King v. Burwell : A Novel Argument to Get Us Out of This Mess

Regardless of your position on the Affordable Care Act (ACA), a decision in favor of King, in King v. Burwell, scheduled to be heard by the Supreme Court March 4, will lead to the loss of insurance for millions of Americans. Both Republicans and Democrats acknowledge this fact. People will lose their insurance because if the Court declares that subsides can only be delivered through state health exchanges, for the millions of American who have purchased their health insurance through the federal exchange, insurance that was only affordable because of the subsidy they received will in a few months become unaffordable. And the result will be that they will not sign up for it next near.

Millions of Americans who now have health insurance and are using it to see doctors, get needed and long-delayed surgery and are seeking and receiving treatments for illness serious and not-so-serious will no longer be able to afford the insurance that is helping them pay for this care. And most importantly, this means they may cease getting the medical care their insurance helps them pay for because they can't afford it.

For many people, this scenario describes social chaos for millions of Americans and a political nightmare, primarily for Republicans, but also for Democrats. Because no matter your political point of view on the law, basic humanity dictates that we not leave millions of people without insurance and thousands who are getting needed medical care with no option to continue to buy health insurance and/or get the medical care they need.

To date most of the analysis about the case and possible outcomes has focused on the specific language of the law and whether drafters and supporters of the law intended the subsidies to be delivered through all exchanges or just the state exchanges. This debate has produced volumes of analysis and hours of television and radio, most of it centered on the split between the conservative and liberal Justices and how they will view the intent question. And importantly, how will Chief Justice Roberts view the arguments and the role of the court in deciding this question?

But what if we have been arguing about the wrong points in this debate? What if there is an easier way out of the mess that this case has created?

We need to take a quick trip back in time to find the root of how a decision could be made on this issue. Recall that in the individual mandate case, Roberts wrote the decision and in that decision he said the mandate was constitutional because it was a tax and taxes are constitutional. This caught nearly everyone by surprise, because nearly everyone had focused on the use of the Commerce Clause to justify the penalty for not enrolling. Many saw this as an overreach, including the court, which in its decision said as much. But because the government also argued the mandate penalty was a tax, five Justices agreed.

The rationale for how the Court could decide King v. Burwell follows Roberts' reasoning, now precedent. King v. Burwell is primarily a question about federal tax law. The subsidies delivered through the exchanges (regardless of whether state or federal) are done so through the tax code, administered by the IRS and a benefit reported on an individual's income tax form. Under federal tax code the only major differentiators on who is eligible for tax benefits or penalties are income, marital status, family size, home ownership, charitable activities, etc. Eligibility is not determined by political geography (i.e., the state you live in cannot decide what federal tax benefit you are eligible for). Under this logic, the tax subsidy is clearly legal and must be available to all based solely on the usual differentiators.

Using this rationale, what many think could be a 5-4 decision with Roberts once again writing the opinion could garner more votes since the precedent has been established and the legality of the tax code has been long established.

Recall that in the mandate case, the tax issue was downplayed by the Obama Administration because of the political consequences of calling it a tax, but it was included. Thus it provided Roberts all he needed to make his ruling. The same is true here.

Let's hope the Obama Administration includes this in its brief and oral arguments and gives the Justices the chance to avoid social chaos.

But what if the Justices rule for King -- can we avoid chaos? Perhaps not for everyone, but the answer is out there. First, however, we must acknowledge that no matter the rhetoric coming out of Congress- - mainly from Republicans -- Congress will not produce a law to help the millions who would lose their insurance. They can't even agree on a strategy for a DHS budget, so there is no way they will produce a bill that would in essence save the ACA. However, they do not need to because states have always been allowed to buy another state's technology and still qualify as a state exchange if certain conditions are met. This includes advisory boards, executive directors, etc. In addition, last year the National Association for Insurance Commissioners (NAIC) worked with the Centers for Medicare and Medicaid Services (CMS) to expand that opportunity by allowing states to buy the federal exchange and still qualify as a state exchange.

Maryland took the route of buying another state's technology after the absolute failure of its own exchange. It bought Connecticut's technology. Nevada and Oregon took the other route and bought the federal technology. All three are considered state exchanges. So, if the Court rules for King, for those states that do not have their own exchange and possess the political will, they could take this route and allow their citizens to continue to receive subsides and thus buy health insurance on the exchange at a price they can afford.

But will Texas, Florida and several other Deep South states that have shown extreme hostility to the law take action? That depends to a large degree on their governors and legislatures and how they react to the pressure of those individuals who lose their health insurance.

In the end, if King prevails, whether citizens have access to health care they can afford is up to the states.

In the meantime, all we can do is wait and see.


William Pierce has worked in health care policy and communication for over 20 years and does work in the insurance industry. These views are his own.