SCOTUS case may impact Affordable Care Act

By Amanda Yarger

Dr. James Henderson, academic director for MBA Healthcare, has served at Baylor for 34 years. His experience in health economics includes numerous publications and committees. His areas of interest also involve Labor Market Analysis and Financial Analysis. As a scholar in health care economics, Henderson weighs in on the Supreme Court’s decision deciding if subsidies are legal for federal and state exchanges.

What is the background of the King v. Burwell case?

The case is about whether or not the subsidies that are identified in the law [The Affordable Care Act] are payable in only the state exchanges, or whether they can also be paid in the federal exchange. This is very tricky because there are three issues involved: What does the law say? What was the legislative history? And, what was legislative intent?

What does the Affordable Care Act say?

If you read it literally, the law says that subsidies are payable in exchanges created by the state- that’s verbatim what it says and it says it in a couple places. It never says the subsidies are available in exchanges set up by the state.

The way the law is organized, there’s a section on the state established exchanges and immediately following that section is a section on the subsidies that are payable by those exchanges set-up by the state- those are juxtaposed.

Following that is a section on if states choose not to set-up their own exchanges, the federal government will set-up the exchanges. It never talks about subsidies in the federal exchange.

The simple literal interpretation is subsidies in a state exchange, no subsidies in a federal exchange. There’s not a lot of dispute over what the law says literally. Here’s where they start getting into the question that I think they’ll base their decision off of: What’s the legislative history?

What is the legislative history for the case?

Normal Method of Passing a Bill

When a bill is debated in both houses of congress, the House will come up with a version and the Senate will come up with their own version. They’re never the same.

The House version gets voted on by the House and the Senate version gets voted on by the Senate- if they pass in both Houses, then the bill goes to the Conference Committee, who hammer out differences between the bills and come up with one piece of legislation that then goes back to each separate branch of Congress and these are voted on without amendments.

In this Instance

In this case, the House passed their bill first and then the Senate passed their bill on Christmas Eve 2008, but then they immediately went on recess until January. They come back in 2009 and the new Congress goes into session.

Approximately a week later, Massachusetts had a special election to replace Ted Kennedy who had died in the fall of 2008. Kennedy was replaced by an interim senator, but Massachusetts law requires a special election… Prior to their special election, when the Bill passed the House, the vote was 219 [in favor], and 215 [against].

If three people had changed their vote from in favor to against, the bill wouldn’t have passed. There were zero Republicans that voted in favor of it. In the Senate, the vote was 60 [in favor], and 40 [against].

What’s special in the Senate is if the 60 was 59, the bill wouldn’t have passed from a filibuster. One vote means it doesn’t pass. When Massachusetts elects Scott Brown in their special election, he’s a Republican.

Suddenly the democrats only have 59 votes, so if these two bills go to Conference, which they haven’t because they just came out of recess, if they send them to Conference for a single bill and everybody [keeps their same vote], the bill will pass in the House, but it doesn’t pass in the Senate.

There’s the dilemma, what has to happen? The House re-votes on the Senate Bill and it passes, but it’s the Senate Bill. It doesn’t matter what was in the House Bill because the Senate Bill passed.

How does this impact the Affordable Care Act?

When you look at legislative history, you look at the Senate Bill because that’s what passed. What’s interesting is that, as with most bills, there are versions of the bill as it [gets evaluated]. The last two versions, prior to the bill that passed, both of those had subsidies payable in the federal exchange in them. The final bill, it wasn’t in there. What happened?

The House bill didn’t have federal exchanges in it. They had to have all 60 votes in the Senate to get it to pass and there was one senator who said, ‘This isn’t right; we have to have a federal exchange or I won’t vote for it,’ so they put a federal exchange in it which is why it ends up in the two bills prior to the final bill.

I’m not sure where the evidence is, but some people say it was a conscience decision on the part of the people who wrote the bill to take the federal exchange out.

There was one senator who wanted an incentive for states to set up their own exchange. The incentive would be, if you set up your own exchange, subsidies are available to your own people, if you don’t set up, subsidies aren’t available… It’s going to depend on how the justices interpret the legislative history.

What is the legislative intent?

The Democratic legislators who all voted for it would say ‘we intended the subsidies to be available in the federal exchanges.’ I guess the question is: that may have been the intention, but was that what was written? Is that the bill that got voted on?