The fate of the Affordable Care Act (ACA), a highly debated law aimed at providing healthcare to millions of uninsured Americans, once again rests on the decision of the U.S. Supreme Court. This decision could have a significant impact on school districts and their employees. The Supreme Court has agreed to hear a challenge brought by plaintiffs who argue that the Obama administration is incorrectly allowing subsidies to be given to individuals participating in a federal health-insurance exchange in the majority of states. These plaintiffs claim that the administration has exceeded its authority by awarding subsidies to help individuals, including workers in K-12 districts, pay for insurance. There is also a separate legal challenge in Indiana focused on the obligations of school districts, brought by the state’s Republican attorney general and a group of school districts. They are not only challenging the subsidies, but also the law’s provision requiring certain employers, including school districts, to provide health insurance.
The implications for school districts will depend on the justices’ decision and how it affects the subsidies given to school employees in different states. However, the potential impact of such a ruling on the country and schools could be significant, particularly in states where it applies. Linda J. Blumberg, an economist and senior fellow at the nonpartisan think tank Urban Institute, stated that such a ruling has the potential to completely undermine the law in those states.
The ACA, more commonly known as Obamacare, narrowly survived a challenge before the Supreme Court two years ago when a group of plaintiffs sought to declare it unconstitutional. The court upheld the statute, ruling that the provisions in the law were a legal exercise of Congress’ taxing authority. The health-care law was approved by Congress in 2010 after a contentious partisan debate.
The current challenge, known as King v. Burwell, revolves around a specific section of the law. The ACA presently allows consumers to access subsidized health insurance through exchanges established by their states or the federal government in states that do not have their own exchanges. More than two-thirds of the states chose not to set up their own exchanges, primarily due to opposition from Republican state officials. Uninsured residents of these states have instead relied on federal exchanges. The Internal Revenue Service (IRS) has confirmed that individuals in these states can receive subsidies through a federal exchange. However, the plaintiffs in the King case argue that the language of the ACA does not permit individuals in states without their own exchanges to receive subsidies through the federal program. They point to the wording that grants subsidies for insurance purchased on exchanges "established by the state." If this argument holds, the plaintiffs contend that no subsidies should be allowed for individuals in those states through a federally established exchange.
The decision made by the Supreme Court will also impact support staff in schools.
There are several other factors that may affect the potential impact of a court ruling on schools. If the subsidies are declared illegal, the impact on school employees and others may vary from state to state. In states that have their own exchanges, such as California, it is likely that the subsidies for school employees and others would remain in place. However, in the two-thirds of states without exchanges, the subsidies would likely end unless those states took action to keep those workers eligible for insurance. This is not guaranteed, especially in states where there is strong political opposition to the federal law.
Another complicating factor is that even if the Supreme Court strikes down the subsidies, some school employees may continue to seek coverage through federal exchanges, even without the subsidies. This is especially true for individuals with certain illnesses or conditions who were unable to obtain coverage before the federal law. These individuals would be the most likely candidates to do so.
The court is expected to make a decision on the case by the end of June.
In Indiana, there is also a lawsuit challenging the federal subsidies, brought by the state’s Republican attorney general and a group of school systems. In addition to the challenge on subsidies, this lawsuit argues that employers, including school districts in states without exchanges, cannot be penalized for not offering health insurance to full-time workers who do not qualify for subsidies.
Superintendent Rod Gardin of the East Porter County school district in Indiana hopes that this case will relieve his district from financial obligations under the law. Initially, the district estimated that it would have to offer health insurance to 70 employees, costing $260,000 a year. However, the district ended up reducing the hours of 45 employees to avoid this cost. There are still 27 employees who will receive new coverage in 2016, reducing the cost to $100,000 a year.
Calculating the total cost is difficult as the district does not know how many workers might obtain coverage through a spouse’s insurance plan. Without a tax increase to cover the costs, the district has no way of raising the money.
Jim Hamilton, a lawyer representing the Indiana districts, believes that if the Supreme Court invalidates the subsidies, then the penalties affecting districts and others "should fall as well". However, it is uncertain whether the high court will address employers’ obligations as the King case is specifically focused on subsidies.
The Indiana case also challenges the Affordable Care Act on other grounds, such as violating the 10th Amendment to the U.S. Constitution. Regardless of the outcome, it is advised that districts should stay the course and plan on adhering to the employer mandate rather than assuming it will go away. Filing a lawsuit does not invalidate a law.
