King v. Burwell, the latest Supreme Court case attacking the Affordable Care Act, is largely perceived as a threat to people who purchased insurance through the law’s health exchanges. Should the plaintiffs succeed, at least 8 million people with plans purchased through such an exchange are projected to become uninsured — many of whom have life-threatening conditions. In reality, however, King presents an even bigger threat to American lives. Should the Supreme Court embrace the plaintiffs’ theory in King, up to 5 million children who had insurance long before Obamacare became law would also lose their insurance.
That’s 13 million newly uninsured people, many of them children.
The problem arises from the specific words that the King plaintiffs point to in the text of the Affordable Care Act to claim that much of the law should be defunded. These five words — “Exchange established by the State” — appear in a provision of the law governing tax credits intended to help people pay for insurance in the exchanges, but they also appear in another provision intended to shore up funding for the Children’s Health Insurance Program (CHIP). CHIP, which predates Obamacare, and insures millions of children. Thus, should the Court accept the King plaintiffs’ reading of the law, their decision is likely to have the perverse effect of rewriting a law that was intended to expand access to health care to instead deny health care to millions of children who already had it.
Much of the history of the CHIP program is contained in an amicus brief filed on behalf of several children’s health groups such as the American Academy of Pediatrics and the Children’s Hospital Association, in addition to several individuals whose lives are potentially threatened by King (full disclosure: the author of this piece consulted with the attorneys who drafted this brief). According to that brief, CHIP was created in 1997, but it was only funded for ten years. Though both houses of Congress passed a five year extension of CHIP in 2007 that also expanded the program, President George W. Bush vetoed this legislation, twice. Eventually, Congress and the former president negotiated an 18 month stopgap bill that continued CHIP through March of 2009, and President Obama eventually signed legislation similar to the bill Bush vetoed once he took office. That legislation extended CHIP until 2013.
This history was fresh in lawmakers’ minds when they debated and enacted the Affordable Care Act in 2009 and 2010. Fearing that a future president — or a future Congress — might allow CHIP to expire, they wrote several provisions into Obamacare to ensure that CHIP would continue to function. One extended CHIP funding though September of 2015. Another provided a backstop to ensure that, should a funding shortfall occur in the future, CHIP-eligible children would be enrolled in a plan offered through one of the state-based health exchanges that now sell subsidized insurance to private consumers. In the likely event that the Republican-controlled Congress declines to extend CHIP funding beyond this September, this later provision will kick in, ensuring that children who are currently insured through CHIP do not become uninsured.
Unless, that is, these children become collateral damage in King.
King is primarily an attack on the Affordable Care Act’s exchanges. Though the law explicitly states that it gives the states “flexibility” in deciding whether to set up their own exchange or allow the federal government to do so, the King plaintiffs argue that the law wasn’t intended to provide flexibility to the states at all. Rather, they claim, if a state opted to have the federal government run their exchange, the law punishes that state by denying tax credits to the state’s citizens. To support this claim, they quote the words “Exchange established by the State,” which appear in a provision of the law dealing with the size of the credits offered to individuals who purchase exchange plans. If this provision is read entirely in isolation, it appears to indicate that the amount of this tax credit will always be zero dollars for people who live in states with federally-run exchanges, because a federal exchange is not an exchange established by a “State.”
The problem with this legal argument is that courts are not supposed to read a single provision of a law in isolation. Rather, as the Supreme Court has explained, “a reviewing court should not confine itself to examining a particular statutory provision in isolation” as the “meaning—or ambiguity—of certain words or phrases may only become evident when placed in context.” Though the words “Exchange established by the State” do appear in the provision the plaintiffs rely upon, other provisions of the law define the phrase “Exchange established by the State” expansively to encompass exchanges operated by the federal government. Thus, if the Court reads the phrase in context and not in isolation, the plaintiffs lose.
Should the plaintiffs win, however, the five words that form the basis of their case appear elsewhere in the law as well. One place they appear is in the provision ensuring that children to not become uninsured if CHIP funding expires — that provision provides that states that accept CHIP funds must “establish procedures to ensure” that CHIP-eligible children who would otherwise become uninsured are “enrolled in a qualified health plan that . . . is offered through an Exchange established by the State under section 18031 of this title.” In other words, if the plaintiffs win, they don’t just cut off tax credits for people in states with federally-run exchanges, they potentially strip health insurance from millions of children who are insured through CHIP.
According to the amicus brief, “[b]y the end of Fiscal Year 2013, 8.4 million children had enrolled in CHIP; just over 5 million of those children reside in Federal Exchange states.” So that’s five million children who risk losing their insurance in addition to the millions of other people who will become uninsured due to the havoc a victory for the plaintiffs in King would create in the exchanges.
As the amicus brief explains, this reading of the law makes no sense because “[t]he central goal of the backstop provision was to ensure that the children currently insured under CHIP would remain insured in the event that federal CHIP funding proved insufficient or nonexistent.” But, if the King plaintiffs prevail, “the backstop Congress enacted would not be a backstop at all—it would eliminate coverage in many states in the event of a funding shortfall, not maintain it.”