Beyond King v. Burwell: Payers brace for 'death spiral'

Affordable Care Act case leaves insurers with many questions, no answers

Justice Sotomayor later said, "No one's going to visit the program if there are no subsidies because not enough people will buy the programs to stay in the exchanges."

Solicitor General Donald B. Verrilli Jr., representing the defendant, said "there are states that didn't understand the statute" in the same way the plaintiffs interpreted the law. The plaintiffs' argument relies on the the phrasing of section 1311 in the Affordable Care Act, which reads that federal subsidies are available to residents only "through an exchange established by the State."

Justice Samuel Alito quickly rebutted Verrilli: "It's not too late for a state to establish an exchange if we were to adopt petitioners' interpretation of the statute. So, going forward, there would be no harm."

In light of a possible ruling in favor of the plaintiffs, lawmakers in 12 states have proposed bills to create state-run exchanges. However, establishing an exchange is no easy feat, as it requires a huge investment of both time and resourcesFierceHealthPayer previously reported. States also must consult with stakeholders, grant exemptions from the individual mandate to obtain coverage, operate a program that helps individuals navigate the site and certify qualified health plans.

Heavy emphasis on wording

Michael Carvin, lawyer for the plaintiffs, said in his opening remarks that "this is a straightforward case of statutory construction, where the plain language of the statute dictates the result." 

Carvin brought up a valid point. Reading the phrase as written, it does seem as though subsidies are available only in states that actually and physically set up their own exchanges, and not in ones that relied on

Justice Elena Kagan responded to Carvin's remarks by saying, "The answer to the question really does depend on context, and it depends on an understanding of the law as a whole."