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Defending essential equity to ensure equality as SCOTUS takes up ACA again

May 8, 2015
by Ron Manderscheid
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Once again, the Affordable Care Act (ACA) hangs precariously in the balance of a decision by the US Supreme Court.  Unlike the oft-celebrated previous case, in which consequences were principally anticipatory, this time the outcome has the potential to adversely affect almost 7 million Americans who receive federal tax subsidies to purchase essential health insurance.

At issue in King v. Burwell is whether federal tax subsidies can be provided legally if health insurance is purchased through the Health Insurance marketplace which HHS operates for 36 of the states. Federal tax subsidies for health insurance are not at issue for insurance purchased through one of the Marketplaces operated by the remaining states.

The ACA specifically authorizes federal tax subsidies for health insurance purchased through a Marketplace “operated by the state”. The ACA does not define what “operated by” actually means. Further, everyone would agree that the ACA intent was not to provide a federal tax subsidy to some persons, yet deny it to others who have the same income limitations. Clearly, this combination of factors leads to a dilemma.

On the long flight back from Munich to Washington, I thought about King v. Burwell and its possible outcomes. Unlike the previous case, which had only two potential outcomes—either up or down—the current case actually has three: strike down the tax subsidy for the 36 states; uphold the subsidy; or apply relevant precedents from previous decisions.

Let me explain each of these three potential outcomes briefly.

Strike Down the Tax Subsidy for the 36 States: Both Democrats and Republicans agree that this outcome would be devastating. An estimated 7 million Americans would be at immediate risk of losing their health insurance, and the insurance markets would be disrupted for insurance plans participating in the states for which HHS operates the Marketplaces. To avert these dire consequences, immediate corrective action would be required from the Congress or the individual states themselves. The likelihood of such corrective action is only slight at best, granted the acrimonious political environment prevailing at present.

Uphold the Subsidy. Because the ACA does not define the meaning of “operated by the state”, the HHS Marketplace actually may qualify as operated by the state itself. To envision this, think of the relationship between the HHS Marketplace and the state like the relationship created through a contract. For example, a state may operate a program through a contract rather than directly, yet the program is for all practical purposes operated by the state. The relationship between the HHS Marketplace and a state could be viewed in a similar manner.



Ron Manderscheid

Exec. Dir., NACBHDD and NARMH

Ron Manderscheid


Ron Manderscheid, Ph.D., serves as the Executive Director of the National Association of County...

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