The Affordable Care Act (ACA) has faced many legal challenges from those who oppose the law. One of the most significant is King v. Burwell, a case regarding the legality of tax subsidies that help lower insurance costs for consumers who qualify. The case has made it all the way to the Supreme Court and on March 4, 2015, oral arguments were made before the Court.

The King v. Burwell Case

Opponents of the ACA have looked through the wording of the law to find any language that contradicts or limits the scope of current ACA implementation. In this case, certain language in the ACA creates tax subsidies to help lower insurance costs. The controversy is that the language may indicate that these subsidies are for state-run Marketplaces only, not for Marketplaces run or facilitated by the federal government using Healthcare.gov.

This is a big issue because only about 1/3 of states have successfully established health insurance Marketplaces. Most states rely on the federal government to run or facilitate their Marketplace. If the Supreme Court rules against the Obama Administration, the citizens of most states would lose their federal assistance with monthly premiums. This would make coverage unaffordable in those states and significantly impact the ACA’s effectiveness there.

Those who support the ACA point out that another portion of the law grants the federal government authority to establish “such an exchange” if the state chooses not to. This wording indicates that the federally run or facilitated Marketplaces are equal to the state Marketplaces. In addition, supporters argue, it’s clear that lawmakers intended subsidies to extend equally across all states, regardless of the specific wording of the paragraphs in question.

Opponents argue that the law should be read strictly and literally. They say that a broader view allowing for “intention” could be used to change the law substantially without Congressional or voter approval.

The Effect of a King vs. Burwell Ruling

A decision on this important case is expected in June 2015. If the Court finds in favor of the Obama Administration and upholds the current interpretation of the ACA, nothing will change in the current application of the law. Everyone around the country would continue to receive subsidies as normal, and the rollout of the ACA provisions would continue.

If the Court finds against the Administration and rules that the law has to be strictly interpreted, the ACA as a whole would still be valid and in effect. The only change would be in the roughly 2/3 of states that rely on the federal government to run their Marketplace. However, the change would be substantial – 9.3 million Americans would lose their assistance in purchasing health insurance, and would likely have to give up coverage as a result. Nearly 90 percent of Americans who purchased health insurance through the federal Marketplace received a tax subsidy to help lower their premium costs.

A ruling against the current interpretation of the ACA could also destabilize the insurance market nationwide, as some states would offer affordable coverage and others would have inaccessible insurance costs. In addition, the requirement that large employers offer insurance to full time staff would not go into effect in the states with a federal Marketplace, since the requirement imposes a penalty only if the employee gets a subsidy for health insurance.

The effects of a Supreme Court decision against the current implementation would be significant and far reaching. Some Americans would have access to affordable care while others would not. With the political divide in Congress, changes to the language in the contested sections of the ACA would be difficult to make, and any alternate solutions will be difficult to pass. So, all Americans wait anxiously to see what the Court will decide, and how their access to health care will be affected as a result.

To learn more about the effect of a ruling against subsidies, read Supreme Court and the ACA Individual and Employer Mandate.