[IMGCAP(1)]The King v Burwell decision by the Supreme Court, while leaving the status quo unchanged, nevertheless has elicited statements ranging from seasoned analysis to partisan diatribes on both sides of the issue that was litigated.
The issue itself was simple: to determine whether the statute’s wording that allows tax credits to an applicable taxpayer who enrolls in an insurance plan through “an Exchange established by the State” necessarily precludes a subsidy for those enrolled in an insurance plan procured through a Federal Exchange and not one established by the state (see Supreme Court Upholds ACA Subsidies).
For the plaintiffs/petitioners, the implications were that if they failed to receive tax credits it would make the cost of buying the insurance more than 8 percent of their income, thus exempting them from coverage requirements.
The decision will have a significant impact on the accounting world, according to Michael Greenwald, partner and corporate & business tax practice leader at Friedman LLP.
“If there were companies that were on the verge of not offering insurance, and sending their employees to the exchanges and paying the penalty, now they don’t have to worry about the exchanges not being there,” he said. “The bigger question was whether the law would be in place at all. The message is that the law will be in place for a while.”
“What that means most immediately is that there are some significant reporting requirements that start in 2015,” he added. “They phase in this year for employers with 100 plus employees. It involves reporting both to your employees and to the government, and requires a lot of information from different places in the company.”
“The reporting requirements apply not just to for-profit companies, but to a whole host of organizations,” observed Greenwald. “And it’s not something you can get started on in December. A lot of employers will wake up at the end of the year and wonder how they will meet these requirements.”
President Obama celebrated the decision: ”Today, after more than 50 votes in Congress to repeal or weaken this law; after a presidential election based in part on preserving or repealing this law; after multiple challenges to this law before the Supreme Court—the Affordable Care Act is here to stay.”
“This morning, the Court upheld a critical part of this law—the part that’s made it easier for Americans to afford health insurance regardless of where you live,” he said. “If the partisan challenge to this law had succeeded, millions of Americans would have had thousands of dollars’ worth of tax credits taken from them. For many, insurance would have become unaffordable again. Many would have become uninsured again. Ultimately, everyone’s premiums could have gone up. America would have gone backwards. And that’s not what we do. That’s not what America does. We move forward.”
Senate Finance Committee ranking member Ron Wyden, D-Ore., likewise welcomed the decision. “Today, the Supreme Court has reached the same conclusion that has been so clear, to so many, for so long. Congress intended tax credits for all who qualified, no matter their zip code,” Wyden said. “I applaud the Court for reading the law correctly. This ruling should once and for all put to rest challenges to the Affordable Care Act.”
Republican Sen. Chuck Grassley of Iowa, a former chairman of the Senate Finance Committee, commented: “I respect the court and its role in our system of government, but Obamacare remains a terrible law. It’s led to too many people losing the coverage they had and spending more for what coverage they can get. Iowans tell me directly in town meetings and in emails and letters to my office that they don’t like the law. Obamacare upended the whole health system instead of targeting what was wrong and fixing those problems. Now the debate returns to the Congress and next year’s presidential election. I’m committed to replacing Obamacare with health care reforms that empower consumers, drive down costs, and use marketplace incentives to make health care coverage accessible and affordable. The current majority in Congress is committed to repealing Obamacare and replacing it with effective reforms driven by the marketplace, not the heavy hand of government.”
Merrill Matthews, resident scholar at the Institute for Policy Innovation, had a different take on the decision. “If Obamacare fails, it’s best that the American people drive that change through their elected representatives, not a panel of nine justices,” he said. “Having the Supreme Court be the one to single-handedly undermine the president’s health care law was never the best approach; it would have further politically charged the issue and liberals would have pinned the blame solely on the Court if the law foundered.”
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