King v. Burwell – Tomorrow’s the Big Day!

After months of waiting, we’ll finally get to hear the arguments tomorrow in the King v. Burwell Supreme Court case that challenges the legality of delivering government subsidies through the Federally Facilitated Marketplace. And while a lot of people – both brokers and consumers – might be nervous about the outcome of the case, they don’t need to be too worried at this point.

First, the Court is hearing the case tomorrow, not ruling on it. We’re still a few months away from a decision. Yes, we’ve heard a lot of criticism from opponents of the Affordable Care Act because the administration doesn’t have a “back up plan,” but no back-up plan is necessary right now – nobody’s losing their subsidy tomorrow or even next month. There’s time.

In fact, Republicans have hinted this week that even if the Supreme Court tosses out the subsidies in the states that use the FFM, Congress would take action to make sure people don’t lose their financial assistance right away. There would be a transition period, though nobody’s said how long that would be.

Finally, and most importantly, there’s an easy way to fix this problem: just set up a state exchange in those states currently using the FFM. If the plaintiffs in this case are right and the subsidies were intended as an incentive for states to develop their own exchanges, the possibility of tens or even hundreds of thousands of people in a state losing their health insurance because they can no longer afford it is a pretty big incentive. A possible work-around would be for the state to contract with the federal government through a TPA to serve as the state exchange and then – viola – problem solved.

Clearly, there are issues with subsidizing the cost of health coverage for millions of Americans. Those who argue that our country can’t afford it have a strong argument. But that’s not what this case is about – it’s about Congressional intent when the law was written. And even a ruling that Congress intended for the federal funds to be available exclusively through state exchanges doesn’t mean the end of the ACA; it just means that states need to get busy setting up their own marketplaces.

We’ll keep you up to date on this case as it progresses, but for now brokers who specialize in individual health insurance, especially those who have invested in a private exchange site, should continue to focus on what they do best – selling.

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