After weeks of waiting, the Supreme Court released the decision in King et al. v. Burwell,
which is the case addressing the availability of subsidies to residents of states like Nebraska,
which chose not to establish its own state-based exchange.
The Patient Protection and Affordable Care Act (PPACA) states that tax credits,
aka insurance premium subsidies, are available to any “applicable taxpayer”
who has enrolled in an insurance plan through “an Exchange established by the State” under
PPACA.
The Plaintiffs in the Burwell case had a simple argument: “established by the State”
means that citizens in states which chose not to establish their own
exchanges, instead opting to have citizens use the Federal Exchange
(healthcare.gov), are prohibited from receiving tax credits and premium
subsidies on the Federal Exchange. They argued that the plain meaning of
the statute meant that only state-based exchange participants were eligible
for governmental subsides.
Chief Justice Roberts wrote the opinion for the Court. He reasoned
that the context of PPACA was important to consider when deciding whether
the phrase “established by the State” was in need of interpretation from the
overall purpose of PPACA. The Chief Justice said things such as, “Congress
passed the Affordable Care Act to improve health insurance markets, not to
destroy them.” He also stated that “The Affordable Care Act contains more
than a few examples of inartful drafting.” The 6-Justice majority ultimately
found that the phrase “established by the State” was ambiguous, and
reading it to limit subsidies to only state-based exchanges would unravel the
entire purpose of PPACA. Consequently, the Court’s majority upheld the
IRS’s interpretation that the tax credits and subsidies—which are so vital to
PPACA’s existence—are available to all qualifying taxpayers including those
on the Federal Exchange.
This case had the potential to affected Nebraska employers, including
public schools, in a very meaningful way. If the Supreme Court had denied
access to tax credits and subsidies to residents of Nebraska on the Federal
Exchange, it would have removed the main hammer of the “pay or play”
mandates. As we have discussed numerous times at presentations and
workshops, an employer can only be “taxed” for offering unaffordable
insurance or offering insurance to fewer than 95% of full-time employees if
the employees obtain insurance and a tax subsidy or premium credit on the
Exchange. If the Supreme Court had taken away the subsidies and credits,
there would have been no penalties, leaving it to a Republican Congress to
save PPACA. The Chief Justice is correct that it may well have “destroy[ed]”
the marketplace built by PPACA.
This move is not surprising, considering it was the Chief Justice who
saved PPACA in 2013 during the last round of major litigation. We thought
the Court would have used other legal grounds to save PPACA (which are too
boring to talk about here), but the effect of the ruling is the same: thanks to
its third life from the Supreme Court, PPACA is here to stay, at least for now.
As Justice Scalia pointed out, perhaps it’s time to start calling it
“SCOTUScare.”
If your district has not calculated its “large employer number,”
determined its transition relief, and begun preparing for PPACA’s
implementation, you should begin immediately. Feel free to contact Karen,
Steve, or Bobby or your school district's attorney if you have questions
about PPACA.