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The Federal Courts' Role in Implementing the Affordable Care Act

Since the Affordable Care Act’s (ACA) passage, a number of lawsuits have been filed challenging various provisions of the law.  The Supreme Court has decided cases about the constitutionality of the ACA’s individual mandate and Medicaid expansion as well as the applicability of the contraceptive coverage requirement to closely held for-profit corporations with religious objections.   In addition, several cases challenging the availability of premium subsidies in the Federally-Facilitated Marketplace (FFM) are currently progressing through the federal courts.  All of this litigation has altered, or has the potential to alter, the way in which the ACA is implemented and consequently could affect the achievement of the law’s policy goals.  This issue brief examines the federal courts’ role to date in interpreting and affecting implementation of the ACA, with a focus on the provisions that seek to expand access to affordable coverage.

Court decisions about how to interpret the ACA will continue to affect the number of people who ultimately obtain affordable coverage.  At present, access to Medicaid up to 138% FPL is dependent upon where people live because the Supreme Court held that implementation of the ACA’s Medicaid expansion is effectively a state option.  This has resulted in a coverage gap for just over 4.5 million people with incomes too high to qualify for Medicaid but too low to qualify for Marketplace subsidies in the states that have not implemented the ACA’s Medicaid expansion to date.

In addition, depending upon how the current lawsuits challenging the IRS rule providing premium subsidies in the FFM are resolved, access to affordable Marketplace coverage also could be dependent upon where people live.  In this scenario, state decisions to not expand Medicaid and also to not create a State-Based Marketplace could have a compounded effect, leaving even more people in a more expansive coverage gap.

While premium subsidies currently remain available in all Marketplaces, and a final ruling on this issue is not expected for some time, the courts have the potential to continue to impact the extent to which the ACA achieves its policy goals of increasing access to affordable coverage and reducing the number of uninsured.  In December 2014, the entire DC Circuit Court of Appeals will re-hear the premium subsidy case, which could uphold, reverse, or modify the panel decision invalidating the IRS rule allowing subsidies in the FFM.  In addition, the plaintiffs in the 4th Circuit Court of Appeals case have asked the Supreme Court to review that court’s decision upholding the IRS rule.  Meanwhile, similar cases are pending decision in federal district courts in Oklahoma and Indiana.  Over the coming months, it will be important to watch for additional developments as these pending lawsuits progress.

Issue Brief

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.