Supreme Court Ruling on ACA Largely Upholds Status Quo

Resulting clarity on ACA will maintain employer mandates, may smooth the way for legislation on related issues.

June 26, 2015

WASHINGTON – Yesterday, the Supreme Court issued its opinion in King v. Burwell, the latest major legal battle regarding the Affordable Care Act (“ACA”). In a 6-3 decision for the federal government, the Court decided that the ACA does allow subsidies for coverage purchased through federally operated exchanges. The decision means that subsidies will continue to flow in all states, saving 6.4 million people who were at risk of losing their ACA subsidies if the Court had gone the other way.

Chief Justice Roberts wrote the majority opinion, joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor and Kagan. After concluding that the ACA’s subsidy provision is ambiguous, the majority reasoned that the plaintiffs’ interpretation of the ACA would create insurance market “death spirals” in states with federal exchanges. According to the majority, “Congress passed the Affordable Care Act to improve health insurance markets, not destroy them [and] we must interpret the Act in a way that is consistent with the former and avoids the latter.” 

So, what does this mean for you?

Generally speaking, the Court’s decision means that not much will change for businesses. The decision is a big win for the Obama Administration and will likely result in the status quo with respect to ACA implementation. The decision means that the individual and employer mandates stand, along with the rest of the ACA regime. With a little over a year-and-a-half remaining in the president’s term, the agencies have a few large outstanding issues to address: namely, the so-called Cadillac tax and non-discrimination rules.

The Supreme Court decision effectively takes the wind out of the sails of ongoing congressional efforts to substantially amend or repeal the ACA. Going forward, it is likely that ACA-related legislation will be limited to narrow issues that already enjoy bipartisan support, such as repeal of the medical device tax and simplifying employer reporting obligations. It also means that menu labeling legislation — a priority issue for NACS — could enjoy a smoother path to passage, given the lower likelihood that it will be caught up in larger, more controversial ACA-related bills.

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