This morning, the Supreme Court finally released it’s ruling in King v. Burwell, the case that determined “whether individuals in states that opted not to build their own exchanges are eligible for health insurance subsidies.” In a 6-3 decision, the court ruled in favor of keeping subsidies for those purchasing health insurance on the federal exchange, which is wonderful news for Texans. Justices Ginsburg, Breyer, Sotomayor, Kagan, Kennedy and Roberts formed the majority, while Scalia, Alito, and Thomas dissented.
At the heart of the case was the question of the scope of a single phrase in the law. As the Brookings Institute explains:
- “The ACA allows states to set up their own health insurance exchange or participate in the federally run exchange. The plaintiffs (King) argue that, because the legislation refers to those enrolled “through an Exchange established by the State,” individuals in states with federally run exchanges are not eligible for subsidies. However, many analysts argue that the clear intent of the legislation is to allow individuals to obtain subsidized insurance regardless of whether they obtain it through a state exchange or the federal exchange.”
Texas is one of the 34 states that did not build its own state healthcare exchange, instead opting to rely on the federal marketplace. Thanks to this ruling, the 1 million Texans who receive subsidies to purchase health insurance will keep their subsidies, and their affordable coverage.
The consequences for Texans could have been devastating. Statewide, about 1.2 million people, or 4.5% of the population have purchased health insurance through the federal exchange. According to a recent report, 86% of those who bought insurance through the federal marketplace receive the premium subsidies that King v. Burwell called into question. Had those subsidies been lost, “Most of the people who have received premium tax credits and cost-sharing assistance from the federal government would drop their policies because they no longer could afford coverage.” The increased number of uninsured residents would shift ” costs to employers who provide coverage and health care providers who don’t get paid.” It would also have directly impacted anyone who pays property taxes, since those taxes are used to support safety-net hospitals.
Texas’ situation would have been especially terrible, since there are already 1 million residents uninsured due to the governor’s decision not to expand Medicaid. If those receiving subsidies had lost their coverage, Texas would have cemented its status as the state with the most uninsured residents by far.
The loss of subsidies would have created what’s referred to as a “death spiral,” where increased prices would lead healthy people to opt-out of coverage, leaving only those who were ill and needed health insurance to remain insured. Covering sick people costs more, and the loss of premiums from healthy people would mean there wouldn’t be as much available to mitigate those costs. Thus begins the “death spiral,” as prices would continue to rise out of control.
Fortunately, a majority of justices on the court recognized that death spirals would have a devastating effect on the insurance market, and that Congress probably didn’t intend that to happen when it passed the law. As Chief Justice Roberts wrote:
“The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. It is implausible that Congress meant the Act to operate in this manner. Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits. It thus stands to reason that Congress meant for those provisions to apply in every State as well.”
Texas Democrats have already begun praising the decision. State Senator Rodney Ellis (D-Houston) pointed out the high stakes the decision had for Texas in a statement (emphasis added):
“”I am thankful that the Supreme Court did the right thing by protecting the millions of Americans who have secured more affordable health insurance under the Affordable Care Act. This ruling is a win for Texas, as our state has the most to lose with the highest number of uninsured and the most people – over three million – eligible for marketplace coverage.
People may disagree about the law, but one fact is indisputable – many people have and will benefit from the Affordable Care Act. Today, the uninsured rate for the nation has dropped by one-fifth. Millions of women get preventive services like mammograms and pap smears without a co-pay. Health plans must now spend 80 to 85 percent of every premium dollar on health care, insurers can no longer deny coverage to those with pre-existing conditions, and young adults can be covered under their parent’s plan until age 26.
It is long past time to remove narrow politics from the health care debate and focus on truly improving health of women, children, and all Americans. We can and must do better to ensure that all Americans have access to health care.”
One person who probably isn’t happy about the ruling is Governor Greg Abbott. Prior to the ruling, he had expressed hope that the Affordable Care Act would be gutted, happily declaring, “We are going to do everything we can to allow the law to implode so that we can go down a pathway of providing real healthcare reform in this country.” While Abbott may have hoped for an alternate ruling that stripped a million Texans of affordable health coverage, fortunately, that’s not what happened. Instead, Texans can rest easy tonight, knowing that their health coverage is here to stay.
The full opinion of the court is available here.