In a 6-3 vote, the US Supreme Court upheld federal subsidies for health coverage from Affordable Care Act (ACA) health insurance exchanges in all states. While the King v. Burwell ruling, announced today, means that nothing changes, it also means that millions of people will be able to keep their subsidized health insurance on the public exchange.
The good news for employers is that they can continue to rely on the nationwide availability of subsidized health insurance for their active employees working fewer than 30 hours per week. The ruling also supports strategies to transition pre-Medicare-eligible retirees from employer-sponsored plans to the public exchange.
Longer-term employer strategies? The ruling doesn’t specifically point to changes in employer direction in terms of whether they continue to offer benefits directly or through a private benefits exchange. However, it is always a good idea to take advantage of opportunities like this to revisit your overall health care strategy in light of broader market implications.
What does this mean for the future of the ACA? First of all, employers should stay focused on ACA compliance — many still need to take action to meet the reporting requirements for early 2016 — and on planning for the 2018 excise tax. While the ruling maintains the status quo for now, Congress and the President could agree to make targeted changes to the ACA this year, despite the looming 2016 elections. Employer-backed reforms with bipartisan support — including repeal or revision of the 40% excise tax on “high-cost” plans and eased reporting requirements — stand a chance of becoming law as part of a bigger legislative package.
Messaging today was clear — Congress passed the ACA to improve health insurance markets, not to destroy them. There was a moment of levity when Justice Scalia said Obamacare should now be called “SCOTUScare” — causing Justice Roberts to smile and then laugh.