Supreme Court Upholds ACA Subsidies in King v. Burwell: What Does this Mean for YOU?

Insurance premium subsidies will continue to flow to Americans in all states under the Affordable Care Act, the U.S. Supreme Court decided 6-3 in King v. Burwell on June 25.

The justices sided with the Obama administration in the historic decision, saying the healthcare law allows Americans in all states-not just those that established their own exchanges-to receive the subsidies.

Much will be written about the Supreme Court’s King v. Burwell decision. Here is the essence of the decision and the most likely impact for you, as we see it today.

Synopsis of the case: The petitioners challenged an Internal Revenue Service (IRS) interpretation of the Affordable Care Act’s (ACA’s) provisions governing eligibility of uninsured individuals for health insurance premium tax credit subsidies for the purchase of qualified health plan (QHP) coverage on Health Insurance Exchanges. Specifically, the petitioners assert that the ACA only makes premium tax credit subsidies available to individuals residing in states that established their own State-Based Exchanges-while individuals residing in states that rely on the Centers for Medicare and Medicaid Services (CMS) to operate Federally-Facilitated Exchanges (FFEs) on the State’s behalf would not be eligible for premium tax credit subsidies.

Overall, CMS operates FFEs in 34 states that together account for a significant portion of the enrolled population. Reliable estimates are that if the Court had sided with the petitioners in King v. Burwell and invalidated premium tax credit subsidies in states with FFEs, roughly 7.5 million individuals would have lost tax credit subsidies and as many as 10 million fewer people would obtain individual market health insurance coverage through the Health Insurance Exchanges.

Bottom line, regardless of political viewpoints, the risk of substantial chaos in the insurance market has been averted.