News & Updates
Impact on Employers After Supreme Court's Ruling to Uphold Key Provision of Affordable Care Act June 25, 2015
In a 6-3 decision issued today, the United States Supreme Court once again upheld President Obama’s signature legislation, the Patient Protection and Affordable Care Act, keeping the employer mandate in effect for all states — even those without their own health insurance exchange.
At issue in the case, King v. Burwell, was a challenge to the financial subsidies provided to millions of people who obtain their health insurance through the exchange established by the federal government. This challenge was focused on a six-word phrase in section 26 U.S.C. §36B(b)(2)(A) concerning tax credits available to certain taxpayers enrolled in an insurance plan through “an exchange established by the state.”
The petitioners in this case argued that as residents of Virginia, a state that has not established its own exchange, they are not entitled to federal subsidies for health care purchased on that exchange, as the federal exchange is not an exchange established by the state. If the petitioners were successful, eligible residents in the 34 states that have not established an exchange would have lost the financial assistance from the federal government that is available in those states that have established their own exchange pursuant to 42 U.S.C. §18031, effectively depriving millions of their health coverage, disrupting the health insurance markets in those states, and likely driving up insurance premiums across the country. However, by upholding tax credit subsidies for residents who obtain their health insurance plans through a federal exchange, the Supreme Court refused to leave so many people without coverage and cause such disarray.
Stating that language in a law must be read “in their context and with a view to their place in the overall statutory scheme,” the Supreme Court majority rejected the petitioners’ argument that the phrase “an Exchange established by the State under [42 U.S.C. §18031]” limits this subsidy only to insurance plans obtained from an exchange operated by a state. The court found that the Affordable Care Act intends that state and federal exchanges should be treated the same. The court found no evidence that the Affordable Care Act intended to make insurance obtained through a state exchange more affordable than insurance obtained from a federal exchange. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice Roberts wrote in the majority opinion. “If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”
Because this is the second time in three years that the Supreme Court has rejected a challenge to a key provision of the Affordable Care Act, Justice Antonin Scalia suggested in his dissenting opinion that the law should now be referred to as “SCOTUSCare” rather than “ObamaCare.”
The most significant impact of this ruling for employers is that the employer mandate will remain in effect in those states without their own exchange. Had the petitioners prevailed, no employee who obtained coverage through a federal exchange would have received a subsidy; the Affordable Care Act only provides penalties in the event that an employee obtains coverage through an exchange and receives a subsidy. A win by the petitioners would have effectively voided the employer mandate in states such as Florida, Indiana, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, and Virginia. Today’s ruling preserves the employer mandate in its entirety.
If you have any questions about how this could impact your business, please contact:
- Sean P. Beiter (716.566.5409; firstname.lastname@example.org)
- Caroline J. Berdzik (609.986.1314; email@example.com)
- Or another member of the Goldberg Segalla Employment and Labor Practice Group.