The Affordable Care Act as adopted contains 906 pages. It is a complex statute made necessarily so by industry and congressional efforts to block provisions that would have simplified it such as a move to a single payer option. To satisfy all of the various stakeholders including insurance and pharmaceutical companies and their minions, it became strategically necessary to make complex what would otherwise be simple by creating a system of state insurance exchanges and low income subsidies to increase enrollment.
The case of King v. Burwell pending in the Supreme Court of the United States is an effort to scuttle the Act by focusing on four words out of the 906 pages. Part of the changes to the tax code contained in the Act provides for a calculation of a tax credit that depends upon the number of months that the taxpayer has been enrolled in a health insurance plan purchased on an insurance exchange “established by the State.”
States, under the Act have the option to establish their own exchange or to rely on exchanges set up by the federal government. 34 states have opted to use the federal exchanges.
The argument goes that if a state fails to set up its own exchange and relies on the federal default exchange those states have not utilized an exchange established by the State and therefore there can be no tax credits provided for those subsidized insureds living in the 34 federal option states. If successful, the plaintiffs in King will have engineered the loss of $29 Billion dollars in tax credits in those states impacting primarily poor and middle income people on subsidies.
Interestingly, the proponents of the abrogation of the Act provide no specific alternatives for the federal government to deal with what appears likely to be the largest public service and human suffering disaster since Katrina. In order for the Supreme Court to kill the Act on these grounds it would need to abandon any semblance of judicial restrain and proceed on strictly political grounds. The country be damned.
Federal exchanges adopted by a state in lieu of one created by the state is one established by the state in the context of the Act as a whole.