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King vs Burwell Coming Up:
No Tax Credits for ACA Federal Exchanges?
In less than a month, the Supreme Court will hear oral arguments in King vs. Burwell, a lawsuit that may have a devastating impact under the Patient Protection and Affordable Care Act (ACA). The lawsuit challenges whether text of the ACA that authorizes tax credits for insurance purchased on an exchange only allows for subsidies on state-run exchanges, and does not authorize tax credits for insurance purchased on a federal exchange.
If the challenge is successful, millions of Americans who obtained coverage through federal exchanges could lose their tax credits and, in all likelihood, their health insurance coverage. The individual mandate, employer mandate, and tax credits for employers to provide health-insurance coverage might also be overturned in states with federal exchanges. However, insurers would likely still be required to cover all applicants regardless of pre-existing conditions, which could destabilize the insurance market in states with federal exchanges and lead to rapid rises in premiums and the possible collapse of the insurance market in those states.
Only 14 states have set up their own exchanges. If the mandates and subsidies are struck down in the other 36 states, many think that the economic foundation of the ACA would be undermined, putting the entirety of the legislation at risk.