# Amicus Curiae Brief — King v. Burwell, 135 S. Ct. 475 (2014) (No. 14-114)

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0338%3A14

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2014

## Text

Supreme Coun. US.

FILED

JAN 2 8 2015
No. 14-114 L_OFFICE OF THE CLERK _|

In the Supreme Court of the Anited States

DAVID KING, ET AL., Petitioners,
V.
SYLVIA BURWELL, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET AL., Respondents.

On Writ of Certiorari To The United States
Court of Appeals For the Fourth Circuit

Brief of Amici Curiae AARP, National Health Law
Program, Services and Advocacy for Gay, Lesbian,
Bisexual and Transgender Elders, and National
Council On Aging In Support of Respondents

Urging Affirmance
Jane Perkins Stuart R. Cohen
National Health Law Counsel of Record
Program lris Y. Gonzalez
101 E. Weaver St., AARP Foundation
Suite G-7 Litigation
Carrboro, NC 27510 601 E Street, NW
(919) 968-6308 Washington, DC 20049

perkins@healthlaw.org (202) 434-2060
scohen@aarp.org

Counsel for Amici

PAGE
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BUREREARY OF ABU MIIEIN TE cosciscccckcccccoccsccccsccccccccccs 3
1s, ESERIES AG oper eet Oe eT OE ee ie 5
[. Before the ACA, Heath Insurance
Was Unavailable or Unaffordable
to Millions of Pre-Medicare Adults ................. 5
A. Employer-Sponsored Health
Insurance Was Frequently
Unavailable or Unaffordable ..................... 6
B. Health Insurance on the Individual
Private Market Was Unaffordable
STINE RL: Ge EE 7
C. Medicaid or Medicare Was Unavailable....9
II. Lack of Adequate and Affordable
Health Insurance Among Pre-Medicare
Adults Results in Worse Health
Outcomes and Death, and Negatively
Impacts Financial Stability, the Health
Care System, Federal Programs, and
Sie BRUNE III oo cnscccscvcceccsscccesescccscnesis 10

1

TABLE OF CONTENTS

IIT.

1

A. Uninsured Pre-Medicare Adults Die
or Suffer Worse Health Outcomes at
Greater Costs to Them and to the
BOOMs CORPO EPP OOIUI .nn cs ccevccceccsescscescccescece 10

B. When Uninsured Older Adults Enroll
In Medicare, They Become Healthier
But Are More Costly to the Medicare

C. Lack of Adequate, Affordable Health
Insurance Among Pre-Medicare
Adults Profoundly Affects Their
Financial Stability and the National

The Central and Overarching Purpose
of the ACA is to Make Health Insurance
and, Thus, Health Care Affordable to All... ..17

A. Congress Clearly Expressed the
Purpose of the ACA in Its Text................ 17

B. Congress’ Chosen Policies Were
Specifically Designed to Work
Together to Achieve the Goal of
Making Health Insurance
Accessible and Affordable to All .............. 18

1. The ACA Encourages
Employers to Offer Adequate,
Affordable Health Insurance......... 19

IV

ill

2. The ACA Encourages
Individual Participation in,
and Improves Access to, the
Individual Market..................2.......

3. The ACA Makes Health

Insurance in the Individual
Market More Affordable ................
4. The ACA Encourages States

to Expand Medicaid Coverage

for Low-Income Adults Who

May Be Exempt From the

Individual Mandate .......................
Premium Tax Credits Were Meant to
Incentivize Individuals, Not States ..............
Premium Tax Credits Are Essential to
the Act’s Primary Purpose—Achieving
Access and Affordability for All.....................
A. If Premium Tax Credits Are

Eliminated on the Federally

Facilitated Exchanges, Health

Insurance Will, Once Again,

Become Unaffordable and

Inaccessible for Millions of Low- to

Moderate-Income Americans ..................-

1. Those Who Qualify for
Premium Tax Credits Will
Find Insurance Unaffordable
and Become Uninsured .................

28

VI.

1V

2. The Effectiveness of the
Individual Mandate in
Increasing and Diversifying
the Insurance Risk Pool Wil!
Be Significantly Hampered,
Making Health Insurance

Less Affordable for Everyone
in the Private Individual
Insurance Market .......................... 30

3. Coverage Losses in Public and
Group Insurance Markets Will
Undermine the Goal of Near-
Universal Coverage ....................... 33

B. Eliminating Premium Tax Credits
on the Federally Facilitated
Exchanges Will Disproportionately
Impact Low- to Moderate-Income
Pre-Medicare Adults..................2..2....20. 100 O4

Eliminating the Availability of Premium

Tax Credits in 34 States Will Cannibalize

the Act’s Key Reforms and Jeopardize

IT Sa sh speucweddoracabnvesoseotonsee 35

A. Eliminating the Availability of
Premium Tax Credits in 34 States
Will Render Other Interconnected
ACA Reforms Meaningless .......................35

v

B. Premium Tax Credits, and the ACA,
Have Saved the Lives of Pre-
Medicare Adults Who Were
Previously Uninsured, Underinsured
or Denied Adequate, Affordable
Health Insurance Due to Their Age
or Preexisting Conditions.......................... 36

LENE kinciccctnlcsansantenumsesenemssersiemensancuaendiones 38

vi
TABLE OF AUTHORITIES
Cases

Halbig v. Sebelius, Civ. No. 13-0623 (PLF),
2014 U.S. Dist. LEXIS 4853 (D.D.C.
OE RM ea AE INR MN bh 2 Raa PER Ae nt eS te NEON 18

Nat'l Fed’n of Indep. Bus. v. Sebelius,
132 S. Ct. 2666 (2012)............ Aah se Thee! 18, 22, 23

United Steelworkers v. Weber,
Et ARS Ee DOE a MA SA 39

Statutes, Rules and Regulations

Wa ia ii ia A ese 34
Pub. L. 111-148, 124 Stat. 119 (2010).......-...00.0.000-- 18
Le ee : ) | ee 21, 23
26 U.S.C. § 36B(b)(3)(A)(i).......ceccceceeceseseecsescseceeneeees 24
26 U.S.C. § 36B(c)(2)(C) GAD)... -ceeeececececeeeeecereeees 19
I I ecresnnsnesisiconemsitnsnionsesasiomneni 24
ETE I ccnsssccieminscrivnsnitinieniniieonencibas 20
26 U.S.C. § 498OH(a) ........cecececeseecececseseseceseeeseeeeeee 19

EES I eritenscsnecrencenemtenisnnnentiocennenentt 19

vu

E506 GU a nee es 21
ihe see 24
ae (ee 21, 31
26 U.S.C. § 5OOOA(C)(2)(B)Gi) .......e.ceescescesseeceeseessesnees 22
26 U.S.C. § BO00A(c)(2)(B) (iii) .........essescecseesecsesseeneeees 22
a 6 i a 22
26 0.6.C. ¢ SOOOAGSOIOD 5k cw 22
ee I on ee a 22
26 U.S.C. § 5OOOA(])(1)(A) ........scccnscescesesecnseneees 31, 35
Pe oh CARA Ae aire ee 8
42. U.S.C. § 300gg(a)(1)(A)-(B) .......--e-sessecseesesseceeeseeees 20
42. U.S.C. § 300gg(a)(1)(A) iI) 6... eee eseceeeseeeeeees 8, 20
ETE, Sigs sens ecvitn caren ~
i i a esinsccsarenenection 20
a ie a i sineintnaneeniontnpi .
AO aia inne ntrnetenon 20

42 U.S.C. § 1394a(a)(10)(A))CVIID) .........--. eee. 22

OR na Oe EE vckstiastascidechamauscianaepetasssoneea 22
WUC FA | eee 21
8 Th Saas ee Rai 26, 27
eo hee 20
ee i 25
I ic ne 26
Oe I acai carcicoiscesibicecscecremenmienss 25
i iinnicesadiiiaciencacscesscinrnesnnienl 21, 23
CT de 0 ae ee 24
I inci iitsiescasmectcneneeacsmnsssninsiinndonei 18
LE Lod b,c ee 18
BB UII. © WII oa iisstsscisceevcasncenvnenosnssnnsonaseoes 21

Legislative Materials

H.R. Rep. No. 111-4443, vol. 1 (2010)...................... 22
ns ee CI cncnndinccsnsenntsommetotubesncentens 25

The Instability of Health Coverage in
America: Hearing Before the Subcomm.
on Health of the H. Comm. on Ways &
Means, 110th Cong. 50 (2008)......................... 12, 13

ix

Jonathan Gruber, Written Testimony of
Professor Jonathan Gruber before the
Committee on Oversight and Government
Reform, U.S. House of Representatives,
December 9, 2014, (2014),

ie IID sitcceveis contin cuntcsnecsmensescsannes

Miscellaneous

Elizabeth Abbott et al., Implementing the
Affordable Care Act’s Insurance Reforms:
Consumer Recommendations for Regulators
and Lawmakers (2012)

Linda J. Blumberg, et al., Urban Inst.,
Characteristics of Those Affected by a
Supreme Court Finding for the Plaintiff

eee PP ee eee eer eee

Se ee GIy Ge hccnieren cnctietcnascnsimeecineni 29-35

Amy Burke et al., U.S. Dep’t of Health &
Human Servs., Premium Affordability,
Competition, and Choice in the Health

Insurance Marketplace, 2014 (2014) .................

Robert Calandra, Once Opposed to ACA, Now
a Convert, Philadelphia Inquirer, Apr. 28,

2014, http://goo.glV/D48Cgt ......... oe ceeeceeeee ee eees

Michael F. Cannon, New Study Suggests
RomneyCare Saved Lives, But at a Very
High Cost, Forbes, May 5, 2014, http://

TET Sica ornndanicuinepsewsnetesienrnusmbnnveusssansenves

x

Ranee Chatterjee et al., Screening for Diabetes
and Prediabetes Should Be Cost-Saving in
Patients at High Risk, 36 Diabetes
Se I bn cencniisxsutvasisdiadadonincnsvevmeivesesennbeude 13

Sara R. Collins et al., The Commonwealth
Fund, Help on the Horizon: How the
Recession Has Left Millions of Workers
Without Health Insurance, and How
Health Reform Will Bring Relief
SUIIINET Ul scnceisiinh ccs cinmatemiaetasheddcadbeaanainiashsiapeaseresdeumamiia 14, 15

Sara R. Collins et al., The Commonwealth
Fund, Realizing Health Reform’s Potential:
Adults Ages 50-64 and the Affordable Care
RE er ee I wivcaccsdnsdsaccteancctnsecanaceenssncnss 6, 7, 14

Ctrs. for Medicare & Medicaid Servs., Medicare
& Medicaid Statistical Supplement: 2013
Edition (2012), http://goo.g/gYdWFW .................... 9

Cong. Budget Office, Insurance Coverage
Provisions of the Affordable Care Act—
CBO’s January 2015 Baseline (2015).............. 23, 30

Cong. Budget Office, Labor Market Effects
of the Affordable Care Act: Updated
Estimates, in The Budget and Economic
Outlook: 2014 to 2024 (2014).......................00.. 14, 15

Cong. Budget Office, Updated Estimates of
the Effects of the Insurance Coverage
Provisions of the Affordable Care Act,
Pe I cciadeisrvinenipiesbinineniaeciapenesinl 28, 29

xl

Keziah Cook et al., Does Major Illness Cause
Financial Catastrophe? 45 Health Servs.
I aa ae 15

Cynthia Cox et al., Kaiser Family Found., An
Early Look at Premiums and Insurer

Participation in Health Insurance
POC, DIES GAG wv evcis veccsccievessisesssscccscntacca 34

Sid Groememan, AARP, Staying Ahead of the
Curve 2007: The AARP Work and Career
Study (2008)

Jonathan Gruber at Noblis, Jan. 18, 2012,
I IN Weis sv vesiinccdcreccsnessoiiscacdeveeninvexscensl 27

Inst. of Med., America’s Uninsured Crisis:
Consequences for Health and Health Care
II cco ccstntenrsepdsnciaseupiaviaebactctvadeseortecsels 11, 12

Richard W. Johnson et al., AARP Pub. Policy
Inst., Older Workers on the Move:
Recareering in Later Life (2009).....................0.00-0 14

Timothy S. Jost, Health Insurance Exchanges:
NS MN, Cite tictsesnsccnnscsienrenvcicespixssandivatisiens 26

Kaiser Comm’‘n on Medicaid & the Uninsured,

Key Facts about the Uninsured Population
ae denicsrneete cacshus'enseadcentiansteubetiuasadisncedinbasoaiennienes 6

Kaiser Family Found., Health Insurance
Market Reforms: Guaranteed Issue (2012),
NN I i 6 oisciiicvncnnantasbasicndeet cansidaientéawpneanns 8

x11

Kaiser Family Found., Marketplace Enrollees
Eligible for Financial Assistance as a Share
of the Subsidy Eligible Population (Apr. 19,
2014), http://eo00.gVBO4iAZ ..............00..0..c0c.c.00.0000. 30

Kaiser Family Found., State Decisions on
Health Insurance Marketplaces and the
Medicaid Expansion (Jan. 27, 2015),
noose cantekucoeianielis 5, 23, 36

Noam N. Levey, Obamacare’s Guaranteed
Health Coverage Changes Lives in First
Year, LA Times, Jan. 4, 2015,
SET SO ROCA ar at nee EPO 37

Larry Levitt & Gary Claxton, Kaiser Family
Found., The Potential Side Effects of Halbig
(Jul. 31, 2014), http://goo.g/GECcHt .............. 32, 33

J. Michael McWilliams et al., Use of Health
Services by Previously Uninsured
Medicare Beneficiaries, 357 New Eng. J.
RS, Cee Sesadia tartare Stats rtecals AOE -EMe Poem ae AS 12

Megan Multack, AARP Pub. Policy Inst., Use
of Clinical Preventive Services and
Prevalence of Health Risk Factors Among
Adults Aged 50-64 (2013)............... BARN.) a ETERS 11

Nat'l Colorectal Cancer Roundtable, /ncreasing
Colorectal Cancer Screening ~— Saving
Lives and Saving Dollars: Screening 50 to
64 Year-Olds Reduces Cancer Costs to
Medicare (2007)............ ee ea ee a 13

x1ll

Lynn Nonnemaker, AARP Pub. Policy Inst.,

Beyond Age Rating: Spreading Risk in
Health Insurance Markets (2009)

Karen Pollitz et al., Kaiser Family Found.,
Medical Debt Among People With Health
Insurance (2014)

Sara E. Rix, AARP Pub. Policy Inst., The
Employment Situation, December 2013:
Disappointing Year-End Numbers for
Older Workers (2014)

Evan Saltzman & Christine Eibner, Rand
Corp., The Effect of Eliminating the
Affordable Care Act’s Tax Credits in
Federally Facilitated Marketplaces (2015)

Jeannine S. Schiller et al., U.S. Dep't of
Health & Human Servs., Summary
Health Statistics for U.S. Adults:
National Health Inter: 2w Survey,
2010 (2012)

Press Release, Sentier Research, Household

Income Down by 3.1 Percent Overall

Post Recession, But Many Groups Have
Started to Recover Following 2011 Low-
Point (2014)

Gerry Smolka et al., AARP Pub. Policy
Inst., Effect of Health Reform for
50-to 64-Year-Olds (2013)

PR - oo eee ee 2

ILO oe eee eee eee eee eee eee eee eee ee ee ee eee eee eee

OL eee eee eee eee eee eee eee eee ee eee ee ee eee eee eee ee |

sh medhiohnatod 5, 6, 9, 19, 22, 23

X1V

Gerry Smolka et al., AARP Pub. Policy Inst.,
Health Care Reform: What’s at Stake for
50- to 64- Year Olds? (2009) .....................00.. 5. 15, 20

Kevin T. Stroupe et al., Chronic Illness and
Health Insurance-Related Job Lock, 20 J.
Policy Analysis & Mgmt. 525 (2000)...............0..... 14

U.S. Dep’t of Commerce, Census Bureau,
Income, Poverty and Health Insurance
Coverage in the United States: 2012 (2013).......... 16

U.S. Dep’t of Commerce, Census Bureau,
Living in Near Poverty in the United
a en cleswunennaneblameumnusnee 16

U.S. Dep't of Health & Human Servs., At
Risk: Pre-Existing Health Conditions
Could Affect 1 in 2 Americans (2011)...................... 8

U.S. Dep’t of Health & Human Servs., Ctrs.
for Disease Control & Prevention, Chronic
Diseases: The Power to Prevent, the Call to
REE AAS Sen CE CARLENE el UU Se 10, 11

U.S. Dep’t of Health & Human Servs., Office
of the Assistant Sec. for Planning and
Evaluation, Further Resources on Poverty
Measures, Poverty Lines, and Their

Friatery, REC ITROO.G TE BMRA... .ncsccecccscccccccessccesis 15

XV

U.S. Dep’t of Health & Human Servs.,
Health Insurance Marketplace 2015 Open
Enrollment Period: January Enrollment
Report For the Period: November 15, 2014 -
January 16, 2015 (2015).................secscscs00 29, 31, 34

U.S. Dep’t of Health & Human Servs., Health
Insurance Marketplace: Summary
Enrollment Report for the Initial Annual
Open Enrollment Period: October 1, 2013 -
Pp Bk Re eee 28, 34

U.S. Gov't Accountability Office, GAO-15-53,
Medicare: Continuous Insurance Before
Enrollment Associated With Better Health
and Lower Program Spending (2013) ................... 12

Brian W. Ward & Jeannine S. Schiller,
Prevalence of Multiple Chronic Conditions
Among US Adults: Estimates From the
National Health Interview Survey, 10
Preventing Chronic Disease 1 (2013)

Dale H. Yamamoto, Soc’y of Actuaries,
Health Care Costs from Birth to Death
(2013)

INTERESTS OF AMICP

AARP is a nonprofit, nonpartisan organization
with a membership that strengthens communities
and fights for the issues that matter most to families
such as health care, employment, income security,
retirement planning, affordable’ utilities and
protection from financial abuse. Since its founding in
1958, AARP has advocated for quality, affordable,
and accessible health care as well as controlled
health care costs. In response to the growing number
of older people who lacked health care services or
faced financial burdens due to unaffordable and
inaccessible insurance and other health care costs,
AARP sought legislative reforms that would, among
other objectives: guarantee access to affordable
health insurance for people ages 50 to 64 who were
priced out of the individual market due to their age,
preexisting conditions, or health status; and help
low- to moderate-income older adults receive

assistance with premiums and other health care
costs.

The National Health Law Program (NHeLP)
protects and advances the health nghts of low-
income and underserved people. For over forty years,
NHeLP has worked to help individuals and advocates

1 Counsel for the parties filed notices of consent to the filing of
amicus curiae briefs in this case. No counsel for any party
authored this brief in whole or in part. No person or entity
aside from amici or its counsel made a monetary contribution to
support the preparation or submission of this brief.

2

overcome barriers to health care, including lack of
affordable services.

Services & Advocacy for GLBT Elders (SAGE)
is the largest and oldest national organization
dedicated to improving the lives of lesbian, gay,
bisexual and transgender (LGBT) older adults.
Founded in 1978, SAGE coordinates a network of
affiliates across the country, offers supportive
services and consumer resources for LGBT older
adults and their caregivers, advocates for public
policy changes that address the needs of LGBT older
people, and provides training for aging providers and
LGBT organizations. Many LGBT older adults
across the country struggle to find affordable and
culturally competent health care—placing them at a
significant disadvantage when they are most
vulnerable. SAGE is committed to ensuring that the
Patient Protection and Affordable Care Act (ACA or
“the Act”) protects the ability of all older adults to
age with security and dignity.

For 65 years, the National Council on Aging
(NCOA) has been a respected national leader and
trusted partner to help people aged 60+ meet the
challenges of aging. Our mission is to improve the
lives of millions of older adults, especially those who
are struggling. Through innovative community
programs and services, online help, and advocacy,
NCOA is partnering with nonprofit organizations,
government, and business to improve the health and
economic security of 10 million older adults by 2020.
NCOA’s Center for Benefits Access helps community-
based organizations find and enroll seniors and

3

younger adults with disabilities with limited means
into benefits programs for which they are eligible, so
they can remain healthy, secure, and independent.

Amici have supported the ACA and the access
to affordable health insurance it provides for millions
of individuals. Premium tax credits under the ACA
are critical to affordability and, thus, access to
needed health care services. Amici are interested in
the issues raised by this case, and write to provide
additional information about how the Act’s statutory
provisions work together to achieve its overarching
purpose and how the Petitioners’ theory of statutory
construction squarely contravenes that purpose and
harms vulnerable people—in particular older adults.
The Parties and other amici have not addressed the
impact of premium tax credit assistance on older
adults’ ability to obtain adequate and affordable
health insurance and on their lives.

SUMMARY OF ARGUMENT

The overarching purpose of the ACA is to
address the lack of adequate and affordable health
insurance and, thus, access to health care—a
complex social and economic problem that affects all,
but can be especially challenging to those ages 50 to
64 (hereinafter “pre-Medicare adults”). Pre-Medicare
adults faced special difficulties in obtaining adequate
and affordable health insurance in the nongroup and
employer-based markets and generally did not
qualify for publicly funded insurance.

4

Prior to the passage of the ACA, pre-Medicare
adults were denied coverage based on preexisting
conditions or health status or offered costly policies
that excluded coverage for needed care. When
coverage was available, insurance premiums for older
adults were up to seven times higher than those for
younger adults. Annual and lifetime caps—easily
exceeded by treatment for a single illness such as
cancer or heart disease—meant that many older
adults either went without treatment until they
became eligible for Medicare or incurred financially
ruinous medical debt. Lack of adequate insurance
among this pre-Medicare group resulted in worse
health outcomes, including death, and negatively
impacted personal finances, health care spending,
federal programs, and the national economy.

The ACA reflects Congress’ chosen policies to
address these _ problems. Reflecting a _ basic
understanding that affordability and accessibility of
health insurance in the private individual market
required a larger and more diversified insurance risk
pool, key reform provisions of the ACA are designed
to encourage people to obtain health insurance and to
reduce barriers to coverage. Among __ these
interconnected reforms is the availability cf federal
tax credits to reduce premiums for indiviauals who
buy insurance on the Exchanges.

Petitioners’ argument that Congress intended
to provide premium tax credits only to individuals in
states that established an Exchange is inconsistent

5

with the text and structure of the Act? and is directly
at odds with its purpose, as expressed by Congress
and manifested in its interconnected reforms.
Petitioners’ acontextual interpretation of a single
phrase in one provision of the Act—if accepted—will
make insurance unaffordable in the 34 states that
use the Federally Facilitated Exchanges,* harming
low- to moderate-income residents of those states. It
would also render meaningless other key provisions

of the ACA designed to increase access to affordable
health insurance for all.

ARGUMENT

I. Before the ACA, Health Insurance Was

Unavailable or Unaffordable to Millions
of Pre-Medicare Adults.

Before implementation of the ACA, the
number of uninsured Americans aged 50 to 64, grew
at an alarming rate—increasing from 5.2 million in
2000, to 7.1 million in 2007, and then to 9.2 million
in 2012. See Gerry Smolka et al., AARP Pub. Policy
Inst., Health Care Reform: What’s at Stake for 50- to
64-Year Olds? 1 (2009) [What’s at Stake]; Gerry

2 Amici adopt and incorporate by reference Respondents’
arguments regarding statutory construction of the ACA.

% Individuals may purchase health insurance policies via 27
Federally Facilitated Marketplaces and 7 State-Partnership
Marketplaces. See Kaiser Family Found., State Decisions on
Health Insurance Marketplaces and the Medicaid Expansion
(Jan. 27, 2015), http://goo.g/NmpIrG (last visited Jan. 28, 2015)
[State Decisions]. Amici refer to these 34 Marketplaces
collectively as “Federally Facilitated Exchanges.

6

Smolka et al., AARP Pub. Policy Inst., Effect of
Health Reform for 50-to 64-Year-Olds 1 (2013) [Effect
of Health Reform]. Most uninsured pre-Medicare
adults did not have access to affordable employer-
sponsored insurance, could not afford private
insurance on the individual market, or did not
qualify for publicly funded insurance programs. See
Kaiser Comm'n on Medicaid & the Uninsured, Key
Facts about the Uninsured Population 2 (2013). The
consequences for these individuals, their families,
and the nation were devastating.

A. Employer-Sponsored Health Insurance
Was Frequently Unavailable or
Unaffordable.

For many pre-Medicare adults, employer-
sponsored insurance was unavailable or
unaffordable. In 2012, an estimated 11 million
employed pre-Medicare adults did not have employer-
sponsored insurance. Effect of Health Reform, supra,
2. Of these, less than half were able to obtain
coverage from another source. Jd. The unavailability
of employer-sponsored insurance for pre-Medicare
adults was driven, in part, by the economic recession,
during which this group experienced rising rates of
unemployment. See Sara R. Collins et al., The
Commonwealth Fund, Realizing Health Reform’s
Potential: Adults Ages 50-64 and the Affordable Care
Act of 2010, at 2 (2010) [Realizing Health Reform's
Potential]. Pre-Medicare adults went without
employer-sponsored insurance for longer than their
younger counterparts because, on average, they
remained unemployed for longer periods of time. 7d.

7

As of December 2013, for example, adults ages 55
and older remained unemployed for an average of
11.6 weeks longer than their younger counterparts.
See Sara E. Rix, AARP Pub. Policy Inst., The
Employment Situation, December 2013:
Disappointing Year-End Numbers for Older Workers
4 (2014).

B. Health Insurance on the Individual
Private Market Was Unaffordable or
Inadequate.

Prior to ACA reforms, many pre-Medicare
adults could not afford adequate insurance policies
on the private individual market. In 2007, 61% of
pre-Medicare adults who tried to purchase health
insurance on the _ private market found it
unaffordable. See Realizing Health Reform’s
Potential, supra, 5 ex. 4. Among those who
purchased insurance, 60% reported difficulty paying
medical bills or accessing services due to cost such
that they were effectively underinsured. /d. 6 ex. 5.
High health insurance premiums, high out-of-pocket
medical expenses, and lack of coverage for older
adults were linked to insurance underwriting policies
that allowed insurers to deny coverage or charge
higher premiums based on age and/or health status,
offer very limited policies to people with preexisting
conditions, or offer policies with comprehensive
coverage but prohibitively expensive premiums
and/or cost sharing. See Elizabeth Abbott et al.,
Implementing the Affordable Care Act’s Insurance
Reforms: Consumer Recommendations for Regulators
and Lawmakers 10-13 (2012); Lynn Nonnemaker,

8

AARP Pub. Policy Inst., Beyond Age Rating:
Spreading Risk in Health Insurance Markets 2-3
(2009) [Beyond Age Rating}. Pre-Medicare adults
were disproportionately affected by these
underwriting policies because 48 to 86% of people
ages 55 to 64 had preexisting health conditions. U.S.
Dep’t of Health & Human Servs., At Risk. Pre-
Existing Health Conditions Could Affect I in 2
Americans 3 fig. 1 (2011).

ACA reforms prohibit or limit these practices.
See, e.g., 42 U.S.C. § 300gg(a) (2012) (premiums may
not be based on health status); 42 U.S.C.
§ 300gg-1 (2012) (guaranteed issue in individual and
group markets); 42 U.S.C. § 300gg-2 (2012)
(guaranteed renewal). These reforms prohibit
insurance companies from denying coverage based on
preexisting conditions, disability, or other
information related to health status such as genetic
predispositions or past medical expenses. See Kaiser
Family Found., Health Insurance Market Reforms:
Guaranteed Issue (2012), http://goo.gl/9d4Sk7. Yet,
even after the passage of the ACA, challenges remain
for pre-Medicare adults shopping for health
insurance in the private market because they still
face higher premiums than their younger
counterparts. See 42 U.S.C. § 300gg(a)(1)(A)(iii)
(permitting age rating ratio of 3:1). As a group,
however, they are no better able to afford higher
premiums than other age groups. An analysis of the
March 2008 Current Population Survey revealed that
the median income for the uninsured ages 50 to 64
was roughly equal to the median income of their
younger counterparts. Beyond Age Rating, supra, 3

9

tbl. 1. Moreover, the Great Recession worsened the
financial outlook for households led by people
between ages 55 and 64, whose median household
income declined by 6.4%—the largest percentage
decrease among all age groups. See Press Release,
Sentier Research, Household Income Down by 3.1
Percent Overall Post Recession, But Many Groups
Have Started to Recover Following 2011 Low-Point 1
(2014), http://goo.g/cU2BSf. Federal assistance with
insurance plan premiums and out-of-pocket costs is,
therefore, critical to insurance affordability and
access for pre-Medicare adults.

C. Medicaid or Medicare Was
Unavailable.

Most adults ages 50 to 64 did not qualify for
publicly funded insurance. In 2012, 10% of the
insured ages 50 to 64 had coverage through Medicaid
and 8% had some other form of public insurance such
as Medicare,4 VA, or TRICARE—representing only
13% of the total population in this age range. Effect
of Health Reform, supra, 1-2, 5. Even if all states
now expanded Medicaid eligibility to include adults
who have incomes at or below 138% of poverty, less
than one third of the 13.8 million pre-Medicare
adults who were on the individual health insurance
market or uninsured in 2012 would be eligible for
Medicaid. Id. 7-8 fig. 2.

4 In 2012, only 17% of Medicare beneficiaries were under the
age of 65 because they qualified due to disability rather than
age. See Ctrs. for Medicare & Medicaid Servs., Medicare &
Medicaid Statistical Supplement: 2013 Edition tbl. 2.4 (2012),
http://goo. g/gYdWFW.

10

Il. Lack of Adequate and Affordable Health
Insurance Among Pre-Medicare Adults
Results in Worse Health Outcomes and
Death, and Negatively Impacts Financial
Stability, the Health Care System,
Federal Programs, and the National
Economy.

A. Uninsured Pre-Medicare Adults Die or
Suffer Worse Health Outcomes at
Greater Costs to Them and to the
Health Care System.

As people age, they are more likely to
experience chronic health conditions, resulting in
worse health outcomes and increased mortality for
the uninsured. The prevalence of multiple chronic
conditions is greater in adults ages 45 to 64 than in
younger adults and, for this older population, it
increased significantly between 2001 and 2010.
Brian W. Ward & Jeannine S. Schiller, Prevalence of
Multiple Chronic Conditions Among US Adults:
Estimates From the National Health Interview
Survey, 2010, 10 Preventing Chronic Disease 1, 5
(2013). For example, adults ages 45 to 64 suffer from
heart disease at a rate three times higher than
younger adults. Jeannine S. Schiller et al., U-S.
Dep't of Health & Human Servs., Summary Health
Statistics for U.S. Adults: National Health Interview
Survey, 2010, at 19 (2012). The Centers for Disease
Control and Prevention estimates that chronic
conditions are the leading cause of death and
disability and that treating such conditions accounts
for more than 75% of health care spending. U.S.

11

Dep’t of Health & Human Servs., Ctrs. for Disease
Control & Prevention, Chronic Diseases: The Power
to Prevent, the Call to Control 2 (2009). This
tremendous toll on human life and on health care
resources can be reduced, as many of these conditions
are preventable and can be effectively controlled with
preventive services and early treatment. The
uninsured, however, are less likely to have access to
these services. Id.

Uninsured pre-Medicare adults are three
times less likely to be up-to-date with clinical
preventive services than those who are insured. See
Megan Multack, AARP Pub. Policy Inst., Use of
Clinical Preventive Services and Prevalence of Health
Risk Factors Among Adults Aged 50-64, at 40, 43
(2013) (32.8% of insured women were up-to-date,
compared to only 10% of uninsured women; 36.1% of
insured men were up-to-date, compared to only 12.4%
of uninsured men). Uninsured adults are less likely
to be aware of risk factors for chronic conditions and
to have these conditions diagnosed, treated, or well-
controlled. Inst. of Med., America’s Uninsured Crisis:
Consequences for Health and Health Care, 72-83
(2009) (comparing uninsured adults ages 18 to 64 to
their insured counterparts). Consequently,
uninsured adults suffer worse health outcomes,
including higher mortality rates. /d. at 75 tbl. 3-4.

12

B. When Uninsured Older Adults Enroll
In Medicare, They Become Healthier
But Are More Costly to the Medicare
System.

When previously uninsured older adults gain
Medicare coverage, they experience improved health
outcomes and a decreased risk of dying when
hospitalized for serious conditions. Jd. at 72. These
findings suggest that uninsured pre-Medicare adults
had significant unmet health needs before they
enrolled in Medicare and gained increased access to
prescription drugs and other medical treatments to
control their illnesses. See id. at 77. Consequently,
it is substantially more costly to treat the previously
uninsured in the Medicare system than treating
those who were previously insured. See U.S. Gov't
Accountability Office, GAO- 15-53, Medicare:
Continuous Insurance Before Enrollment Associated
with Better Health and Lower Program Spending 9
(2013) (Medicare spent 35% more on the previously
uninsured in the first year of enrollment than on
those continuously insured over the previous six
years); see also J. Michael McWilliams et al., Use of
Health Services by Previously Uninsured Medicare
Beneficiaries, 357 New Eng. J. Med. 143, 151 (2007).

Obtaining preventive services and medical
treatments earlier could reduce the cost of medical
and drug treatments for individuals who eventually
enroll in Medicare because conditions would be
diagnosed at less advanced stages and/or better
controlled. See The Instability of Health Coverage in
America: Hearing Before the Subcomm. on Health of

13

the H. Comm. on Ways & Means, 110th Cong. 50
(2008) (statement of Dr. John Z. Ayanian). For
example, one study followed adults ages 50 to 64
until they reached the age of 75 and found that, if
they received screening for colorectal cancer before
enrolling in Medicare, the program could save
between $7.7 and $21.7 billion in potential treatment
costs. See Nat'l Colorectal Cancer Roundtable,
Increasing Colorectal Cancer Screening -— Saving
Lives and Saving Dollars: Screening 50 to 64 Year-
Olds Reduces Cancer Costs to Medicare 2 (2007).
Similarly, diabetes screening for people who are 55
and older and have at least one risk factor could
reduce Medicare's diabetes-related costs of care by
17.1%. Ranee Chatterjee et al., Screening for
Diabetes and Prediabetes Should Be Cost-Saving in
Patients at High Risk, 36 Diabetes Care 1981, 1984
tb]. 2 (2013). For uninsured pre-Medicare adults,
however, these types of preventive and screening
services and treatment for underlying conditions, are
unaffordable and inaccessible.

C. Lack of Adequate, Affordable Health
Insurance Among Pre-Medicare Adults
Profoundly Affects Their Financial
Stability and the National Economy.

The lack of adequate, affordable health
insurance profoundly affects both the financial
mobility and stability of pre-Medicare adults and, in
turn, the national economy. Many pre-Medicare
workers who relied on employer-sponsored health
insurance did not leave their jobs, switch jobs, reduce
their hours, or retire for fear that they would lose

14

and be unable to regain affordable health benefits.
See Richard W. Johnson et al., AARP Pub. Policy
Inst., Older Workers on the Move: Recareering in
Later Life at x, 10, 18 (2009) (“Nearly a quarter of
career changers lose health insurance when they
change jobs; only about 10 percent gain insurance.”);
see also Sara R. Collins et al., The Commonwealth
Fund, Help on the Horizon: How the Recession Has
Left Millions of Workers Without Health Insurance,
and How Health Reform Will Bring Relief 3 (2011)
[Help on the Horizon] (nearly three fifths of adults 18
to 64 who lost employer health benefits became
uninsured). Chronically ill workers, who are more
likely to be older workers, were 40% less likely to
leave their jobs if they had employer-sponsored
health insurance compared to those who did not rely
on such coverage. Kevin T. Stroupe et al., Chronic
Illness and Health Insurance-Related Job Lock, 20 J.
Policy Analysis & Mgmt. 525, 525 (2000). Many
older workers eligible for Medicare needed to
maintain health coverage for a younger spouse or
dependent child and were deterred from retiring or
reducing their work hours. See Sid Groememan,
AARP, Staying Ahead of the Curve 2007: The AARP
Work and Career Study 23 (2008) (finding that 47%
of workers 62 to 74 cited the “need to maintain
health insurance” as a reason to continue working).
The Congressional Budget Office (CBO) projected a
decrease in the number of work hours inversely
related to the availability of subsidies on the
Exchanges, suggesting that the availability of
affordable health insurance will increase labor
market mobility. See Cong. Budget Office, Labor
Market Effects of the Affordable Care Act: Updated

15

Estimates, in The Budget and Economic Outlook:
2014 to 2024 at 121 (2014).

Health care costs were financially debilitating
for those with inadequate or no health insurance.
See, e.g., Karen Pollitz et al., Kaiser Family Found.,
Medical Debt Among People with Health Insurance
12, 19 (2014) (profiling a 5l-year-old man with
household income below 400% of Federal Poverty
Level (FPL)5 and high insurance premiums that
contributed to his bankruptcy). The median pre-
Medicare household with a recently ill and uninsured
member lost between 30 and 50% of its assets.
Keziah Cook et al., Does Major Illness Cause
Financial Catastrophe? 45 Health Servs. Res. 418,
419 (2010). More than two thirds of pre-Medicare
adults who participated in the individual insurance
market paid more than 10% of their income to
medical costs. What’s at Stake, supra, 2 tbl. 1. One
study estimated that 29 million people used all of
their savings on medical expenses. Help on the
Horizon, supra, 12. Another 22 million were unable
to pay for basic necessities such as rent, food, and
utilities due to medical bills. Jd.

These health-care-related financial burdens
severely hampered’ retirement security for
individuals and hurt the national economy as well.

5 The Federal Poverty Level is set by guidelines based on
poverty thresholds and used to determine eligibility for certain
federal programs. U.S. Dep’t of Health & Human Servs., Office
of the Assistant Sec. for Planning and Evaluation, Further
Resources on Poverty Measures, Poverty Lines, and Their
History, http://goo.gl/Y Yn¢xA (last visited Jan. 28, 2015).

16

In 2012, there were 6.3 million adults ages 65 and
older living at or near the FPL. See U.S. Dep't of
Commerce, U.S. Census Bureau, Income, Poverty and
Health Insurance Coverage in the United States:
2012, at 14 (2013) [Poverty] (3.9 million living at or
below the FPL); U.S. Dep’t of Commerce, U.S. Census
Bureau, Living in Near Poverty in the United States:
1966-2012, at 19 (2014) [Near Poverty] (2.4 million
living between 100% and 125% of the FPL). The
number of older adults living in financial insecurity
is likely higher because the factors considered to
calculate the FPL, developed 40 years ago, do not
take into account a number of relevant measures of
economic wellbeing such as health care costs, which
increase as one ages. See Poverty, supra, 20-21
(finding that15.3 million additional people over 65
would be in poverty if social security payments were
not counted as income); Dale H. Yamamoto, Soc’y of
Actuaries, Health Care Costs From Birth to Death i
(2013) (finding that health care costs increase with
age). National budget deficits are worsened when
lower-income pre-Medicare adults use a large share
of their income on rising health care expenses, retire
without savings, and find they must turn to
government assistance to meet housing, food, and
utility needs. See Near Poverty, supra, 15 fig. 9
(detailing the rates at which people in and near
poverty received public assistance in 2012).

17

II. The Central and Overarching Purpose of
the ACA is to Make Health Insurance and,
Thus, Health Care Affordable to All.

The central and overarching purpose of the
ACA was to address the complex problems described
above by making health insurance and, thus, health
care accessible and affordable to all. Congress clearly
expressed this purpose in the text of the Act.
Moreover, Congress made policy choices in the Act
that were clearly intended to effectuate this purpose
and thereby reduce the staggering burdens of lack of
affordable insurance on the uninsured, the health
care system, federal spending programs, and the
national economy. Congress understood that health
insurance affordability could only be achieved by
significantly expanding and_ diversifying’ the
population of insured individuals. Thus, many key
provisions of the ACA, including those that authorize
premium tax credits, are designed to encourage more
Americans of varying health statuses to obtain
health insurance. Petitioners acontextual
interpretation of a single phrase in one provision of
the Act, which is only used to calculate the amount of
the premium tax credit, by contrast, would have the
opposite effect: discouraging participation in the
insurance marketplace and raising costs.

A. Congress Clearly Expressed the
Purpose of the ACA in Its Text.

The purpose of the ACA, as expressed by
Congress in its text, is to achieve “near-universal
coverage” and “lower health insurance premiums.”

18

42 U.S.C. § 18091(2)(D), (1) (2012); see also Nat’
Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2580
(2012) (purpose of the Act is “to increase the number
of Americans covered by health insurance and
decrease the cost of health care”). The name of the
Act—the “Patient Protection and Affordable Care
Act”—reflects the purpose of the legislation, as do the
names of the Titles of the ACA. See Pub. L. 111-148,
§ 1, 124 Stat. 119, 119 (2010). As one District Court
noted, “Title 1 of the ACA is titled ‘Quality,
Affordable Health Care for All Americans.” Halbig
v. Sebelius, Civ. No. 13-0623 (PLF), 2014 U.S. Dist.
LEXIS 4853, at *55 (D.D.C. Jan. 15, 2014).

B. Congress’ Chosen Policies Were
Specifically Designed to Work
Together to Achieve the Goal of
Making Health Insurance Accessible
and Affordable to All.

Congress chose to accomplish “near universal
coverage” and “lower health insurance premiums’
through a series of statutory requirements that,
working together, make coverage affordable and
accessible to everyone. See 42 U.S.C. § 18091(2)
(2012). The ACA reduces the number of uninsured
by establishing incentives for individuals, states, and
employers to participate in the insurance markets
and provide insurance coverage. The Act also
increases access to health insurance in the individual
market through guaranteed issue provisions, rating
limitations, and the individual mandate. Together,
these provisions improve affordability because they
ensure that the insurance risk pool is larger and

19

more diverse, and, in doing so, keep premiums down.
Finally, the ACA makes insurance more affordable
for low- to moderate-income individuals through tax
credits to lower the cost of premiums and cost-
sharing reductions to assist with out-of-pocket costs.

1. The ACA Encourages Employers to
Offer Adequate, Affordable Health
Insurance.

Employer-based insurance is the traditional
backbone of the American health insurance system
where most adults purchase coverage. Yet, in 2012,
10.8 million older workers did not have access to
employer-based insurance, and 5.9 million of those
workers were not able to obtain coverage from
another source. Effect of Health Reform, supra, 3 tbl.
2. The ACA addresses this problem by encouraging
employers to offer health insurance. The Act imposes
a shared-responsibility requirement on large
employers, who now face a tax penalty if they do not
offer adequate and affordable insurance to their full-
time employees. See 26 U.S.C. § 4980H(a) (2012)
(penalizing large employers who do not offer
affordable minimum coverage to employees); 26
U.S.C. § 36B(c)2)(C)G@dID (2012) (employer-
sponsored coverage is unaffordable if the employee's
share of the premium for self-only coverage is more
than 9.5 percent of his or her household income); 26
U.S.C. § 4980H(b)-(d) (2012) (employer is penalized
after verification that it did not offer insurance that
meets the defined affordability and adequacy
standards). Small employers are also encouraged to
provide health benefits to their employees through

20

the Small Business Health Options Program, which
is designed to increase their buying power on the
group market by making tax credits available. See
42 U.S.C. § 18031(b)(1)(B) (2012); 26 U.S.C. § 45R
(2012) (small businesses are eligible for tax credits
for health insurance expenses when low-wage
workers buy health insurance through the Program).

2. The ACA Encourages Individual
Participation in, and Improves
Access to, the Individual Market.

For those without employer-sponsored
insurance, the ACA eliminates or significantly
reduces the barriers that many pre-Medicare adults
previously faced in accessing affordable health
insurance in the individual market. See, supra, Part
I.B.; What’s at Stake, supra, 5. The Act bans
insurers’ practice of cancelling the policies of people
who became ill and requires insurers to “accept every
employer and individual in the State that applies for

coverage,” regardless of preexisting conditions.
42 U.S.C. § 300gg-1(a); accord 42 U.S.C. § 300gg—12
(2012). New rating limitations prohibit insurers from
charging differential premiums based on health
status. 42 U.S.C. § 300gg(a)(1)(A)-(B) (2012).
Though insurers may still use age-rating, premiums
for older adults may not be more than three times the
amount of the premium for a younger adult. 42
U.S.C. § 300gg(a)(1)(A) Gus) (2012).

To ensure that the insurance market can cover
the risk of insuring more people with health
conditions, the individual mandate ensures that

21

healthy people participate by requiring most people
to purchase insurance and maintain minimum health
coverage. 26 U.S.C. § 5000A(a) (2012). Between
guaranteed issue provisions, rating limitations, and
the individual mandate, the ACA seeks to create
“effective health insurance markets in which
improved health insurance products can be sold”
by broadening the risk pool to include people of
varying health statuses. 42 U.S.C. § 18091(2)(I)
(2012).

3. The ACA Makes Health Insurance
in the Individual Market More
Affordable.

In addition to reducing barriers to access, the
ACA makes health insurance on the individual
market more affordable through two principal forms
of direct financial assistance to qualified individuals
buying coverage offered on the Health Insurance
Exchange/Marketplace: tax credits to reduce
premium costs for people with incomes between 100
and 400% of the FPL, 26 U.S.C. § 36B(b)(3)(A), and
cost-sharing reductions for out-of-pocket expenses for
people with incomes below 250% of the FPL, 42
U.S.C. § 18071(c)(2). These forms of assistance were
designed to encourage low- to moderate-income
adults to purchase insurance rather than seek the
unaffordability exemption or pay the_ shared

6 Adults 30 years of age and under and those who demonstrate
they cannot afford coverage have the option to purchase
catastrophic coverage, and everyone has the option of paying a
tax in lieu of purchasing coverage. See 42 U.S.C. § 18022(e)
(2012); 26 U.S.C. § 5000A(c) (2012).

22

responsibility tax.?7 H.R. Rep. No. 111-443, vol. 1, at
250 (2010) (premium tax credits “are key to ensuring
people affordable health coverage”). In 2012, about 2
million people ages 50 to 64 that were in the
individual market and more than 5 million who were
uninsured could qualify for premium tax credits for

individual coverage purchased on the Exchange.
Effect of Health Reform, supra, 7.

4. The ACA Encourages States to
Expand Medicaid Coverage for
Low-Income Adults Who May Be
Exempt From the Individual
Mandate.

While individuals who cannot afford coverage
even with the aid of premium tax credits are exempt
from the individual mandate, 26 U.S.C.
§ 5000A(e)(1), states may expand their Medicaid
programs so that lower income people are eligible for
public insurance under the ACA. 42 U.S.C.
§1396a(a)(10)(A) (i)(VIII) (2012). Prior to the ACA,
low-income adults without dependent children were
not eligible for Medicaid in most states unless they
had a disability. Beginning in 2014, adults in this
category whose incomes are at or below 138% of
federal poverty will be eligible for Medicaid if their
state chose to participate in this expansion. 42
U.S.C. § 1396d(y) (2012); Nat'l Fed’n of Indep. Bus.,

7 In 2014, the tax is the lesser of $95 or 1% of taxable income.
26 U.S.C. § 5000A(c)(2)(B)(a), (c)(3)(B) (2012). In 2016, the tax
increases to $695 or 2.5% of taxable income. Id. § 5000A(c)(2)
(B)(ii1), (c)(3)(D) (2012).

23

132 S. Ct. at 2607 (making Medicaid expansion a
state option).

Currently, 28 states and the District of
Columbia have chosen to expand Medicaid eligibility
under the ACA. State Decisions, supra. Those living
between 100 and 138% of poverty in states that do
not expand may purchase coverage on the Exchanges
and qualify for premium tax credits and cost-sharing
reductions. 26 U.S.C. § 36B(b)(3)(A) (2012); 42
U.S.C. § 18071(c)(2) (2012). About 1.3 million low-
income pre-Medicare adults who did not have
employer-sponsored health insurance in 2012 had
incomes between 100 and 138% of poverty. Effect of
Health Reform, supra, 7 fig. 2. These low-income pre-
Medicare adults could qualify for Medicaid or, if their
state of residency is not expanding Medicaid
eligibility, for tax credits on the Exchanges.

Considering the reforms discussed ahove (and
others not discussed here), the CBO and Joint
Committee on Taxation project that by 2025, 27
million more people under the age of 65 will have
insurance coverage than would have had without the
ACA. Cong. Budget Office, Jnsurance Coverage
Provisions of the Affordable Care Act—-CBO's
January 2015 Baseline, tbl. B-2 (2015) [CBO January
2015 Baseline]. These gains in coverage represent a
9.4% decrease in the uninsured rate due to ACA
reforms, the vast majority of which will result from
insurance purchases on the Exchanges. Id. (24
million will be insured through purchases on the
Exchanges and 16 million through Medicaid and
CHIP).

24

IV. Premium Tax Credits Were Meant to
Incentivize Individuals, Not States.

The text and structure of the ACA support the
conclusion that premium tax credits were provided to
incentivize individuals to participate in the
individual health insurance market, not to
incentivize states to establish Exchanges. Like the
individual mandate and the federal tax enforcing it,
see 26 U.S.C. § 5000A(b), premium tax credits are
directed at individuals and enforced through federal
mechanisms. The amount of the credit depends on
the individual's household income. 2a US.C.
§ 36B(b)(3)(A)G) (2012). Additionally, premium
credits are available as an advance payment to the
individual or are payable directly to the individual's
insurer as a refundable federal income tax credit. 26
U.S.C. § 36B(f) (2012); 42 U.S.C. § 18082(c) (2012).

Petitioners cite no credible authority for their
proposition that Congress intended to use premium
tax credits to “induce states to act” to establish
Exchanges. Pet’rs’ Br. 40-41. Instead, Petitioners
argue that “legislative history is irrelevant” because
the text that they allege limits premium tax credits is
“piain” and “causes [no] objective absurdity.” Pet’rs’
Br. 39 (emphasis removed). One claim begs the
question and the other based on faulty premises.
Petitioners read four words in the Act out of context
(ignoring various provisions that give additional
meaning to these words) and in doing so create the
most absurd result—dismantling the very reforms
that the Act was written to effectuate. See infra
Parts V and VI. Additionally, Petitioners speculate

25

that there was little discussion of Federally
Facilitated Exchanges in the legislative record “likely
because the consensus was that states would
establish their own.” Pet’rs’ Br. at 40 (emphasis
added). But such speculation is unnecessary when
one considers the detailed provisions in the Act
regarding the operation of Exchanges, as they show
that Congress structured the Federally Facilitated
Exchanges to function in the same way as the State-
established Exchanges, including the function of
pricing premiums based on income qualification for
premium tax credits. See 42 U.S.C. § 18041(c)(1)
(2012) (directing the Secretary of HHS to “establish
and operate such Exchange” if the state failed to do
so) (emphasis added); § 18031(d)(4) (detailing the
minimum functions of “[aJn Exchange,” including
electronic calculation of the actual cost of coverage
after the application of premium tax credits and cost-
sharing reductions); see also Resp’ts’ Br. 25.

Finally, Petitioners claim that “what history
does exist” supports their argument that Congress
intended to use premium tax credits to induce states
to establish Exchanges. Pet’rs’ Br. 41. But this one-
sided view of “history” is incomplete and out of
context. The cited draft proposal of the Health
Education Labor and Pensions Committee, S. 1679,
explicitly stated that, as a condition of eligibility for
tax credits, states must establsh their own
Exchanges. S. 1679, lllth Cong. § 3104(a), (d)
(2009). In contrast, the ACA does not contain such
an expressly confining condition. Petitioners suggest
that the ideas in the S. 1679 proposal were borrowed
from Timothy S. Jost. Pet’rs’ Br. 41. However, they

26

fail to point out that, in the cited article, Professor
Jost also made two other suggestions of how
Congress could tincentivize states to establish
Exchanges, that these other suggestions do not
condition tax credits on the establishment of state
Exchanges, and that these other suggestions do
appear in the text of the ACA. See Timothy S. Jost,
Health Insurance Exchanges: Legal Issues 7 (2009)
(“Congress could invite state participation in a
federal program, and provide a federal fallback
program to administer exchanges in states that
refused to establish complying exchanges [or
offer] explicit payments to states that establish
exchanges conforming to federal requirements.”); cf.
42 U.S.C. §§ 18041(c) (2012) (providing a federal
fallback program to administer exchanges in states
that refuse to establish their own), 18031(a)

(providing grants to states that establish their own
exchanges).

In the end, what the history shows is that a
proposal to condition premium tax credits on states
establishing Exchanges never made it out of
Committee, but the idea of establishing federal
fallback Exchanges that would function in the same
way as State Exchanges was enacted into law.®

8 Though Jonathan Gruber’s statements of opinion made after
the passage of the ACA are no evidence of Congressional! intent,
Petitioners rely on these statements to support their claim that
Congress intended to use premium tax credits to incentivize
states to establish Exchanges. Pet’rs’ Br. 4-5, 42-43. Not only is
their reliance on these statements inapposite, but the
statements were taken entirely out of context and, thus, do not
support the argument. To ensure that his comments were
interpreted in the relevant contemporaneous context, Gruber

27

Congress may have created other incentives for
states to establish Exchanges, see, e.g., 42 U.S.C. §
18031(a) (authorizing federal grants to states), but

the individual premium tax credit is not one of those
incentives.

V. Premium Tax Credits are Essential to the
Act’s Primary Purpose—Achieving Access

and Affordability for All.

Analysis of the available data on insurance
purchases on the Exchanges coupled with analyses of
the potential effects of eliminating premium tax
credits in the 34 states with Federally Facilitated
Exchanges confirm what Congress knew when it
structured the ACA’s interlocking reforms: premium
tax credits are essential to achieving the Act's
primary purpose of achieving access and affordability
for all. If premium tax credits become unavailable in
the Federally Facilitated Exchanges, health
insurance will once again become unaffordable for

testified that he was referring to “the possibility that the federal
government, for whatever reason, might not create a federal
exchange. If that were to occur, and only in that context, then
the only way that states could guarantee that their citizens
would receive tax credits would be to set up their own
exchanges” Jonathan Gruber, Written Testimony of Professor
Jonathan ruber before the Committee on Oversight and
Governmen. Reform, U.S. House of Representatives, December 9,
2014, at 2 (2014), http://goo.gl/nlIXHpO; see also Jonathan
Gruber at Noblis, at %31:26-32:23, Jan. 18, 2012,
http://goo.gVIkNrFs (including portion of video omitted from
Petitioners’ citation). If the Court is inclined to consider Mr.
Gruber’s opinion, it sheuld consider his full opinion as expressed
in sworn testimony.

28

millions in the private individual market including
those who do not qualify for premium tax credits—
drastically reducing access and affordability for all.

A. If Premium Tax Credits Are
Eliminated on the Federally
Facilitated Exchanges, Health
Insurance Will, Once Again, Become
Unaffordable and Inaccessible for
Millions of Low- to Moderate-Income
Americans.

1. Those Who Qualify for Premium
Tax Credits Will Find Insurance
Unaffordable and Become
Uninsured.

Millions would lose premium tax credit
assistance and become uninsured if the Court accepts
the Petitioners’ acontextual interpretation of the Act.
In the initial 2014 enrollment period, 4.7 million
(86%) of those who selected a plan via Federally
Facilitated Exchanges did so with premium tax credit
assistance. U.S. Dep’t of Health & Human Servs.,
Health Insurance Marketplace: Summary Enrollment
Report for the Initial Annual Open Enrollment
Period: October 1, 2013 -- March 31, 2014, at 19
(2014) [Initial Enrollment Report),
http://goo.gl//w1B1S5.9 During the first two months of

9 Over 6.6 million people qualified for premium tax assistance
on all the Exchanges, surpassing the CBO’s estimate by 1.6
million. Jnitial Enrollment Report, supra, 19; Cong. Budget
Office, Updated Estimates of the Effects of the Insurance
Coverage Provisions of the Affordable Care Act, April 2014 at 10

29

the 2015 open enrollment period, another 6.1 million
(87%)! of those who selected a plan on the Federally
Facilitated Exchanges qualified for premium tax
credits. See U.S. Dep’t of Health & Human Servs.,
Health Insurance Marketplace 2015 Open Enrollment
Period: January Enrollment Report For the Period:
November 15, 2014 — January 16, 2015, at 3, 25-26
tbl. B4 (2015) [2015 Open Enrollment January
Report], http://goo.gl/P1D 112.

Because 2015 open enrollment is ongoing and
because the availability of tax credits affects market
competition and affordability on the Exchanges,
various studies have attempted to mode! the effects
of losing premium tax credits in the 34 states with
Federally Facilitated Exchanges based on available
data and other assumptions. One such study
concluded that an estimated 9.3 million people will
lose premium tax subsidies in 2016. Linda J.
Blumberg, et al., Urban Inst., Characteristics of
Those Affected by a Supreme Court Finding for the
Plaintiff tn King v. Burwell 2 (2015) [Characteristics

tbl. 3 (2014). The CBO did not differentiate between State
Exchanges and Federally Facilitated Exchanges.

10 This percentage was calculated for 37 states to include the
three states that have State Exchanges but use the
Healthcare.gov platform (Nevada, New Mexico, and Oregon).
See 2015 Open Enrollment January Report, supra, 3, 25-26 tbl.
B4. When one excludes enrollment in those states, the
percentage remains the same. Jd. The 6.1 million figure also
excludes those three states. Id.

30

of Those Affected}.'1 Of those, two thirds will become
uninsured. Jd. 2-3. The 1.1 million who are in the
lowest income bracket for tax credit eligibility—100
to 138% FPL—will be most adversely affected when
they become uninsured, as they are living in states
that did not expand Medicaid eligibility under the

ACA and thus will not have other alternatives for
affordable coverage. Id. 3-4 tbl. 1.

2. The Effectiveness of the Individual
Mandate in Increasing and
Diversifying the Insurance Risk Pool
Will Be Significantly Hampered,
Making Health Insurance Less
Affordable for Everyone in the Private
Individual Insurance Market.

The function of the individual mandate, to
increase the number of insured, would be

\\ “Estimates presented in this analysis reflect effects at a point
in time, and therefore understate the number of people who
would be affected over the course of a year and over multiple
years...... Id. Though the long-term effects of eliminating tax
credits on the Federally Facilitated Exchanges are nearly
impossible to predict, there are some projections that shed light
on the magnitude of the potential impact. See eg., CBO
January 2015 Baseline, supra, tbl. B-3 (not differentiating
between State and Federally Facilitated Exchanges, the CBO
projected that by 2018, 19 million will purchase insurance on
the Exchanges with the assistance of premium tax credits);
Kaiser Family Found., Marketplace Enrollees Eligible for
Financial Assistance as a Share of the Subsidy-Eligible
Population, April 2014 (Apr. 19, 2014), http://goo.gVEQ4iAZ
(last visited Jan. 28, 2015) (an additional 10.5 million people
qualified for tax credits during the 2014 open enrollment penod,
but did not enroll).

31

significantly weakened if premium tax credits were
eliminated in states with Federally Facilitated
Exchanges. Insurance premiums will become
unaffordable for millions who may then qualify for
the unaffordability exemption to the individual!
mandate or may opt to pay the tax penalty for
choosing to forgo coverage. See 26 U.S.C. §
5000A(e)(1)(A) (2012) (exempting individuals from
obtaining coverage when the cost of coverage exceeds
8% of household income); see also 26 U.S.C. §
5000A(c) (providing the tax penalty amounts for not
purchasing coverage). Though some of those loosing
tax credits would retain health insurance, either at
higher premium prices or through alternative
methods of gaining coverage (e.g., post-retirement
employment to gain employer-based coverage),
almost all of them (99%) would face premiums in the
individual market deemed unaffordable under the
ACA. See Characteristics of Those Affected 3, 7; see
also 26 U.S.C. § 5000A(e)(1)(A); 2015 Open
Enrollment January Report 22-24 tbl. B38 (96% of
those who applied for coverage were eligible for
premium tax credits).

Most of those who would become uninsured if
premium tax credits were eliminated reported being
in excellent, very good, or good health.
Characteristics of Those Affected 3, 6 (90.3% of those
losing tax credits and 92.1% of those with higher
incomes and ineligible for tax credits reported good or
better health). Consequently, these healthy people
are less likely to retain insurance that is significantly
more expensive. Id. 3 (67.9% of those in good or
better health will drop coverage compared to 58.2% of

32

those in fair or poor health). Without the ability to
attract more healthy people to the insurance risk
pool in states with Federally Facilitated Exchanges—
as tax credits currently do by reducing premiums by
an average of 76%—there would be fewer insurance
providers in the individual market thus reducing
competition and increasing premiums. See Amy
Burke et al., U.S. Dep’t of Health & Human Servs.,
Premium Affordability, Competition, and Choice in
the Health Insurance Marketplace, 2014, at 2, 17-18
(2014). Premiums may increase by 35 to 47 percent.
Evan Saltzman & Christine Eibner, Rand Corp., The
Effect of Eliminating the Affordable Care Act’s Tax
Credits in Federally Facilitated Marketplaces 2
(2015) [The Effect of Eliminating Tax Credits];
Characteristics of Those Affected, supra, 3. This
effect will be more pronounced in states that use
Federally Facilitated Exchanges because those states
have higher proportions of low-income residents, had
higher rates of uninsured residents pmor to
implementation of the ACA, and most did not pursue
Medicaid Expansion under the ACA. Id. 6.

The rising costs of health insurance premiums
will affect everyone in the individual market—in
State Exchange markets, in plans sold outside of the
Exchanges, and even for those who have higher
incomes that make them ineligible for tax credits.
One study estimated that changes in premium prices
would make 3% of those who purchased health
insurance on the State Exchanges eligible for the
unaffordability exemption to the individual mandate.
Larry Levitt & Gary Claxton, Kaiser Family Found.,
The Potential Side Effects of Halbig (Jul. 31, 2014),

33

http://goo.g/GECcHt. Another study found that
“fejnrollment in the ACA-compliant individual
market, including plans sold outside of the
marketplaces that comply with ACA regulations,
would decline by 9.6 million.” The Effect of
Eliminating Tax Credits, supra, 2. Others have
estimated that 1.2 million people who would pay full-
price for their premiums will be uninsured because
premiums will become unaffordable. Characteristics
of Those Affected, supra, 3.

3. Coverage Losses in Public and
Group Insurance Markets Will
Undermine the Goal of Near-
Universal Coverage.

Not surprisingly, eliminating tax credits that
are so central to affordability and access—and thus
to achieving near-universal coverage—in_ the
individual insurance market will impact other
insurance markets as well. A sort of “reverse wood-
work” effect will occur when people who would
otherwise go to Federally Facilitated Exchanges to
investigate whether they are eligible for tax credits
no longer do so and, in the process, forgo discovering
that they and/or their family members are eligible for
publicly-funded insurance. /d. at 6 (estimating that
445,000 individuals fall into this’ category).
Additionally, changes in nongroup'- insurance
premiums will affect decisions about whether to offer
and accept employer-based group coverage. /d.
(estimating that 300,000 individuals fall into this
category). Taking all of these effects into
consideration, by one estimate, the number of

34

uninsured people would increase by 8.2 million in
2016. Id.

B. Eliminating Premium Tax Credits on
the Federally Facilitated Exchanges
Will Disproportionately Impact Low-
to Moderate-Income Pre-Medicare
Adults.

Older adults comprise nearly half of those who
enrolled for individual health insurance coverage
through Federally Facilitated Exchanges. Initial
Enrollment Report, supra, 20 tbl. B1 (22% ages 45 to
54 and 25% ages 55 to 64); 2015 Open Enrollment
January Report, supra, 12 tbl. Al (22% ages 45 to 54
and 27% ages 55 to 65). Premium tax credits will be
especially important to pre-Medicare adults, given
their historic difficulty accessing affordable coverage.
For example, one study estimates that tax credits
will reduce the cost of monthly premiums by $433
(69%) for a Silver Plan for a 60-year-old with income
at 250% of the FPL in Indianapolis, Indiana (a state
with a Federally Facilitated Exchange). See Cynthia
Cox et al., Kaiser Family Found., An Early Look at
Premiums and Insurer Participation in Health
Insurance Marketplaces, 2014, at 6 (2013). Without
premium assistance, this 60-year-old could pay $626
per month for this plan, representing 26% of her
monthly income.!2 Given the high cost of insurance
relative to income, this 60-year-old may opt to forgo

12 Two hundred and fifty percent of the FPL in 2013, when this
study was conducted, is an annual income of $28,725 and a
monthly income of about $2,394. See Annual Update of the
HHS Poverty Guidelines, 78 Fed. Reg. 5,183 (Jan. 24, 2013).

35

health insurance altogether and seek an affordability
exemption. See 26 U.S.C. § 5000A(e)(1)(A) (the
unaffordability exemption is available when the cost
of coverage exceeds 8% of household income). This
example illustrates that, for low- to moderate-income
people, assistance with their premiums will be the
difference between coverage that is affordable and
coverage that is out of reach. Indeed, 38.5% of those
who would lose tax credits and become uninsured are
between the ages of 45 and 64, a rate higher than
any other age group. See Characteristics of Those
Affected, supra, 2, 4 tbl. 1.

VI. Eliminating the Availability of Premium
Tax Credits in 34 States Will Cannibalize
the Act’s Key Reforms and Jeopardize
Lives.

The availability of premium tax credits in all
states is essential to achieving the ACA’s central
purpose. This is evident not only from the effect that
the elimination of premium tax credits has on
affordability, both in terms of individual affordability
and the overall effect it has on premium prices in the
insurance markets, but also from the effect it has on
many other reforms central to the ACA.

A. Eliminating the Availability of
Premium Tax Credits in 34 States Will
Render Other Interconnected ACA
Reforms Meaningless.

All other ACA reforms designed to make
coverage more accessible, such as the guaranteed

36

issue provisions and limitations on age rating, will be
meaningless to those who cannot afford the
premiums. See supra Parts III.B.1-3. Moreover,
eliminating assistance with premiums in the 22
states with Federally Facilitated Exchanges that are
also not expanding Medicaid eligibility means that
low-income residents in these states will not have
new options for affordable coverage. See supra Parts
11.B.4 and V.A.1; see State Decisions, supra.
Additionally, according to Petitioners’ interpretative
theory, employers in 34 states would be able to evade
the employer mandate simply because their state
chose not to establish its own Exchange—thus
eliminating another important reform designed to
increase access to affordable care. See supra Part
I1I.B.1. It is implausible, to say the least, that
Congress intended to allow the entire Act to be
cannibalized by a state’s choice not to establish its
own Exchange.

B. Premium Tax Credits, and the ACA,
Have Saved the Lives of Pre-Medicare
Adults Who Were Previously
Uninsured, Underinsured or Denied
Adequate, Affordable Health
Insurance Due to Their Age or
Preexisting Conditions.

Premium tax credits don’t just make insurance
affordable and make other ACA reforms work—they
save lives. Among the pre-Medicare adults who
credit the ACA with saving their lives is Lisa Gray, a
62-year-old small business owner in Alexandria,
Virginia, who obtained affordable coverage just in

37

time to receive the treatment that eradicated a rare
leukemia discovered during an unrelated visit to the
emergency room. See Noam N. Levey, Obamacare’s
Guaranteed Health Coverage Changes Lives in First
Year, LA Times, Jan. 4, 2015, http://goo.gl//AqDqQ3.
Like many pre-Medicare adults prior to the
implementation of the ACA, Lisa bought an
expensive insurance plan on the individual market
that did not provide sufficient coverage. She was
paying $1,095 per month in premiums, but her plan
covered only $1,500 of the $6,809 monthly cost of the
life-saving oral chemotherapy that her doctor
prescribed. Jd. Though she tried desperately to find
a way to pay for the drug, she earned too much to
qualify for public insurance or the assistance
programs offered by drug companies, and she could
not seek another insurer because she would be
denied coverage due to her preexisting condition. Id.
After months of finding ingenious ways to finance her
treatment or sometimes suffering the consequences
of going without it, she finally obtained health
insurance through Healthcare.gov for $315 less in
premiums and only $30 per month co-pay for her
prescription. Jd. Lisa was now able to afford the
drug that her doctor prescribed and within nine
months her biopsy showed no signs of leukemia. Id.

The life-saving power of affordable health
insurance does not discriminate based on politics or
ideology. Dean Angstadt—a 57-year-old, self-
employed logger who self-insured and who opposed
the ACA—personally experienced that power when
he enrolled for health insurance’ through
Healthcare.gov just in time to have the aortic valve

38

replacement surgery that he could not afford and
that saved his life. See Robert Calandra, Once
Opposed to ACA, Now a Convert, Philadelphia
Inquirer, Apr. 28, 2014, http://goo.gl//D48Cgt. His
first monthly premium was only $26.11. Jd. As
someone who had the ability to obtain affordable,
life-saving health insurance with the assistance of
premium tax credits in a state with a Federally
Facilitated Exchange, and commenting on the politics
surrounding the ACA, Dean stated: “From my own
experience, the ACA is everything it’s supposed to be
and, in fact, better than it’s made out to be.” 7d.
Though some who are politically opposed to the ACA
question whether saving lives is worth the cost, that
cost-benefit analysis was rightfully done by Congress.
See, e.g., Michael F Cannon, New Study Suggests
RomneyCare Saved Lives, But at a Very High Cost,
Forbes, May 5, 2014, http://goo.gl/FyRrOW. Congress
decided to provide federal tax assistance to low- to
moderate-income people in order to effectuate the
purpose of the Act to make affordable, lifesaving,
health insurance accessible to all—not just to those
whose state leaders share their political views.

CONCLUSION

Premium tax credits are critical to ensuring
that all Americans, and in particular pre-Medicare
adults, have access to adequate, affordable health
insurance, and thus health care. Reading the ACA to
limit premium tax credit eligibility only to people
who live in states that operate an Exchange will
make insurance unaffordable and inaccessible to
millions of low- to moderate-income Americans in the

39

34 states with Federally Facilitated Exchanges and
even to those who do not qualify for the tax credits,
will cannibalize the Act’s key reforms, and will put
countless lives in jeopardy—results that are plainly
contrary to the purpose the ACA. Because
Petitioners’ limitation on the availability of premium
tax credits would “bring about an end completely at
variance with the purpose of the statute,” it must be
rejected. United Steelworkers v. Weber, 443 U.S. 193,
202 (1979) (statutory prohibition on discrimination
“because of race” did not prohibit voluntary race-
based affirmative action). The Fourth Circuit Court
of Appeals’ ruling should be affirmed.

JANUARY 2015. Respectfully submitted,

Stuart R. Cohen

Counsel of Record

Iris Y. Gonzalez

AARP Foundation Litigation
601 E Street, NW
Washington, DC 20049
(202) 434-2060
scohen@aarp.org

Jane Perkins

National Health Law Program
101 E. Weaver St., Suite G-7
Carrboro, NC 27510

(919) 968-6308
perkins@healthlaw.org

Counsel for Amici

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0338%3A14. Public record. Not legal advice.