On Thursday, June 25, the Supreme Court of the United States issued its much anticipated ruling in King v. Burwell, the second major Court challenge to a core element of the Affordable Care Act (“ACA”). The Court, by a 6-3 margin, issued a victory for the ACA.
King v. Burwell was not a challenge to the ACA per se. Rather, the plaintiffs challenged an Internal Revenue Service (“IRS”) rule which permits the provision of subsidies for the purchase of health insurance to lower-income residents of states that use Healthcare.gov, the exchange operated by the federal government. Essentially, the plaintiffs, and three Justices in a vigorous dissent penned by Justice Scalia, argued that the plain language of the statute limited the subsidies to residents of states that operate their own exchanges. This would have eliminated subsidies in at least 36 states, and would have had innumerable indirect effects on other provisions of ACA (including eliminating the penalties for violations of the employer mandate in those states).
Although the decision will be of great interest politically and to administrative and constitutional law scholars, it does nothing to change the implementation of the ACA. The exchange system that is currently in place will move forward unless it is changed legislatively or by executive action. This was welcomed by businesses in the two sectors most directly affected by the ruling, insurance and health care providers, and was reflected in sharp one day gains of stock prices for the large insurance companies and for-profit hospital chains.
Another aspect of the ACA that will now definitely move forward as a result of the decision is the scheduled implementation of the employer mandate on January 1, 2016. Accordingly, affected entities (employers of 50 or more full time equivalents) should continue, and in some cases quickly step up, their compliance efforts by reviewing their employment and benefits policies to make certain that they do not run afoul of the employer mandate once it becomes fully effective.