HomeWashington Letter2014 ▶ U.S. Supreme Court to Hear Challenge to ACA Federal Premium Subsidy
U.S. Supreme Court to Hear Challenge to ACA Federal Premium Subsidy

November 2014

Last week, the U.S. Supreme Court announced that it would hear King v. Burwell – a case that challenges whether federal health insurance premium subsidies given to individuals who sign up for health insurance under federally run health insurance exchanges is actually permissible under the Affordable Care Act (ACA). Three lower courts have heard similar challenges to ACA federal subsidies and ruled that ACA does in fact grant subsidies for those who sign up through federal exchanges. In a split decision, a three judge panel of the D.C. District Court of Appeals ruled the federal subsidies through federal exchanges are not permissible, but that ruling is under review by en banc appeals to the entire panel of D.C. District Court of Appeals, so technically, no court has yet ruled that federal subsidies are not permitted. It is unusual for the Supreme Court to accept a case when there is not a conflict in lower court rulings.

The practical implications of the Supreme Court's ruling are significant for the success of the ACA. If the court rules against federal subsidies, an estimated 4.7 million American will lose federal subsidies – likely making health insurance unaffordable the majority of that population. Further, removing that many people from the insurance pool will likely drive up health insurance premiums for those who remain insured.

The schedule for the oral arguments has not yet been issued, but a final ruling is expected in June 2015.

Last Reviewed: October 2017