Trouble on the Horizon?

Yet another provision of the ACA, this one concerning ACA subsidies, is under scrutiny, this one could change health insurance as we know it. A case which has become the topic of discussion as of late is Halbig v. Burwell. This is one of four currently flowing through the appeals process, with similar emphasis and focus.
The Issue

According to the wording in the Affordable Care Act Section 1311, ACA  subsidies should be issued to plans purchased “through and Exchange established by the State under Section 1311”.


Johnathan Adler, a law professor at Case Western Reserve University in Ohio wrote a research paper. In performing his countless hours of research, he came across language in the ACA that caused him to question the validity of a particular provision in the ACA which clearly states that tax credits/subsidies can only be issued through state exchanges and doesn’t apply to federal exchanges.  Johnathan Adler contacted Michael Cannon, the libertarion Cato Institute’s director of health policy studies, in which he voiced this particular language could present serious potential implications for the law, therefore the law should be challenged.  The court case was heard in January 2014 and was decided that that wording of the ACA should stand as is. The ruling stated that it was the intent of this provision to provide tax credits to all Americans who participated in the exchanges, and not just those who participated in the state-run exchanges.

The decision was appealed.

In March 2014, oral arguments were heard by several judges.

July 2014, a decision is to be made as to whether the appeal is upheld or denied.


The opponents to the court case state that the law clearly only provides subsidies/credits to those who are part of state-run exchanges. The particular wording is mentioned in the ACA at least 7 times.


The proponents state that the intent was to have the subsidies apply to all those on the exchanges who meet the qualifications, regardless whether federally or state-run. The intent was originally to have all states setup their own exchanges. However, this was far from the result. Only about 16 states setup their own exchanges with the rest defaulting to federally run exchanges. The wording, however, was never changed.
Potential implications if the appeal stands

  • More than 5 million Americans may no longer qualify for ACA subsidies
  • Of those 5 million, many may no longer to be able to afford insurance and will opt to be uninsured
  • The individual mandate could be threatened and/or many more Americans will become exempt under the hardship provision
  • Penalties assessed under the individual mandate could no longer be allowed because they are only permitted if individuals refuse to buy coverage that is available to them through the exchanges
  • Those no longer eligible for subsidies who become uninsured may drive up premiums for those who remain insured through the exchanges
  • Could cause the number of state run exchanges to switch to federal – employers in states that run their own exchanges could petition states to give up the exchanges, because the ACA’s employer mandate could not be enforced in states without an exchange.
  • May throw a monkey wrench into the upcoming open enrollment, as individuals will be leery as to whether or not they will qualify for ACA subsidies.

Where do you stand?

  • Do you think the ACA was setup with the intent to offer ACA subsidies to all those who qualify whether they are part of the federal exchange or the state-run exchanges?
  • Does intent overrule actual wording?
  • Do you think Johnathan Adler was correct in pursuing a case which very well may go before the Supreme Court?
  • Do you think the possible repercussions as indicated above justify pursuing?
  • Is this a technicality that can easily be fixed or is this a huge deal?