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Six states urge Supreme Court to shoot down ACA subsidies

Subsidized insurance too costly for employers, attorneys general say

Six states have voiced their support for the plaintiffs in the upcoming King v. Burwell Supreme Court case, Employee Benefit Adviser reported.

At issue in the case, which the Court will hear on March 4, are the tax subsidies paid to customers who sign up for health insurance on the federal marketplace. The case made its way to the Supreme Court after the 4th Circuit Court of Appeals ruled that both state and federal exchanges can offer subsidies.

The architects of the Supreme Court lawsuit say the subsidies are available only in the states running their own health insurance exchanges and not on Healthcare.gov, since the Affordable Care Act says that subsidies can be offered "through an exchange established by the State."

The attorneys general in Oklahoma, Alabama, Georgia, Nebraska, South Carolina and West Virginia have filed an amicus brief that urges the Court to overturn the 4th Circuit Court ruling.

The primary issue, according to the brief, is that the tax subsidies "trigger costly obligations for employers," especially in conjunction with the employer mandate that went into effect Jan. 1. Taken together, the six states say this facet of the ACA overrides state insurance laws in the 37 states that do not operate their own insurance marketplace.

Philadelphia attorney Jean Hemphill told EBA that overturning the tax subsidy would subsequently shoot down any penalties associated with the employer mandate in those states. What's more, insurers can cancel exchange plans if the tax subsidies are deemed illegal.

Still, states could step in if the Supreme court strikes down federal subsidies by creating their own insurance exchanges and offering subsidies to residents that way. In the end, it's also highly likely that the Court will reject the plaintiff's case in King v. Burwell, attorney Alden Bianchi told EBA, arguing that the ACA was never intended to be interpreted quite so literally.

A ruling on the case is due in June. The King v. Burwell verdict is expected to define healthcare politics in 2015, FierceHealthPayer previously reported.

For more:
here's the Employee Benefit Adviser story
- read the amicus brief (.pdf)

Related Articles:
King v. Burwell will define healthcare politics in 2015
Michael Cannon: Insurance subsidies could be ACA's undoing
If Supreme Court strikes down ACA subsidies, states could step in
U.S. Supreme Court will hear King v. Burwell
Insurers can cancel exchange plans if subsidies ruled illegal