King v. Burwell Upholds the Status Quo But Employers Still Seek Changes

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By Kristen Ricaurte Knebel

June 25 — The U.S. Supreme Court June 25 laid to rest any doubt about who is eligible for subsidies under the Affordable Care Act, but employers that are racing to comply with the law's reporting requirements might still be looking for more changes to the law.

The 6-3 ruling is the high court’s second in three years to preserve Obamacare in the face of Republican-backed legal attacks. It averts a collapse in state insurance markets and lets millions of Americans keep using federal tax credits designed to make policies affordable.

Attorneys and representatives of employer groups told Bloomberg BNA on the day of the decision that although the ruling upholds the status quo, employers will still be pushing for other changes to the ACA.

“I think it’s good to have this behind us and resolved and I would say that for employers it’s business as usual,” said Steve Wojcik, vice president of public policy at the National Business Group on Health.

Vanessa A. Scott, a partner at Sutherland, Asbill & Brennan LLP in Washington, said that the decision means employers are just dealing with the status quo.

“For employers, the decision means that the employer mandate to provide coverage to full-time employees remains intact, and that employers will still be subject to tax penalties if any of their employees receive federal tax subsides to purchase coverage on an Exchange, whether that Exchange is run by the federal government or by a state,” she said.

Oral arguments for King v. Burwell took place in early March, where divisions among the justices were already clear.

Employer Response 

James A. Klein, president of the American Benefits Council, said that while the decision makes the outlook clearer for the future, there are still a lot of aspects of the ACA that need to be addressed to make the law “workable” for employers offering health coverage to their employees.

“Now that the court has clarified the situation for the 6 million people getting coverage on the individual marketplace, it’s time for them to address some real problems confronting health plans that cover over 150 million people in the employer marketplace,” Klein said.

Two issues Klein pointed to were the possibility of repealing the 40 percent excise tax on high cost coverage and streamlining employer reporting requirements. These issues were part of a list of six ACA-related policy issues the ABC wants looked at now that the decision has been handed down.

One of the ABC's policy suggestions entails enabling employers to fund health reimbursement accounts that individuals could use to purchase coverage on the exchanges, something that the Internal Revenue Service doesn't currently condone.

“This is an opportunity now to look at how large employers, who can’t directly participate in the public exchanges, can nonetheless offer an opportunity for their employees to get coverage through those exchanges,” Klein said.

The ABC wasn't the only employer group asking for changes to the ACA, as the ERISA Industry Committee said in a statement issued after the ruling was announced that it would like to not only see the Cadillac tax repealed, but also the employer mandate.

“With the legal case settled, Congress should use this opportunity to repeal the burdensome and unnecessary taxes, mandates and reporting requirements imposed by the ACA,” Annette Guarisco Fildes, president and CEO of ERIC, said in the statement.

‘Interesting' Decision

Seth J. Safra, a partner with Covington & Burling LLP in Washington, said that one interesting aspect of the decision was the court not giving deference to the IRS's interpretation of the statute.

“Typically if there’s an ambiguity in the statute, courts will defer to the federal agencies to interpret the statute. Here the court said there’s an ambiguity, but we’re not going to defer to the IRS to interpret the ambiguity,” Safra said.

“This was a second ditch effort to undermine the individual mandate. That’s not really hanging out there and the law is what it is at this point,” he said.

Republican Pushback

Republican leaders characteristically didn't waste any time talking about their ongoing plans to repeal the ACA.

Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said in a statement, “Today’s ruling failed to hold the Obama Administration responsible for its reckless execution of its own poorly-crafted law. The plain text of Obamacare authorizes subsidies only through state exchanges, not the federal exchange. This decision allows the Obama Administration simply to ignore the law and to implement its own preferred policy instead.”

Hatch touted the Patient Care Act, a plan he coauthored to replace the ACA with tax credits to help individuals buy insurance.

“Republicans have a plan to reverse this course by repealing and replacing Obamacare with reforms that put patients—not Washington—first,” Hatch said.

Rep. John Kline (R-Minn.), chairman of the Education & the Workforce Committee, also criticized the decision in a statement, calling the ACA “fundamentally flawed.” He said the Supreme Court's decision “doesn’t change our resolve to repeal it.”

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com