Administration Weighs in on ACA Subsidies in King v. Burwell Case, Warning of Exchange Death Spirals

January 30, 2015

Solicitor General Donald Verrilli has told the U.S. Supreme Court that if it rules that premium subsidies are not available in the 34 states with federally-operated ACA exchanges, those exchanges "would face the very death spirals the Act was structured to avoid, and insurance coverage for millions of their residents would be extinguished."  According to the Justice Department brief, the phrase an "exchange established by the State" is a "term of art" that includes federally-facilitated exchanges, and it also pushed back on the plaintiffs' reliance on MIT economist Jonathan Gruber's statements that the tax subsidies were a lure to get states to establish exchanges.  Separately, Democratic members of Congress filed an amicus brief that noted a 2010 fact sheet from the House Energy and Commerce Committee that said all exchanges would provide tax credits.  As the high court prepares to hold oral argument in King v. Burwell, a number of new reports estimate that the loss of subsidies if the administration loses would increase the number of uninsured by 8.2 million people and increase average premiums in 34 states by 35 percent.  The Administration also announced this week that as of January 15, 9.5 million people have signed up for coverage through the ACA exchanges, but as many as six million U.S. taxpayers will have to pay a penalty of as much as one percent of income because they went without health insurance in part or all of 2014.