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ACA Has Day in Court

At any time in the next 10 weeks – probably on a Monday or Thursday – the US Supreme Court will announce its decision in the case of King v. Burwell, the current challenge by opponents to the Patient Protection and Affordable Care Act (ACA).  This is not the first court challenge to the ACA, nor is it likely to be the last. 

King v. Burwell is the latest in four cases that challenge US Treasury regulation, 26 C.F.R. § 1.36B-2(a (1) as implemented by the Internal Revenue Service.  The regulation provides for subsidies on health insurance sold by state-run exchanges, and also on the Healthcare.gov federal exchange.  The challengers in all four cases claim that the IRS exceeded the authority Congress gave it by including subsidies for Healthcare.gov, citing the language of the ACA. 

When Congress wrote the ACA, it provided for subsidies for any “Exchange established by the State under section 1311.” It has been argued that a federal exchange would not offer such subsidies, and that this would give incentives to the states to form exchanges.  Unfortunately, only 14 states did so.  The IRS attempted to clarify this through its implementation of the law, but may not have the authority to do so.  Unlike most Supreme Court cases, the law is being challenged on procedural rather than constitutional grounds. 

The record of these four cases in the courts is: 

  • King v. Burwell (originally King v. Sebelius) was decided by Virginia’s 4th Circuit Court of Appeals in favor of the government. Due to the decision in an identical case in the District of Columbia, this case is now before the US Supreme Court awaiting announcement of a decision.
  • Halbig v. Burwell (originally Halbig v. Sebelius) was heard on the same day as the King case, but by the District of Columbia Court of Appeals. This court, however, ruled that the subsidies were illegal. The split between the two cases merged these into a single Supreme Court case.
  • Pruitt v. Burwell (originally Sebelius) was brought by an individual attorney in the Federal District Court for Eastern Oklahoma. The court ruled that the federal subsidies were struck down.
  • IRS vs. Indiana is a related but slightly different lawsuit based on the Employer Mandate – a requirement that employers with more than 100 employees must offer health care coverage to 95 percent of them by 2016. Brought by the state of Indiana and some of its school districts, arguing that the employer mandate should not apply to local governments and school districts.  The case was heard in December of 2014 in the US District Court for Eastern Indiana, and a decision is pending. 

Two other challenges to the ACA were based on other issues: 

  • National Federation of Independent Business v. Sebelius was a 2012 Supreme Court decision in which the Court upheld Congress's power to enact most provisions of the ACA. In their decision, the justices held that Congress could require individuals to obtain health insurance (the “individual mandate”) under its power to impose taxes.  The Court also held that individual mandate was not a proper use of Congress's Commerce Clause powers, and that the Act’s significant expansion of Medicaid was not a valid exercise of Congress's spending power.
  • Burwell v. Hobby Lobby Stores questions whether the ACA can force closely held for-profit corporations to offer certain contraceptives to employees. Originally filed in the District Federal Court for Western Oklahoma, the case was consolidated with another brought by Consolidated Woodworking and was heard by the US Supreme Court in 2014.   The court ruled in favor of the plaintiffs, but limited its scope to closely held corporations.   It did not address whether such corporations are protected by the free-exercise of religion clause of the First Amendment of the Constitution. 

In 2014, Sen. Ron Johnson (R-WI) and a member of his staff sued to prevent members of Congress and their staffs from receiving subsidies for their healthcare.  That lawsuit was heard by a district court in Green Bay, WI and determined that Johnson and his aide did not have standing to file the suit.  On appeal, a three-judge panel of the Federal District Court in Chicago upheld the lower court’s ruling. 

Also in 2014, House Majority Leader John Boehner filed suit against the ACA on behalf of the House of Representatives, arguing that President Obama illegally used an executive order to delay imposition of the Employer Mandate.  House Republicans generally want to see the Mandate overturned, but believe the president should have permitted Congress to make that decision.  As a secondary issue, the Boehner suit notes that payments were made to insurers as part of the “risk corridor funding” that offsets the reduced co-insurance, co-pays, and deductibles that insurers provide through the Health Insurance Marketplace.  Under the Constitution, all federal funding must be approved by Congress.  No action has yet been taken on this suit. 

In March of 2015, the Supreme Court refused to take up the case of Coons v. Lew, a constitutional challenge to the ACA over creation of the Independent Payment Advisory Board (aka “Death Panel”) that would limit spending for Medicare.  The US Court of Appeals for the 9th District held that since the IPAB had not yet been formed, the suit was premature.  It is expected to be filed again. 

Mayhew v. Burwell is a suit brought by the State of Maine challenging the ACA’s requirement that states maintain their Medicaid eligibility rules as defined in 2009 until 2019.  The state maintains that such a requirement is unconstitutional in that it threatens to cut federal funding for all of Maine’s Medicaid programs.  The hearing before the First Federal Circuit Court ruled against Maine, but the state has requested that it be taken up next year by the Supreme Court. 

Finally, Attorney General Mike DeWine of Ohio has paired with Warren County, OH and four state universities to file suit against fees imposed by the ACA.  The fees are earmarked to pay for the Transitional Reinsurance Program, which will stabilize fees in the individual healthcare markets from 2014 - 2016.  No court action has been taken to date. 

Regardless of how the pending court cases are resolved, the ACA is due to be implemented on a rolling schedule between now and 2019.  This means that unless Congress or the Courts strike it down in the interim, the law is likely to be the target of an increasing number of suits.

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