Sharp Questions Dominate Supreme Court Oral Arguments Regarding The Challenge To The Availability Of ACA Premium Tax Credits

On March 4, 2015, the Supreme Court of the United States heard oral arguments in King v. Burwell, the highest profile challenge to the Affordable Care Act (ACA) since the Supreme Court's 2012 decision to uphold the law. The oral arguments featured sharp questioning of both sides. A decision is anticipated in June to determine whether the high court will maintain the status quo with respect to the availability of premium tax credits to lower-income exchange customers in all states.

The Issue

The plaintiffs in King seek to invalidate a May 2012 Internal Revenue Service (IRS) rule providing that health insurance premium tax credits will be available to all taxpayers nationwide, regardless of whether they obtain coverage through state-based exchanges or federally funded exchanges (FFEs).1 The plaintiffs argue that the plain language of the ACA limits the availability of premium tax credits to health care insurance plans purchased through state exchanges. Only 13 states and the District of Columbia have established state exchanges for 2015;2 the other 37 states will use FFEs in 2015.3 The plaintiffs' argument is based on statutory language providing that premium tax credits are available only for health care plans that are "enrolled in through an Exchange established by the State under section 1311 of the [ACA]."4

Case History

In 2013, two groups of individual taxpayers brought lawsuits contending that the IRS rule violates the plain language of the ACA. The government successfully defended the IRS rule before the U.S. District Court for the District of Columbia (in Halbig v. Burwell) and the U.S. District Court for the Eastern District of Virginia (in King) by asserting that the plaintiffs' isolation of a phrase in the statute was inconsistent with the legislative history, structure and purpose of the ACA. The plaintiffs appealed both decisions to the U.S. Court of Appeals for the D.C. Circuit and the Fourth Circuit, respectively. On July 22, 2014, in Halbig,5 a divided three-judge panel of the D.C. Circuit struck down the IRS rule and held that the plain language of the ACA clearly restricted the availability of premium tax credits to consumers purchasing insurance through state-based exchanges. On that same day, a unanimous panel in the Fourth Circuit upheld the same IRS rule in King,6 concluding that it must defer to the government's reasonable interpretation of the ACA reflected in IRS rule under Chevron.7 Although the D.C. Circuit agreed to rehear Halbig en banc, which potentially could have rectified the circuit split, the Supreme Court granted the plaintiffs' petition to hear King.

The Oral Argument at the Supreme Court

STANDING BRUSHED ASIDE

Although Justice Ginsburg raised the issue of standing within the first few seconds of the argument by Michael Carvin, counsel for the plaintiffs, the issue was brushed aside by the other justices and seems...