King v Burwell: Subsidizing US Health Insurance for Low- and Middle-Income Individuals

JAMA Online, July 9, 2015

3 Pages Posted: 17 Jul 2015

See all articles by Lawrence O. Gostin

Lawrence O. Gostin

Georgetown University - Law Center - O'Neill Institute for National and Global Health Law

Mary DeBartolo

Georgetown University Law Center

Daniel Hougendobler

Georgetown University - The O'Neill Institute for National and Global Health Law

Date Written: 2015

Abstract

In King v. Burwell, the U.S. Supreme Court once again saved the Affordable Care Act (ACA) by upholding subsidies (tax credits) offered to low- and middle-income individuals for insurance bought on federal exchanges. A contrary opinion would have put at risk health insurance for 6.4 million Americans and threatened to destabilize insurance markets for millions more.

The ACA is supported by four interlocking reforms, each of which are necessary to realize its promise of expanding health care coverage: (1) guaranteed issue (prohibiting discrimination based on pre-existing conditions), (2) community rating (barring insurers from imposing higher premiums based on health status and prohibiting lifetime caps), (3) tax subsidies to offset the cost of premiums for low- and middle-income individuals, and (4) Medicaid expansion. King v. Burwell threatened to undermine the third pillar. Buried deep within the law, the ACA states that subsidies are available to “Exchange[s] established by the State.” Not imaging that their residents could be denied subsidies, 34 states chose to allow the federal government to run their exchanges. The Supreme Court ruled in favor of the government, recognizing that Congress would not have given states the option of having the federal government run their exchanges, while simultaneously dooming those exchanges to dysfunction.

With the ACA now safe from its latest — and it is to be hoped last — existential judicial challenge, attention must now turn to the law’s unfinished business. First, a confluence of judicial interpretation and political impasse has created a new Medicaid “donut hole,” with many earning too much to qualify for Medicaid but too little to receive ACA subsidies. States should close this hole, both to protect their most vulnerable citizens and to boost their own economies. Second, the law has left out approximately 11 million undocumented immigrants to the U.S. More than half are uninsured, leading to poor health outcomes, needlessly straining emergency services and safety-net hospitals, and endangering public health. Some localities have experimented with ways of expanding coverage, but national action is needed to guarantee universal health coverage.

Keywords: ACA, Supreme Court, health insurance subsidizing, universal health coverage, health law

JEL Classification: K00, K30, K39

Suggested Citation

Gostin, Lawrence O. and DeBartolo, Mary and Hougendobler, Daniel, King v Burwell: Subsidizing US Health Insurance for Low- and Middle-Income Individuals (2015). JAMA Online, July 9, 2015, Available at SSRN: https://ssrn.com/abstract=2631080

Lawrence O. Gostin (Contact Author)

Georgetown University - Law Center - O'Neill Institute for National and Global Health Law ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States
202-662-9038 (Phone)
202-662-9055 (Fax)

Mary DeBartolo

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Daniel Hougendobler

Georgetown University - The O'Neill Institute for National and Global Health Law ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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