King v. Burwell: Your 5 minute study guide

UPDATE: The Supreme Court has upheld ACA subsidies

With just three decision days left in this Supreme Court Term (today, Friday, and Monday), we’ll soon know the outcome of King v. Burwell.  If you’re like 70% of Americans you may have never even heard of this case, but it has major implications for health care in America.  Now is your time to study up – and if you are in the business of health care, it’s time to plan for the implications if the Court rules in favor of the plaintiff.

THE BOTTOM LINE: Subsidies to purchase health insurance on the federal exchange are at risk – with an impact to millions of Americans who may once again join the uninsured.

In a phenomenon referred to as the “death spiral” (which sounds like it is straight out of Star Wars), premiums may rise to an unaffordable level, causing the healthiest consumers (who balance out the risk of the sickest) to leave the marketplace, and ultimately resulting in even higher prices and less choice as insurers cease participation in the federal exchange.

Wait – Death Spiral?!? WHAT?

One of the goals of the Affordable Care Act (aka “Obamacare” and “ACA”) was to expand access to health insurance.  Two of the major provisions to increase insurance coverage include:

Here’s the catchCredit: Kaiser Family Foundation, CNBC

ACA specifies the subsidies are available through STATE RUN exchanges.  And, there are 34 states (yes, 34!) that didn’t build their own exchanges and instead turned over the task to the federal government. 

Basis of the Case

While the Internal Revenue Service sought to patch this gap by authorizing subsidies to the more than 7.5 million people in states with the federally-run exchange, King v. Burwell challenges whether that regulation is valid because ACA expressly provides subsidies to people who purchase coverage through STATE RUN exchanges.

Impact of a Ruling in Favor of King


Health Systems

Is this health care’s answer to the Y2K crisis or would a ruling in favor of King result in the “death spiral” predicted by some?  We’d love to hear your thoughts.


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