Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


Few Hints of Outcome for ACA Subsidies

The Supreme Court heard oral arguments in the King v. Burwell case last week. The challengers contend that people residing in the 37 states using a federally facilitated exchange are illegally receiving subsidies under the Affordable Care Act (ACA). The Court’s decision, which could eliminate billions in federal health insurance subsidies for eight million people, hinges on the justices’ interpretation of four words in the law’s text: “established by the state.” Michael Carvin, the attorney arguing on behalf of the challengers, attempted to convince the Court that Congress intended to direct the premium subsidies to the state-run exchanges as a means to incentivize states to set up their own marketplaces instead of relying on the federal government to do so. Solicitor General Donald Verrilli, arguing for the Administration, countered that if Congress did intend to coerce states to set up their own exchanges through the withholding of subsidies, this objective would have been made clear and would have been central to the legislation. Critics of the law hope that the Court decides to interpret the key phrase “established by the state” literally, and that the justices not attempt to determine Congress’ intentions. Arguments appeared to be tailored to Chief Justice John Roberts, who cast the deciding vote in favor of the ACA in 2012, and Justice Anthony Kennedy, who has been the swing vote on many of the Court’s decisions in the past. Chief Justice Roberts’ views on the case remain unknown, as he stayed quiet during the oral arguments. Justice Kennedy surprised many with his comments directed at the plaintiffs. He suggested that there was a “serious constitutional problem” with their argument that “established by the state” means that subsidies are only available to people who enroll in health insurance through state-run marketplaces. Kennedy appeared to agree with Justice Sonia Sotomayor’s assessment of the challenger’s argument, that a literal reading of the legislative language would amount to a coercive ultimatum for the states. The remainder of the court appears divided among ideological lines. While the defense argued that federal agencies should have the discretion to interpret ambiguities in the law, and that ruling against the Administration would cause chaos in the insurance market, Justice Antonin Scalia expressed confidence that if the Court rules against the Administration Congress could successfully manage the consequences. Justice Samuel Alito went on to suggest that the Court could provide states with several months, potentially until the end of the tax season, to comply with the law before the subsidies were eliminated. Both Democrats and Republicans have expressed confidence that the Court will rule in their favor. The outcome of the case will be determined by late June. While the Administration insists that it does not have a contingency plan should the Supreme Court rule against them, lawmakers have begun to release details on subsidy replacement plans. Sen. Ben Sasse (R-Neb.) unveiled the Republican party’s first bill addressing the King v. Burwell Supreme Court decision. The legislation would provide an 18-month transition period during which health care subsidies would be available to allow Americans to temporarily keep their health insurance if the Supreme Court Rules against the Administration this spring. Though the legislation does not specify how it would be funded, the Winding Down ObamaCare Act (S. 673) would cover 65 percent of insurance plan costs for six months, with some assistance continuing through 18 months. Sen. Orrin Hatch (R-Utah), Sen. Lamar Alexander (R-Tenn.) and Sen. John Barrasso (R-Wyo.) have also released a proposed strategy that would allow people who have been receiving subsidies to keep their coverage for a transitional period. Rep. John Kline (R-Minn.), Rep. Paul Ryan (R-Wis.) and Rep. Fred Upton (R-Mich.) have also proposed an ACA alternative in the case that the Supreme Court ends subsidies to states that don’t have their own exchanges. The plan would use tax credits to help people purchase health insurance, ending the individual and employer mandates and the law’s insurance coverage regulations. Additionally, the proposal contains policies often championed by House Republicans, including insurance purchasing across state lines, small business insurance pools, and medical malpractice reform. The plan would also retain some aspects of the law, including allowing young adults to stay on their parent’s plan until age 26 and protection of people with pre-existing conditions. Sen. Ted Cruz (R-Texas) has also offered an ACA replacement policy proposal. The Health Care Choices Act (S. 647) would allow Americans to buy health insurance across state lines while repealing the law’s insurance mandates, marketplaces, and subsidies.

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