Transcript:
MARY AGNES CAREY: Welcome to Health on the Hill, I鈥檓 Mary Agnes Carey. The Affordable Care Act is headed back to the Supreme Court.聽 At stake are millions of subsidies that help people in more than three-dozen states afford health care coverage. Julie Rovner, a senior correspondent for Kaiser Health News, joins me now to discuss the case.聽 Hi Julie.
JULIE ROVNER: Hi, Mary Agnes.
MARY AGNES CAREY: What鈥檚 this all about? Lay out the case for us.
JULIE ROVNER: Well, it鈥檚 certainly not about the constitutionality of the Affordable Care Act. A lot of people are saying that. This is what鈥檚 known as a statutory interpretation case, something else that the Supreme Court tends to do when there鈥檚 an argument over what Congress meant.聽 Basically, the Supreme Court acts as a referee. And that鈥檚 basically what they鈥檙e doing here.
MARY AGNES CAREY: And what are the legal arguments on both sides?
JULIE ROVNER: Well, the challengers in this case say the phrase 鈥渆stablished by a state鈥� means that only tax credits that are given out in state exchanges are allowed. And that means, as you mentioned, more than three-dozen states that are using the federal exchange, healthcare.gov, can鈥檛 provide tax credits to people. Now they say Congress intended to do this in an effort to pressure states to create their own exchanges.聽 Those on the other side, including the government and the people who wrote the law say that鈥檚 not the case at all. It was just sort of an odd way that sentence was written and Congress always intended for tax credits to be available to everyone regardless of whether the exchange was established by a state or the federal government.聽 And that鈥檚 basically what鈥檚 at stake here.聽 We鈥檙e looking at a regulation by the Internal Revenue Service that implements that portion of the law that tax credits and the IRS said that everyone should be able to get those tax credits.
MARY AGNES CAREY: Everyone to receive them whether in the state or the federal exchange.
JULIE ROVNER: That鈥檚 right. Everybody who鈥檚 eligible regardless of who鈥檚 running the exchange.
MARY AGNES CAREY: So what happens if the court rules that people in the federal exchanges can鈥檛 get these subsidies any longer?
JULIE ROVNER: Well both sides agree on this; and the answer is basically chaos. It would be kind of a mess. Several states actually tried to reform what鈥檚 called the non-group market, the individual insurance market, by making insurance available to people with pre-existing conditions but without help for other people to buy insurance or to require them to buy insurance. And it did not work very well. In Kentucky, basically every insurer left the state when they tried it in the 1990s. There are various estimates. Somewhere around 7.5 million people would likely lose their subsidies. Because of the way the law is written, if insurance costs more than 8 percent of your income, you鈥檙e not required to buy it. So most of those people would not buy insurance. They wouldn鈥檛 have to. The people who would buy insurance are probably the people who need it the most. That would result in a risk pool that is sicker and therefore premiums would have to go up. Estimates are that premiums would go up somewhere in the neighborhood of 35 to 45 percent. Obviously for people who were getting subsidies, their costs would go up enormously. The average subsidy is about $268 and that covers somewhere in the neighborhood of three-quarters of their premium. So they would basically be priced out of these markets. Insurance companies are very worried about this. Hospitals and other health care providers are also worried about this. They鈥檝e all written amicus briefs to the court saying this would be a real disaster if the subsidies were not available in these states where the federal health exchange is being used.
MARY AGNES CAREY: So on Wednesday we鈥檒l have the oral arguments and then the judges begin their deliberations. Take us through some of the issues that guide those deliberations.
JULIE ROVNER:聽 Well as I mentioned this is what鈥檚 called a statutory interpretation case. They have to decide whether Congress intended for the subsidies to be available in the state and federal exchanges or just in state exchanges. And mostly when they get these cases, they use what鈥檚 called Chevron Deference, that鈥檚 a reference to a 1984 case. The way it works is that first it鈥檚 a two part test. They look at the language of the law and they say, 鈥淚s it straightforward or is it ambiguous?鈥� If they find it ambiguous, then they are suppose to defer to the agency, in this case the IRS, as long as the IRS鈥� interpretation isn鈥檛 unreasonable. That鈥檚 why the challengers in this case are trying to make the case that Congress intended for the tax credits to be denied to people using the federal health exchange because that would make the IRS鈥� interpretation unreasonable, because only if the interpretation is unreasonable, would the Supreme Court then overrule it.
MARY AGNES CAREY:聽 There鈥檚 also some issue involved where if the federal government is going to change something with the states, they have to tell the states they鈥檙e doing that. That鈥檚 one of the issues here.
JULIE ROVNER: That鈥檚 right, a number of states in their court filings are saying that when they were deciding whether or not to have a state exchange, they didn鈥檛 know, no one ever told them there was a possibility that their residents wouldn鈥檛 get these tax credits if they didn鈥檛 create an exchange and that鈥檚 a violation of other sort of previous court rulings that said you can鈥檛 limit things, that you can鈥檛 limit what they states get if you don鈥檛 tell them what their options are. And frankly as someone who covered this law from its inception, I certainly never heard anybody talk about the idea that only states exchanges would have access to the tax credits. It simply was never discussed.
MARY AGNES CAREY:聽 Thank you so much Julie Rovner, Kaiser Health News.