Waiting For the King Decision in Validity of Health Insurance Subsidies | Mercer US

States, Congress Brace for King Decision

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States, Congress Brace for King Decision
Calendar23 June 2015

The health care policy world is bracing for the Supreme Court’s decision in King v. Burwell, which will determine the validity of health insurance subsidies for policies purchased through federal exchanges. A ruling could come as early as this Thursday.

Looking ahead to the decision, the Department of Health and Human Services recently granted conditional approval to Arkansas, Delaware, and Pennsylvania to switch from federally facilitated to state-run exchanges. While these three states plan to switch to state run exchanges, its unlikely most of the remaining 31 states with federal exchanges will make the same move.

A decision either way will influence the heath care policy agenda in Congress.

If the court ends the subsidies, Republican leaders are expected to quickly propose legislation to temporarily extend the subsidies (absent a Court order that does the same). The measure is also expected to include major ACA changes – such as repeal of the individual and employer mandates – sure to draw stiff opposition from Senate Democrats and President Obama. Whether Republicans could unite behind a single proposal and reach a deal with the president, or what changes affecting employers could land in a legislative “fix” would be major unknowns.

Should the court uphold the subsidies, Republicans will likely continue to push for changes, and Congress and the president could agree to targeted reforms this year. The looming 2016 elections will make that difficult, but employer-backed reforms with bipartisan support – including repeal or revision of the 40% excise tax on “high-cost” plans, eased employer reporting requirements, and enhancements to health savings accounts – will remain in the mix and stand a chance of becoming law as part of a bigger legislative package.

Eased employer reporting rules would likely be modeled on bipartisan legislation (HR 2712) that would, among other things, ease compliance with Internal Revenue Code Sections 6055 and 6056 by allowing employers to certify the type of health care coverage available to full-time employees before the beginning of the calendar year, eliminating – in most cases – the need to provide highly detailed statements to the IRS and the full-time employees.

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