King vs. Burwell: What it Means for Your Patients

In a resounding vote, the US Supreme Court has upheld tax subsidies for low income and middle class people who buy health insurance through federal exchanges under the Affordable Care Act (ACA), saying it has the “final word” on the issue.

The high court’s vote was 6 to 3. Chief Justice John G. Roberts, and Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor, and Elena Kagan joined the majority vote.

“After multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay,” said President Obama during an appearance in the White House Rose Garden after the high court ruling. “What we’re not going to do is unravel what has now been woven into the fabric of America.”

House Speaker John A. Boehner vowed to keep up the fight to dismantle the ACA. “We’re going to continue our efforts to do everything we can to put the American people back in charge of their health care and not the federal government,” Boehner said.

A majority of people who enroll through federal exchanges receive tax credits to help lower monthly premiums. According to healthcare.gov, the average subsidy amounts to $272 a month, which covers around three-fourths of the average premium.

If the high court ruling had gone the other way, 6.4 million people could have lost coverage, said Larry Levitt, senior vice president of the non-profit Kaiser Family Foundation, which tracks healthcare issues. The non-subsidized price tag for insurance premiums in the 34 states that use federal exchanges would have increased almost 50%.

The ruling does not affect one of the important provisions of the ACA-- that people cannot be denied insurance coverage due to “pre-existing conditions.”

For thousands of patients with chronic rheumatic diseases, such as rheumatoid arthritis and lupus, this has meant access to health insurance for the first time.

However, insurance premiums can still be costly for people with these diseases, depending on what plans they sign up for and whether expensive disease modifying antirheumatic drugs (DMARDs) like tumor necrosis factor (TNF) blockers and other biologicals are reimbursed (even in part) by lower-tier drug formularies.

“Sadly, many patients with rheumatic diseases are still unable to afford the breakthrough treatments needed to avoid disability due to expensive out-of-pocket costs they incur under the “specialty tier” pricing systems health insurers have adopted, the American College of Rheumatology (ACR) said in a statement.

“Under specialty tiers, patients who rely on these medications are required to pay a percentage of the drug cost instead of a fixed payment. This results in an average monthly copay of $500 – $5,000 for patients who rely on newer medications like biologics to treat their condition,” the ACR statement said. Even older biologicals like etanercept (Enbrel), approved in 1996, now costs upwards of $42,000 a year.

Turning on a phrase

The decision in King v. Burwell hinged on the words "an Exchange established by the State," which the court decided meant health insurance exchanges established by either the federal or state government -- not simply “states. “

The plaintiffs, from Virginia which does not run a state exchange but allows people to obtain insurance through healthcare.gov., had challenged an Internal Revenue Service regulation that permitted tax subsidies whether an insurance exchange was run by a state or by the federal government.

In his majority opinion, Chief Justice Roberts wrote that finding for the challengers “would destabilize the individual insurance market in any state with a federal exchange, and likely create the very ‘death spirals’ that Congress designed the act to avoid.”

In his dissent, Justice Antonin Scalia said the majority’s reasoning was “quite absurd” and called it “interpretive jiggery-pokery.”

Although subsidies help cut the direct costs of buying health insurance for many patients, they don’t put a damper on the ever-rising cost of insurance itself which is fueled, in part, by soaring drug costs, expensive tests, and the fee-for-service structure of US medical care.

In the “spirit of continuing to expand access to care,” the ACR says it is encouraging lawmakers to support the Patients’ Access to Treatment Act (H.R. 1600). “This Act limits patients’ cost-sharing requirements for specialty tier drugs; reduces financial burden for patients; increases their access to life-saving treatments; and allows patients to lead functional lives and remain in the workforce,” the group explained.