $45,960, and families of four who earn up to $94,200 are eligible for subsidies, according to government figures.

The Rand Corporation estimates in a new study that 11 million patients would lose their health insurance if the subsidies are eliminated. In addition, marketplace enrollment would drop 68%, and premiums would rise by as much as 43%.

In addition to this legal challenge, the ACA will be a target of Republicans on Capitol Hill, emboldened by gaining control of the U.S. Senate and increasing their majority in the House of Representatives in the midterm elections.