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Biggest Court Decision to Impact Health Care Industry in 2015
The U.S. Supreme Court recently heard oral arguments in the case King vs. Burwell. Our current health care system rides on the outcome of this case. It addresses a vital component of the Affordable Care Act (ACA): tax credits that give millions of low and middle-income Americans the ability to pay for health coverage. The issue before the Court is whether the IRS may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the ACA.
May 1, 2015, 00:00 AM
By Guest Blogger, Joanne M. Judge, CPA, JD, shareholder and co-chair of the Health Care Group at Stevens & Lee PC and Health Care Conference speaker
The U.S. Supreme Court recently heard oral arguments in the case King vs. Burwell. Our current health care system rides on the outcome of this case. It addresses a vital component of the Affordable Care Act (ACA): tax credits that give millions of low and middle-income Americans the ability to pay for health coverage. The issue before the Court is whether the IRS may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the ACA.
This year, 11.4 million people signed up for private health insurance through state and federal exchanges. If the Supreme Court strikes down the tax credit provision, about 8.2 million people in 34 states risk losing their insurance coverage. As a result, premiums are likely to increase for those who are insured, while an estimated $22 billion decrease in spending by uninsured patients could depress the entire health care system.
The ramifications of a Supreme Court decision extend far beyond that of the subsidy issue itself. If the Supreme Court finds for the petitioners and invalidates the IRS regulation based on the plain language of the law, the so-called employer mandate to provide insurance in states with federal exchanges would essentially become a moot point, as the penalties are applicable only to employers with employees receiving subsidies. The bottom line for providers in Pennsylvania is that a decision for the petitioners, absent action by Congress or the states to prevent such a consequence, would lead to a reversal of all or most of any reduction in the uninsured population experienced since Jan. 1, 2014. Several factors could actually increase the number of uninsured beyond the number of uninsured on Dec. 31, 2013. In combination with the reduction in funds available for uncompensated care, the financial health of safety net providers, and hospitals in particular, could be endangered.
It is unlikely that any Supreme Court decision will apply retroactively, meaning individuals will keep subsidies already received and an insurer’s ability to retroactively cancel policies is limited by law. The decision is expected June 2015.
To hear more from Joanne Judge, view the On Demand presentation on PICPA's website.
Joanne M. Judge, CPA, JD, shareholder and co-chair of the Health Care Group at Stevens & Lee PC and frequent speaker at the PICPA Health Care Conference.
The U.S. Supreme Court recently heard oral arguments in the case King vs. Burwell. Our current health care system rides on the outcome of this case. It addresses a vital component of the Affordable Care Act (ACA): tax credits that give millions of low and middle-income Americans the ability to pay for health coverage. The issue before the Court is whether the IRS may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the ACA.This year, 11.4 million people signed up for private health insurance through state and federal exchanges. If the Supreme Court strikes down the tax credit provision, about 8.2 million people in 34 states risk losing their insurance coverage. As a result, premiums are likely to increase for those who are insured, while an estimated $22 billion decrease in spending by uninsured patients could depress the entire health care system.
The ramifications of a Supreme Court decision extend far beyond that of the subsidy issue itself. If the Supreme Court finds for the petitioners and invalidates the IRS regulation based on the plain language of the law, the so-called employer mandate to provide insurance in states with federal exchanges would essentially become a moot point, as the penalties are applicable only to employers with employees receiving subsidies. The bottom line for providers in Pennsylvania is that a decision for the petitioners, absent action by Congress or the states to prevent such a consequence, would lead to a reversal of all or most of any reduction in the uninsured population experienced since Jan. 1, 2014. Several factors could actually increase the number of uninsured beyond the number of uninsured on Dec. 31, 2013. In combination with the reduction in funds available for uncompensated care, the financial health of safety net providers, and hospitals in particular, could be endangered.
It is unlikely that any Supreme Court decision will apply retroactively, meaning individuals will keep subsidies already received and an insurer’s ability to retroactively cancel policies is limited by law. The decision is expected June 2015.
To hear more from Joanne Judge, view the On Demand presentation on PICPA's website.
Joanne M. Judge, CPA, JD, shareholder and co-chair of the Health Care Group at Stevens & Lee PC and frequent speaker at the PICPA Health Care Conference.
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