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

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No. 14-114

IN THE

supreme Court, U.S. 7}

FILED

JAN 2 8 208

OFFICE OF THE CLERK

RT, U.S.

Supreme Court of the United States

DAVID KING, ET AL.,

Petitioners,

SYLVLA 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 FOR THE AMERICAN ACADEMY OF

PEDIATRICS, AMERICAN ACADEMY OF FAMILY

PHYSICIANS, CHILDREN’S HEALTH FUND,

CHILDREN’S HOSPITAL ASSOCIATION, FIRST FOCUS,

MARCH OF DIMES, NATIONAL PHYSICIANS

ALLIANCE, AND INDIVIDUALS WITH PRE-EXISTING

MEDICAL CONDITIONS AS AM/CI CURIAE

IN SUPPORT OF RESPONDENTS

DANIELLE C. GRAY WALTER DELLINGER

O'MELVENY & MYERS LLP (Counsel of Record)

Times Square Tower wdellinger@omm.com

7 Times Square RAKESH KILARU

New York, N.Y. 10036 ——— D. oe

KARA ASON ZARRO

JOEL T penne O'MELVENY & MyeERS LLP

DAVID A. FRAZEE 1625 Eye Street, N.W.

BARNES & THORNBURG LLP aon bene 20006

11 South Meridian SAdesisedatiiiatn unl

Indianapolis, IN 46204 itted in California only

Attorneys for Amici Curiae

TABLE OF CONTENTS

Page

INTEREST OF AMICI CURIAE ....................00..cecce00. l

INTRODUCTION AND SUMMARY OF

gE alla aa Cree aby Sat oA a alacant SE te ]

i eae enaesduhslbeasbinardiannioxiecs 6

I. PETITIONERS’ CONSTRUCTION OF THE

ACA COULD DEPRIVE MILLIONS OF

CHILDREN OF INSURANCE COVERAGE

AND ACCESS TO AFFORDABLE

a I i cidaslasdadiavssircosteiesisbdashsinlsdubsagnentenante 6

A. For Almost Two Decades, CHIP Has

Provided Children From Low- And

Moderate-Income Families With Access

nn 6

B. The ACA Not Only Renewed CHIP, But

Took Steps To Make The Program

More Comnpreemaive ..........cccccccccccccc0c.cc0000 11

C. Petitioners’ Construction Of The

Phrase “Exchange Established By A

State” Contravenes Congressional In-

tent And Risks Depriving Millions Of

Children Of Access To Healthcare............. 13

Il. ELIMINATING TAX CREDITS FOR INDI-

VIDUALS IN FEDERAL EXCHANGE

STATES WOULD HAVE DEVASTATING

CONSEQUENCES FOR INDIVIDUALS

WITH PRE-EXISTING CONDITIONS. ........... 19

TABLE OF CONTENTS

(continued)

Page

A. Tax Credits For Low- And Moderate-

Income Americans Are An Essential!

Part Of The ACA’s Reforms To The In-

RR A At a Sate es inet ante wae nate 19

B. The ACA’s Successful Insurance Re-

forms Would Collapse If Petitioners

Ill. CHIP AND THE ACA’S INSURANCE RE-

FORMS HAVE ALLOWED CHILDREN

AND INDIVIDUALS WITH PRE-

EXISTING HEALTH CONDITIONS TO

Fy. ho hg eA 27

A. CHIP Has Provided Essential

Healthcare Coverage To Vulnerable

CE aR RE AE A cet aie cs BS eM re en 27

B. The ACA Has Allowed The Individual

Amici To Obtain Affordable Insurance

And Lifesaving Treatments For Their

Pre-Existing Medical Conditions ............... 29

Sr EIEN pisiecstinvendecvassosinpinlidientdseptimansinwhannuiinasiien 32

APPENDIX: LIST AND DESCRIPTION OF

PEE SPIE cnscciisicnsvincttaveonantinsidesevetcibaionseninnnianss la

TABLE OF AUTHORITIES

Page(s)

CASES

Halbig v. Burwell,

(Ue & Ti tee me CY | ee 14, 16

Nat Fed’n of Indep. Bus. v. Sebelius,

+e Be ye YE eee ee passim

Utility Air Regulatory Grp. v. EPA,

ee ae ee, ee er at 18

Whitman v. Am. Trucking Ass’ns,

ee ee, Se Bieta rccuhcdnecenivediccasatebinaaseeccsaana 18

STATUTES

tle Pod & Bien REE SES Eee nebo eet amie sebaten 21

eas We Se ciivckcnenistcacdniacocciabitaencdeiatacins l

CLS Lig tidak ait lanne aay Semremersien Taeet ee 21

oR Te 5 aot a Reena k tee Pee Pee re teu A 20

Se Sade RRR RA ae Pattee oa. ae atl, IE Se 20

PTE ce ye Cee itaeati nM ede Wel nt 20

a ea ctienccecconicodesncnesndtaibanaciibiareientvirs 20

42. U.S.C. § 1397ee(d)(3)(B).....ecceseeceeeeeeeees 2, 4, 13, 18

Patient Protection and Affordable Care Act,

Pub. L. No. 111-148, 124 Stat. 119................. 1, 21

LEGISLATIVE MATERIALS

The Affordable Health Care for America

Act, H.R. 3962, 111th Cong. (2009)............... 1, 18

153 Cong. Rec. $10,401 (July 31, 2007) ................... 28

153 Cong. Rec. $10,537 (Aug. 1, 2007)............... 27, 28

TABLE OF AUTHORITIES

(continued)

Page(s)

153 Cong. Rec. H11,471 (Oct. 10, 2007)................... 28

153 Cong. Rec. $12,835 (Oct. 15, 2007).................85. 28

155 Cong. Rec. $11,457 (Nov. 18, 2009)............... 4,15

156 Cong. Rec. H2207 (Mar. 22, 2010)................0.... 15

H.R. Rep. No. 111-443, 111th Cong.,

I, CN ne rch sous ts cctein cement eenescen 21

Patient Protection and Affordable Care Act,

H.R. 3590, 111th Cong. (Dec. 24, 2009).............. 12

S. Rep. No. 111-89, 111th Cong.,

a a ee red eh ale aoa 22

OTHER AUTHORITIES

All Kids Covered, CHIP Stories, available at

http://www.allkidscoveredcolorado.org/

issues-initiatives/chip-works/

SIRI, 5c suis calensvimsacduenancuciavavedensanicsvarcntesies 29

American Academy of Pediatrics, Children’s

Health Insurance Program (CHIP):

Accomplishments, Challenges, and Policy

Recommendations (Jan. 27, 2014),

available at http://pediatrics.aappub

lications.org/content/133/3/e784.full.pdf......... 9, 10

Linda J. Blumberg et al., Characteristics of

Those Affected by a Supreme Court

Finding for the Plaintiff in King v. Burwell

(Jan. 2015), available at http://www.urban.

org/UploadedPDF/20000 78-

Characteristics-of-Those-Affected-by-

BA IIIE wnsius onrsasenciicacyscninesssaseansescs 25, 26

TABLE OF AUTHORITIES

(continued)

Page(s)

Linda J. Blumberg et al., The Implications of

a Supreme Court Finding for the Plaintiff

in King vs. Burwell (Jan. 2015),

available at http://www.urban.org/

UploadedPDF/20000 62-The-Implications-

PARIS AT IGE. IE vivsviicnsdcsccsevasececesestsaeane ee 26

Amy Burke et al., ASPE Research Brief:

Premium Affordability, Competition, and

Choice in the Health [Insurance

Marketplace (June 18, 2014), available at

http://aspe.hhs.gov/health/reports/2014/pre

miums/2014mktplaceprembrf.pdf................. 22, 24

Center for American Progress, The Economic

Costs of Poverty in the United States:

Subsequent Effects of Children Growing

Up Poor (Apr. 2007), available at

http://www.irp.wisc.edu/publications/dps/.......... 16

Center on Budget Policy and Priorities,

CHIP’s Success Not an Argument for

Block-Granting Medicaid (June 28, 2011),

available at http://www.cbpp.org/files/

©-BD- 1 TORIC. WE viccsceikisiivsesccosconen dae 9, 11

Sara R. Collins et al., Gaining Ground:

Americans’ Health Insurance Coverage

and Access to Care After the Affordable

Care Act’s First Open Enrollment Period,

Commonwealth Fund (July 2014),

available at http://www.commonwealth

fund.org/~/media/files/publications/issue-

brief/2014/jul/1760_collins_gaining ground

_SPRCKINE _SUTVOY PGE 00s .ccesccsssisntsteessienemeneaeee 24

TABLE OF AUTHORITIES

(continued)

Page(s)

Congressional Budget Office, An Analysis of

Health Insurance Premiums Under the

Patient Protection and Affordable Care Act

(Nov. 30, 2009), available at http://www.

cho.gov/sites/default/files/1 1-30-

ato ccc caemennanptenusnseredensudcaversserreves 22

Congressional Budget Office, Key Issues in

Analyzing Major Health Insurance

Proposals (Dec. 2008), available at

http://www.cbo.gov/sites/default/files/

Department of Health & Human Services,

Annual Update of the HHS Poverty

Guidelines, 78 Fed. Reg. 5182

a ccendmndghansccsonssnccessoon 7

Department of Health and Human Services,

Open Enrollment Week 9: January 10,

2015 January 16, 2015 (Jan. 21, 2015),

available at http://www.hhs.gov/

healthcare/facts/blog/ 2015/0 1/open-

enrollment-week-nine. html .....................0..e000000 24

Families USA, CHIPRA 101: Overview of the

CHIP Reauthorization Legislation (Mar.

2009), available at http://familiesusa.org/

sites/default/files/product_documents/

I net cccscncceassunbenedbesibatioesesore 8,9

47 Million and Counting: Why the Health

Care Marketplace Is Broken: Hearing

Before the Senate Comm. on Finance,

110th Cong., 2d Sess. (2008) ................0...000-000000 20

vii

TABLE OF AUTHORITIES

(continued)

Page(s)

Georgetown University Health Policy

Institute, Center for Children & Families,

About CHIP, available at http://ccf.

georgetown.edu/ wp-content/uploads/20 1 2/

03/About-CHIP-20141.pdf ....................cccceeceeeesees 16

Georgetown University Health Policy

Institute, Dismantling CHIP in Arizona:

How Losing KidsCare Impacts A Child's

Health Care Costs (May 2014),

available at http://ccf.georgetown.edu/wp-

content/uploads/2014/05/Dismantling-

Ce i I iscsecncectisatesonssdcccscsssssarsiness 8, 18

Liz Hamel et al., Survey of Non-Group Health

Insurance Enrollees, Kaiser Family

Foundation (Jun. 19, 2014), available at

http://kff.org/health-reform/report/survey-

of-non-group-health-insurance-enrollees/.....23, 24

Health Insurance Marketplace: Summary

Enrollment Report for the Initial Annual

Open Enrollment Period, Department of

Health and Human Services (May 1, 2014),

available at http://aspe.hhs.gov/health/

reports/2014/marketplaceenrollment/

apr2014/ib_2014apr_enrollment.pdf................... 23

Health Reform in the 21st Century: Insurance

Market Reforms: Hearings before the

House Ways and Means Comm., 111th

emma. Bak TO, Cee eccncscecceescasesiceccescntavciereaneess 21

TABLE OF AUTHORITIES

(continued)

Page(s)

The Henry J. Kaiser Family Foundation,

Distribution of the Total Population by

Federal Poverty Level, available at

http://kff.org/other/state-indicator/

population-up-to-139-fpl/ .............. cece cee eseee eee eee 16

The Henry J. Kaiser Family Foundation,

Medicaid & Children’s Health Insurance

Program Provisions in Health Reform Bills

(Jan. 14, 2009), available at

https://www.aucd.org/docs/Medicaid%20

and %20the%20Children%27s%20

Health%20Insurance%20Program%20

Provisions%20in%20Health%20%20

RATERS SEN ER nee ele ree 12

The Kaiser Comm’n on Medicaid & the

Uninsured, Children’s Health Coverage:

Medicaid, CHIP and the ACA (Mar. 2014),

available at http://kff.org/health-reform/

issue-brief/childrens-health-coverage-

medicaid-chip-and-the-aca/ ..................... 6, 7, 8, 13

The Kaiser Comm’n on Medicaid & the

Uninsured, State Children’s Health

Insurance Program (CHIP):

Reauthorization History (Feb. 2009),

available at http://kaiserfamilyfoundation.

files.wordpress.com/2013/01/7743-02. pdf ........... 10

Kaiser Health News, Health Reform Sparks

Debate on Future of Children’s Health

Program (Nov. 18, 2009), available at

http://kaiserhealthnews.org/news/childrens

-health-insurance-program-chip? ........................ 12

TABLE OF AUTHORITIES

(continued)

Page(s)

Sharon K. Long et al., Taking Stock: Health

Insurance Coverage under the ACA as of

September 2014 (Dec. 3, 2014), available at

http://nrms.urban.org/briefs/Health-

Insurance-Coverage-under-the-ACA-as-of-

a are ay la Pe Ee ee 23

The Marfan Foundation, What Is Marfan

Syndrome? available at http://www.

marfan.org/about/marfan ...................0.cccccceeeeeeees 29

Mathematica Policy Research, CHIPRA

Mandated Evaluation of the Children’s

Health Insurance Program: Final

Findings (Aug. 1, 2014), available at

http://aspe.hhs.gov/health/reports/

2014/CHIPevaluation/rpt_CHIP

TEE Aas SE eg NE eM Re 6, 7,8

Medicaid & CHIP Payment & Access

Commission, MACBasics: Federal CHIP

Financing (Sept. 2011), available at

http://www.gpo.gov/fdsys/pkg/GPO-MAC

PAC-MACBasics-CHIP-2011-09/pdf/GPO-

MACPAC-MACBa sics-CHIP-2011-09.pdf ...10, 11

Medicaid & CHIP Payment & Access

Commission, Report to the Congress on

Medicaid & CHIP (Mar. 2014), available at

http://www.macpac.gov /reports/..................... 8,17

Robert Pear, Obama Signs Children’s Health

Insurance Bill, N.Y. Times, Feb. 4, 2009............ 10

TABLE OF AUTHORITIES

(continued)

Page(s)

Portraits of Healthy Families: Why All

California Children Need Health

Insurance: Success Stories For Parents,

Kids, and the State, available at http://

ccf.georgetown.edu/wp-content/uploads/

2012/03/california-story-pamphlet.pdf.............

Evan Saltzman & Christine Eibner, The

Effect of Eliminating the Affordable Care

Act’s Tax Credits in Federally Facilitated

Marketplaces (Jan. 2015), available at

http://www.rand.org/content/dam/rand/

pubs/research_reports/RR900/RR980/

a te ees irs

Benjamin D. Sommers et al., Health Reform

and Changes in Health Insurance Coverage

in 2014, 371 New Eng. J. Med. 867 (2014)......

Shery! Gay Stolberg, President Vetoes Second

Measure to Expand Children’s Health

Program, N.Y. Times, Dec. 13, 2007................

David Stout, Bush Vetoes Children’s Health

@& ha, wo & Eo | See

U.S. Gov’t Accountability Office, Private

Health Insurance: Estimates of Individuals

with Pre-Existing Conditions Range from

36 Million to 122 Million (Mar. 2012),

available at http://www.gao.gov/

assets/590/5896 18. pal..............-ccccccsssscesesseeees

Utah Department of Health, CHIP Success

Stories, available at http://health.utah.gov/

SRI NIG BIOI ooc sce sccvcessccsescoseccscseseese

INTEREST OF AMICI CURIAE

Amici represent two of the most vulnerable

groups in society: children and individuals with life-

threatening medical conditions.'! Amici believe that

a ruling in favor of Petitioners would make it diffi-

cult, if not impossible, for low- to moderate-income

children and individuals with serious medical condi-

tions to obtain health insurance coverage—precisely

the results Congress wanted to avoid in enacting the

Patient Protection and Affordable Care Act, Pub. L.

No. 111-148, 124 Stat. 119 (*ACA” or “Act”). Amici

therefore believe that the judgment of the Fourth

Circuit should be affirmed.?

INTRODUCTION AND

SUMMARY OF ARGUMENT

This case turns on the meaning of the phrase

“Exchange established by the State” in the ACA pro-

vision setting forth the method for calculating tax

credits for low- to moderate-income individuals pur-

chasing insurance on an Exchange—i.e., a market-

place allowing consumers to compare and purchase

individual health plans. See 26 U.S.C.

§ 36B(c)(2)(A)(i); Pet. Br. 3. The same phrase also

appears in a key ACA provision relating to the Chil-

dren’s Health Insurance Program (“CHIP”), a pri-

marily federally-funded program that provides in-

' No counsel for any party authored this brief in whole or in

part, and no person other than amici, their members, or their

counsel made any monetary contribution intended to fund the

preparation or submission of this brief. The parties’ letters

consenting to the filing of this brief have been filed with the

Clerk’s office.

2 A full list and description of amici appears in the appen.

dix to this brief.

surance to millions of children from low- to moder-

ate-income families. Recognizing the importance of

children’s healthcare, Congress sought to guarantee

that children would continue to have health insur-

ance in the event of a shortfall in federal funding for

CHIP or a nonrenewal of the program. To that end,

Congress provided that any eligible children exclud-

ed from the program shall be enrolled on a CHIP-

equivalent plan “offered through an Exchange estab-

lished by the State.” 42 U.S.C. § 1397ee(d)(S)(B).

According to Petitioners, the phrase “Exchange

established by the State” refers exclusively to Ex-

changes set up by states with no assistance from the

federal government (“State Exchanges,” for short).

Pet. Br. 11. If adopted, that interpretation would

have harmful consequences in states with federally-

facilitated Exchanges (“Federal Exchange states”).

Children on CHIP would lose access to affordable in-

surance in the event of a CHIP funding shortfall.

Individuals with pre-existing, life-threatening medi-

cal conditions would lose access to the tax credits

that enable them to obtain health insurance, and

thus essential, life-saving treatments. And individ-

uals who maintain insurance would face costly pre-

mium spikes, leading to an adverse-selection “death

spiral.”

The ACA was specifically designed to avoid such

consequences. Construing the Act in a manner that

creates them would contravene the express purpose

of the law. Congress reformed the healthcare and

insurance markets in order to provide access to vul-

nerable Americans. It did not undo that work by in-

cluding the phrase “Exchange established by the

State” in a handful of statutory provisions. It defies

logic to suggest that the Congress that passed the

ACA intended to imperil the functioning of a

longstanding children’s health program, render mil-

lions of the nation’s poorest and sickest citizens inel-

igible for tax credits and thus affordable insurance,

and exacerbate the adverse selection and premium

shock problems it set out to avoid.

1. Petitioners’ position would seriously under-

mine the functioning of CHIP.

A. CHIP is a bipartisan success story. Enacted

as part of the Balanced Budget Act of 1997, and re-

newed on four different occasions, CHIP has provid-

ed health insurance to millions of previously-

uniusured children from families that do not qualify

for Medicaid and cannot afford private insurance.

CHIP coverage, in turn, increases children’s access

to healthcare and provides their families with peace

of mind. Yet despite CHIP’s success, the program

has been threatened by funding shortfalls and the

possibility of nonrenewal.

B. As the ACA was under debate, Congress gave

extensive consideration to how to guarantee contin-

ued coverage for low-income children. CHIP was

scheduled to expire in 2013, and Congress sought to

continue CHIP’s successes in the ACA while elimi-

nating the risks to children posed by inadequate or

nonexistent federal funding. After debating differ-

ent proposals, Congress ultimately elected to reau-

thorize the program through 2019 and continue the

program’s funding through September 2015. Criti-

cally, Congress also enacted a backstop in the event

federal CHIP funding proved insufficient or was dis-

continued. In a subparagraph titled “Assurance of

exchange coverage for targeted low-income children

unable to be provided health assistance as a result of

funding shortfalls,” Congress required states to en-

roll any eligible children left out of CHIP in an

equivalent plan on the “Exchange established by the

State.” 42 U.S.C. § 1397ee(d)(3)(B). In the words of

one of the principal sponsors of the CHIP extension,

“the goal of this legislation is four words: ‘No

child worse off.’” 155 Cong. Rec. $11,457 (Nov. 18,

2009) (Sen. Casey).

C. Petitioners’ construction of the phrase “Ex-

change established by the State” would undercut the

CHIP backstop provision, and so too Congress’s goal

of ensuring continuing coverage for children in need.

On Petitioners’ view, Congress intended to provide

backup coverage only for children with access to

State Exchanges—even though the program Con-

gress was backing up provides coverage to all CHIP-

eligible children. Nothing in the program’s history

or the proceedings surrounding the CHIP reauthori-

zation suggest that Congress had such a counterin-

tuitive result in mind, and no sound policy reason

supports it. Petitioners’ construction would also

have widespread harmful consequences if Congress

does not renew CHIP funding later this year—a very

real possibility. Up to 5 million children could lose

access to affordable insurance coverage based on the

happenstance of geography. The Congress that

sought to reaffirm and reinforce CHIP would not

have undermined it.

II. Petitioners’ position would also unwind the

core insurance reforms in the ACA.

A. In enacting the ACA, Congress recognized

that the individual insurance market was routinely

denying coverage or charging increased premiums to

individuals with conditions as common as pregnancy

and as serious as cancer. But prohibiting those

practices would not alone constitute a workable rem-

edy, because it would trigger adverse selection prob-

lems. Accordingly, Congress required individuals to

purchase insurance coverage or pay a tax penalty,

and provided tax credits for Exchange coverage to

ensure that the former option is affordable and thus

a meaningful one. The tax credits are an essential

part of the ACA’s reform.

B. If Petitioners prevail, millions of Americans

would lose tax credits, and thus the ability to afford

insurance and obtain necessary medical care. The

statistical impact would be enormous: 7.1 million

Americans, including millions with pre-existing

health conditions, purchased insurance on federally-

facilitated Exchanges through January 2015, and

most received tax credits that reduced premiums by

an average of 76%. A substantial majority of those

individuals would lose that necessary financial assis-

tance if Petitioners’ challenge succeeds. One study

predicts that as many as 8 million people would for-

go insurance altogether in Federal Exchange states,

rather than pay full premiums. The departure of

healthy individuals from the insurance marketplace

would drive premiums still higher, resulting in the

type of “death spiral” that the ACA was designed to

forestall. The fact that Petitioners’ reading of the

phrase “Exchange established by the State” would

undo virtually all of the ACA’s reforms provides am-

ple reason to reject it.

Ill. CHIP and the ACA have allowed countless

Americans to survive life-threatening illnesses and

serious injuries and enjoy personal and financial lib-

erty and security. Just a few anecdotes of their ex-

periences are enough to confirm that Congress did

not intend to condition the availability of backstop

CHIP coverage and insurance tax credits on a state’s

administrative decisions regarding its Exchange.

Depriving Americans of those benefits based on a

tortured textual argument makes no practical or le-

gal sense.

ARGUMENT

I. PETITIONERS’ CONSTRUCTION OF THE

ACA COULD DEPRIVE MILLIONS OF

CHILDREN OF INSURANCE COVERAGE

AND ACCESS TO AFFORDABLE HEALTH-

CARE

A. For Almost Two Decades, CHIP Has

Provided Children From Low- And

Moderate-Income Families With Access

To Healthcare

Passed with broad bipartisan support as part of

the Balanced Budget Act of 1997, CHIP has provided

health insurance to millions of children who other-

wise would have been uninsured. See Mathematica

Policy Research, CHIPRA Mandated Evaluation of

the Children’s Health Insurance Program: Final

Findings at ix (Aug. 1, 2014) (Mathematica Report);*

The Kaiser Comm’n on Medicaid & the Uninsured,

Children’s Health Coverage: Medicaid, CHIP and the

ACA 2 (Mar. 2014) (“Kaiser Report”).4 Prior to

CHIP’s enactment, the Medicaid program provided

health insurance coverage to all children from fami-

lies with incomes up to the federal poverty line. Kai-

3 Available at http://aspe.hhs.gov/health/reports/2014/CHIP

evaluation/rpt_CHIPevaluation. pdf.

4 Available at http://kff.org/health-reform/issue-brief/child

rens-health-coverage-medicaid-chip-and-the-aca/.

ser Report at 2.5 But there was no comparable cov-

erage for children from families with incomes that

were higher than the federal poverty line, but still

too low to afford private insurance coverage. For ex-

ample, a child from a working class family of four in

Alabama with an adjusted gross income of $33,000

last year would be ineligible for Medicaid (because

the family makes well more than the federal poverty

line of $23,550), but her family surely could not af-

ford insurance on the private market. See Depart-

ment of Health & Human Services, Annual Update

of the HHS Poverty Guidelines, 78 Fed. Reg. 5182,

5182-83 (Jan. 24, 2013). CHIP fills that gap.

Like many federal programs, CHIP is a federal-

state partnership. If states elect to participate in the

program, they must comply with minimum coverage

requirements established by the Centers for Medi-

care and Medicaid Services. But CHIP was designed

to give states more control over program particulars

in the hopes that the programs would “more closely

resemble[} options available in the commercial in-

surance market.” Mathematica Report at xi. States

that establish a program also receive substantial]

federal funding to defray program costs—on average,

the federal government covers 70% of CHIP expens-

es, compared to just over 50% for Medicaid. Kaiser

Report at 2. This cooperative federalism scheme has

worked: Every state and the District of Columbia

5 Medicaid also extended to all children five and younger

from families with incomes up to 133% of the federal poverty

line. Kaiser Report at 2.

has participated in CHIP since 2001.6 Mathematica

Report at xi.

By any measure, CHIP has “succeeded in ex-

panding health insurance coverage to the population

it is intended to serve, particularly children who

would otherwise be uninsured, increasing their ac-

cess to needed healthcare, and reducing the financial

burdens and stress on families associated with meet-

ing children’s healthcare needs.” Id. By 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, and the rest live in

states that operate their own Exchanges. Medicaid

& CHIP Payment & Access Commission, Report to

the Congress on Medicaid & CHIP 68-69 (Mar. 2014)

(MACPAC Report).? In combination with Medicaid,

CHIP has helped reduce the uninsured rate for chil-

dren to 7%—the lowest number in history. Kaiser

Report at 3. The programs, in other words, have

worked “to provide an insurance safety net for low-

income children during economic hard times.”

Mathematica Report at ix. “Children in Medicaid

and CHIP experienced better access to care, fewer

unmet needs, and greater financial protection than

children who were uninsured.” /d. at x.®

6 The only exception is Arizona—discussed in more detail

below, see infra n.23—which has been phasing out CHIP since

the ACA’s enactment. See Georgetown University Health Polli-

cy Institute, Dismantling CHIP in Arizona: How Losing Kid-

sCare Impacts A Child’s Health Care Costs 1 (May 2014) (Los-

ing KidsCare) available at http://ccf.georgetown.edu/wp-con

tent/uploads/2014/05/Dismantling-CHIP-in-Arizona.pdf.

7 Available at http://www.macpac.gov/reports.

8 States can also use CHIP funds to provide insurance cov-

erage to pregnant women. Families USA, CHIPRA 101: Over-

While CHIP’s success has been constant, its

funding has not. The original iteration of the pro-

gram was funded for ten years, through 2007. See

American Academy of Pediatrics, Children’s Health

Insurance Program (CHIP): Accomplishments, Chal-

lenges, and Policy Recommendations at e785 (Jan.

27, 2014) (AAP Report). But the initial formula

used to distribute federal funding among states did

not accurately predict state needs, leading to signifi-

cant federal funding shortfalls in many states, and

the possibility of enrollment caps or reductions in

income eligibility levels. See Center on Budget Polli-

cy and Priorities, CHIP’s Success Not an Argument

for Block-Granting Medicaid at 4, 6 (June 28, 2011)

(CBPP Study).'° Congress initially avoided those

adverse results by redistributing unspent federal

funds from other states. Jd. at 5. Yet that solution

was only a short-term fix. Some states had to cap

enrollment anyway because of state budget problems

resulting in insufficient state funds. Jd. at 6. And

eventually, redistribution of federal funds stopped

working too—from 2006 to 2008, nearly 20 states

faced significant federal funding shortfalls. Jd. at’ 5.

Congress was forced to appropriate additional feder-

al funding in separate bills. Jd. By 2008, in fact,

Congress’s additional appropriations represented

more than 14% of federal CHIP spending. Jd.

view of the CHIP Reauthorization Legislation 1 (Mar. 2009),

available at http://familiesusa.org/sites/default/files/product

_documents/chipra-101-overview.pdf.

8 Available at http://pediatrics.aappublications.org/content/

133/3/e784.full. pdf.

10 Available at http://www.cbpp.org/files/6-29-1 Lhealth.pdf.

In addition to these state-specific funding short-

falls, CHIP’s overall funding has not always been

certain. In 2007, as the original funding was set to

expire, both houses of Congress voted to expand

CHIP and also extend it for another five years. AAP

Report at e785. President Bush twice vetoed that

legislation. See David Stout, Bush Vetoes Children’s

Health Bill, N.Y. Times, Oct. 3, 2007; Sheryl Gay

Stolberg, President Vetoes Second Measure to Ex-

pand Children’s Health Program, N.Y. Times, Dec.

13, 2007. Congress and President Bush instead

agreed on stopgap legislation to continue the pro-

gram for 18 months, through March 2009. AAP Re-

port at e785; see Families USA, CHIPRA 101: Over-

view of the CHIP Reauthorization Legislation 1

(Mar. 2009).!!

In 2009, with the veto threat lifted, Congress

reauthorized CHIP through 2013 and expanded the

program to cover 4.1 million new children. Robert

Pear, Obama Signs Children’s Health Insurance Bill,

N.Y. Times, fF >. 4, 2009; The Kaiser Comm'n on

Medicaid & the Uninsured, State Children’s Health

Insurance Program (CHIP): Reauthorization History

1-2 (Feb. 2009).'2 In addition, Congress provided for

a CHIP contingency fund in yet another attempt to

address the funding shortfalls that had plagued the

program in the preceding years. See Medicaid &

CHIP Payment & Access Commission, MACBasics:

1! Available at http://familiesusa.org/sites/default/files/pro

duct_documents/chipra-101-overview.pdf.

\2 Available at http://kaiserfamilyfoundation.files. wordpress

.com/2013/01/7743-02. pdf.

Federal CHIP Financing at 2-4 (Sept. 2011)!5; CBPP

Study at 6 (in reauthorizing CHIP in 2009, Congress

recognized that state funding shortfalls had caused

“losses in children’s coverage,” and “took various

steps to ensure that no states faced federal funding

shortfalls that could result in enrollment caps or re-

ductions in CHIP eligibility levels”).

B. The ACA Not Only Renewed CHIP, But

Took Steps To Make The Program More

Comprehensive

CHIP’s history and future were critical issues in

the healthcare reform efforts that culminated in the

ACA. The program’s funding was set to expire in

2013, placing Congress at a crossroads. Congress

knew that CHIP had achieved great success in

providing children access to affordable healthcare,

and their families with peace of mind. But Congress

was also contemplating fundamental structural

changes to the healthcare and insurance markets,

necessitating reconsideration even of programs that

were working as designed. ;

The bills proposed by the House and Senate con-

tained different models for continuing to provide in-

surance to low- and moderate-income children. The

House’s healthcare reform bill would have eliminat-

ed CHIP: Children from families with incomes below

150% of the federal poverty line would be transi-

tioned to Medicaid, and all other formerly-CHIP-

eligible children would be enrolled on a single, na-

tionwide insurance exchange. See The Affordable

Health Care for America Act, H.R. 3962, 111th Cong.

'S Available at http://www-gpo.gov/fdsys/pkg/GPO-MAC

PAC-MACBasics-CHIP-2011-09/pdf/G PO-MACPAC-MACBa

sics-CHIP-2011-09.pdf.

§§ 302(d)(1), 302(d)(4), 1701(a), 1703(d) (2009); The

Henry J. Kaiser Family Foundation, Medicaid &

Children’s Health Insurance Program Provisions in

Health Reform Bills 1 (Jan. 14, 2009) (Kaiser Reform

Bills).'4 The Senate, by contrast, proposed to extend

CHIP through 2019 and CHIP funding through

2015. Patient Protection and Affordable Care Act,

H.R. 3590, 111th Cong. § 10203 (Dec. 24, 2009); Kai-

ser Reform Bills 1. The Senate bill also contained a

provision mandating that CHIP-eligible children be

enrolled on Exchanges operated by the states in the

event of a funding shortfall, discussed in more detail

below.

There was spirited debate within Congress

about which of these two proposals to adopt, and the

Senate version eventually prevailed. See, e.g., Kai-

ser Health News, Health Reform Sparks Debate on

Future of Children’s Health Program (Nov. 18,

2009).'5 The salient point, however, is that both

proposals took as a given that children currently re-

ceiving CHIP coverage should continue to receive

health insurance, even if the program were later de-

funded. The House proposal completely eliminated

the need for CHIP funding, substituting Medicaid

and exchange coverage instead. The Senate proposal

used the Exchanges as a backstop to cover any po-

tential gaps created by funding shortfalls. But both

sought to guarantee to future children the benefits

‘4 Available at https://www.aucd.org/docs/Medicaid%20and

%20the%20Children%27s%20Health%20I nsurance%20Progra

m%20Provisions%20in%20Health%20%20Reform™%20Bills.

pdf.

‘5S Available at http://kaiserhealthnews.org/news/childrens-

health-insurance-program-chip/.

provided by CHIP—and neither suggested that any

aspect of children’s insurance coverage should turn

on the mechanics of establishing a state insurance

Exchange. In other words, Congress agreed that if

future funding fell short (as it did in CHIP’s early

years) or if negotiations mirrored 2007 (when fund-

ing was twice vetoed), children and their families

should not be abandoned without coverage.

C. Petitioners’ Construction Of The Phrase

“Exchange Established By A State” Con-

travenes Congressional Intent And

Risks Depriving Millions Of Children Of

Access To Healthcare

Congress ultimately extended CHIP through

2019, and funded it through September 2015. Kai-

ser Report at 1. The Act also provided a backstop for

children in the event of a funding shortfall or cutoff

(such as the one slated for late 2015). In a subpara-

graph titled “Assurance of exchange coverage for

targeted low-income children unable to be provided

health assistance as a result of funding shortfalls,”

Congress provided that in the event of a funding

shortfall or nonrenewal, and after screening children

on CHIP for Medicaid eligibility, a state must “estab-

lish procedures to ensure that [any remaining] chil-

dren are enrolled in a qualified health plan that

is offered through an Exchange established by the

State under section 18031 of this title.” 42 U.S.C.

§ 1397ee(d)(3)(B) (emphasis added).'* The ACA thus

set up a sensible and simple solution for CHIP short-

i6 The same provision makes such children eligible for pre-

mium tax credits, allowing their families to afford Exchange

coverage. 42 U.S.C. § 1397ee(d)(3)(B).

falls: Children left out of CHIP receive access to

equivalent plans on the Exchanges.

Not under Petitioners’ approach. Petitioners’

core position is that the phrase “Exchange estab-

lished by the State” in the ACA means only an Ex-

change established by a state without any federal as-

sistance. Pet. Br. 3. But 34 states have declined to

create Exchanges on their own. /d. at 7. On Peti-

tioners’ view, then, CHIP-eligible children in those

34 states would not be enrolled on the Exchanges if

there were a shortfall in CHIP funding. In other

words, according to Petitioners, Congress provided

for children in 16 states to receive equivalent

healthcare coverage if CHIP funding were insuffi-

cient—but also decided to deny children in the 34

other Federal Exchange states the same access to

affordable healthcare.

That result makes little sense—so little that Pe-

titioners do not even attempt to justify it in their

brief.!7 The 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 nonex-

istent. If Petitioners were correct, the backstop

Congress enacted would not be a backstop at all—it

'? The D.C. Circuit addressed this issue in its now-vacated

opinion, in a cursory footnote devoid of citation. See Halbig v.

Burwell, 758 F.3d 390, 406 n.10 (D.C. Cir. 2014). In the court's

view, the statutory “oddity” regarding CHIP does not “make[]

the statute nonsensical or otherwise meet{] the high threshold

of absurdity.” Jd. But in the context of a statute enacted to

increase access to care for all Americans, a construction that

could reduce access to care for up to five million children is not

an “oddity” or a mere quirk—it is a nonstarter.

would eliminate coverage in many states in the event

of a funding shortfall, not maintain it.

There is no indication that Congress intended

such an irrational result. Congress recognized that

some states would elect not to establish their own

Exchanges. See, e.g., 156 Cong. Rec. H2207 (Mar.

22, 2010) (Rep. Burgess) (up to 37 states “may not

set up the State-based exchange”); see also Nat

Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566,

2665 (2012) (NFIB) (joint dissent) (“Congress

thought that some States might decline to partic-

ipate in the operation of an exchange.”). Yet nothing

in the proceedings governing the CHIP reauthoriza-

tion suggest that Congress intended to condition a

child’s eligibility for coverage in the event of a fund-

ing shortfall on the manner in which her state elect-

ed to establish an Exchange. To the contrary—the

evidence demonstrates that Congress went to great

lengths to guarantee coverage to all eligible children

regardless of funding disputes. See 155 Cong. Rec.

$11,457 (Nov. 18, 2009) (Sen. Casey) (“I believe the

goal of this legislation, as it relates to those children,

those who are poor or children with special needs, is

four words: ‘No child worse off.’”). Likewise, there is

no sound basis for discriminating between states

based on the type of Exchange they establish.

Congress of course could not predict in advance

which states would opt to create their own Exchang-

es when it enacted the ACA. The division that cur-

rently exists, however, cannot justify the disparate

treatment: To name just two eyamples, 12.2% of

children in Federal Exchange states are born pre-

term, compared to 10.3% in states with their own

Exchanges, and 8.4% of children in Federal Ex-

change states are born with a low birthweight, com-

pared to 7.3% in states with their own Exchanges. '8

Further, many of the states that accepted federal

Exchange assistance have high poverty rates, which

correlates with poor child health and the need for

insurance coverage. See The Henry J. Kaiser Family

Foundation, Distribution of the Total Population by

Federal Poverty Level (above and below 100% FPL)

(of the 25 states with the highest number of indi-

viduals under the federal poverty level, 18 have fed-

erally-facilitated Exchanges)!9; Center for American

Progress, The Economic Costs of Poverty in the

United States: Subsequent Effects of Children Grow-

ing Up Poor 1 (Apr. 2007) (children who grow up in

poverty are “more likely. . to have poor health later

in life”). 2°

Nor is the Exchange backstop provision irrele-

vant or minor, as the D.C. Circuit suggested. Halbig

uv. Burwell, 758 F.3d 390, 406 n.10 (D.C. Cir. 2014).

As explained above, CHIP has repeatedly faced fed-

eral funding shortfalls. See supra at 9-11. And fed-

eral funding for CHIP expires on September 30,

2015. See Georgetown University Health Policy In-

stitute, Center for Children & Families, About Chip

1.2! Even though CHIP has enjoyed bipartisan sup-

'8 These figures are based on the National Center for

Health Statistics’ 2012 Natality Data, available at

http://www.marchofdimes.org/peristats, as analyzed by the

March of Dimes Perinatal Data Center on January 14, 2015.

19 Available at http://kff.org/other/state-indicator/popula

tion-up-to-139-fp)/.

2 Available at http://www.irp.wisc.edu/publications/dps/

pdfs/dp132707.pdf.

21 Available at http://ccf.georgetown.edu/wp-content/up

loads/2012/03/About-CHIP-20141 pdf.

port in the past, Congress has not yet passed a bill

extending funding for the program. The conse-

quences of non-renewal—which was on the table as

recently as 2007—would be dire if Petitioners suc-

ceed in this case. If the government prevails, and

CHIP funding is not renewed, children throughout

the country could simply transition to the Exchanges

operated in their states. But if Petitioners prevail,

up to five million children currently on CHIP could

lose access to affordable insurance coverage, simply

because they happen to live in Federal Exchange

states. See MACPAC Report at 68-69.22 These chil-

dren could not take advantage of tax credits to ob-

tain CHIP-equivalent coverage on their state’s Ex-

change because it was not exclusively established by

the state. They would also be ineligible for Medicaid

(because their families’ incomes are too high) and

unable to afford private coverage (because their fam-

ilies’ incomes are too low).?°

22 This figure consists of the sum of the numbers of children

enrolled in CHIP in Federal Exchange states, based on the

most recent available public information compiled by the Medi-

eaid and CHIP Payment and Access Commission (MACPAC).

MACPAC is a non-partisan federal agency charged with provid-

ing policy and data analysis and making recommendations to

Congress on Medicaid and CHIP. See MACPAC Report at xix.

23 1t is true, but irrelevant, that a state could avoid the

backstop provision by declining to participate in CHIP in the

first place. The relevant point is that the backstop provision

was designed to provide a uniform solution to funding short-

falls in every participating state—there is no indication that

Congress wanied the backstop to operate differently because of

a state’s administrative decisions in establishing an Exchange.

It is important to note, however, that Petitioners’ construc-

tion of the ACA would strip children of insurance even in the

one state (Arizona) that has attempted to phase out CHIP. In

The Congress that extended CHIP, expanded

the program to cover more children, and provided

backstop Exchange coverage in the event of a fund-

ing shortfall, could not have intended these results.

Congress “does not alter the fundamental details of a

regulatory scheme in vague terms or ancillary provi-

sions—it does not, one might say, hide elephants in

mouseholes.” Whitman v. Am. Trucking Ass’ns, 531

U.S. 457, 468 (2001). It did not do so here: Congress

did not strip millions of children of backstop insur-

ance coverage in the event of a funding shortfall

simply by using the term “Exchange established by a

State” in a_ statutory provision designed to

“fajssurfe]” those children continuing coverage going

forward. 42 U.S.C. § 1397ee(d)(3)(B) (emphasis add-

ed). The history of CHIP thus reveals that the

phrase “Exchange established by the State” cannot

have the meaning Petitioners suggest. A construc-

tion that “would be inconsistent with—in fact, would

overthrow—the Act’s structure and design,” is unac-

ceptable. Utility Air Regulatury Grp. v. EPA, 134 S.

Ct. 2427, 2442 (2014).

place of CHIP, Arizona enrolled some low-income children on

Medicaid, and left the other 14,000 children to obtain tax-

credit-eligible coverage on the state’s Exchange. See Losing

KidsCare at 1. But Arizona is a Federal Exchange state, mean-

ing that the thousands of children transitioned to the Exchange

would be without affordable insurance in the event Petitioners

prevail.

Il. ELIMINATING TAX CREDITS FOR INDI-

VIDUALS IN FEDERAL EXCHANGE

STATES WOULD HAVE DEVASTATING -

CONSEQUENCES FOR’ INDIVIDUALS

WITH PRE-EXISTING CONDITIONS

In addition to depriving countless children of

their health insurance, Petitioners’ construction of

the term “Exchange established by the State” would

upend the carefully-crafted insurance reforms at the

heart of the ACA. Individuals with life-threatening

conditions would lose the tax credits that allow

many of them to obtain insurance and live with dig-

nity, and would face the prospects of financial ruin

or death. More broadly, insurance would become

less affordable and less accessible for Americans in

the private insurance market. These are precisely

the results Congress sought to avoid—not (as Peti-

tioners argue) results Congress intended to create.

A. Tax Credits For Low- And Moderate-

Income Americans Are An Essential

Part Of The ACA’s Reforms To The In-

surance Market

Congress enacted the ACA to provide more

Americans access to health insurance, and so make

healthcare affordable. NFIB, 132 S. Ct. at 2580. In

particular, Congress sought to ensure that individu-

als with pre-existing health conditions would have

access to insurance coverage. Federal law precluded

employer-sponsored insurance plans from charging

employees higher insurance premiums based on

their health status or medical history. See Congres-

sional Budget Office, Key Issues in Analyzing Major

Health Insurance Proposals at xi (Dec. 2008) (Key

Issues).24 But there was no similar restriction on in-

surance plans purchased in the individual market,

so insurance companies routinely denied coverage or

charged high premiums even to individuals with

common conditions like asthma and pregnancy. 47

Million and Counting: Why the Health Care Mar-

ketplace Is Broken: Hearing Before the Senate

Comm. on Finance, 110th Cong., 2d Sess. 52 (2008)

(statement of Professor Mark A. Hall). Around 80%

of the 45 million Americans without employer-

sponsored or government insurance—some of whom

had severe, life-threatening conditions—were unin-

sured. Key Issues at 46; U.S. Gov't Accountability

Office, Private Health Insurance: Estimates of Indi-

viduals with Pre-Existing Conditions Range from 36

Million to 122 Million 12 (Mar. 2012) (Pre-Existing

Conditions) (depending on the practices of particular

insurers, 20% to 66% of the adult population has a

pre-existing condition).?°

In direct response to that state of affairs, Con-

gress enacted two provisions, known as “guaranteed

issue” and “community rating.” Together, those pro-

visions “prohibit insurance companies from denying

coverage to those with [pre-existing conditions] or

charging unhealthy individuals higher premiums

than healthy individuals.” NFIB, 132 S. Ct. at 2585

(opinion of Roberts, C.J., citing 42 U.S.C. §§ 300gg,

300gg-1, 300gg-3, 300gg-4). Insurance companies

thus would have to “accept unhealthy individuals

[without] charging them rates necessary to pay their

coverage.” Id.

24 Available at http://www.cbo.gov/sites/default/files/cbo

files/ftpdocs/99xx/doc9924/ 1 2-18-keyissues. pdf.

25 Available at http://www.gao.gov/assets/590/5896 18. pdf.

Congress knew, however, that these require-

ments were not economically feasible standing alone.

“When insurance companies are required to insure

the sick at affordable prices, individuals can wait

until they become ill to buy insurance.” NFIB, 132

S. Ct. at 2614 (Ginsburg, J., concurring in part, con-

curring in the judgment in part, and dissenting in

part); see Health Reform in the 21st Century: Insur-

ance Market Reforms: Hearings before the House

Ways and Means Comm., 111th Cong., 1st Sess., 10,

13 (2009) (statement of Professor Uwe E. Reinhardt)

(“[I]mposition of community-rated premiums and

guaranteed issue on a market of competing private

health insurers will inexorably drive that market in-

to extinction.”).

Accordingly, Congress enacted two equally im-

portant reforms designed to pay for the nondiscrimi-

nation provisions. First, the ACA requires most in-

dividuals to purchase health insurance or pay a tax

penalty (the “individual mandate”). See 26 U.S.C.

§ 5000A. Second, to encourage individuals to enter

the insurance market (rather than merely pay the

tax penalty), Congress provided that individuals who

met certain income criteria would qualify for tax

credits to enable them to purchase insurance on the

Exchanges at low cost. See ACA § 1401, codified at

26 U.S.C. § 36B.

The tax credits are an absolutely essential com-

ponent of the ACA’s insurance reforms. See, e.g.,

H.R. Rep. No. 111-443, 111th Cong.,

2d Sess., vol. I, at 250 (2009) (noting that tax “credits

are key to ensuring people affordable health cover-

age”). Congress was fully aware that it was essen-

tial to expand insurers’ risk pools to include younger,

healthier individuals to counterbalance the certain

influx of seriously ill people. NFIB, 132 S. Ct. at

2614 (Ginsburg, J., concurring in part, concurring in

the judgment in part and dissenting in part). At the

same time, Congress recognized that it would be fu-

tile to require those individuals to purchase insur-

ance they could not afford. S. Rep. No. 111-89, 111th

Cong., lst. Sess. 4 (2009) (Congress sought “[t]o en-

sure that health coverage is affordable”). The tax

credits bridge that divide. At the time of the ACA’s

enactment, the CBO estimated that tax credits

would be available to 78% of individuals purchasing

insurance on the Exchanges. Congressional Budget

Office, An Analysis of Health Insurance Premiums

Under the Pati2nt Protection and Affordable Care

Act 24 (Nov. 30, 2009).26 And recent studies have

shown that the tax credits have a still broader reach:

Almost 90% of people purchasing insurance on the

Exchanges have relied on tax credits. See Amy

Burke et al., ASPE Research Brief: Premium Afford-

ability, Competition, and Choice in the Health In-

surance Marketplace 3 (June 18, 2014) (ASPE Re-

search Br.).27

Petitioners’ approach to the ACA would make

most Americans ineligible for the tax credits, and

sabotage the ACA’s insurance reforms. As explained

above, Petitioners’ view is that tax credits are avail-

able only to individuals living in the minority of

states that have established their own Exchanges

without any federal involvement. Pet. Br. 11. If Pe-

titioners are correct, many individuals with pre-

26 Available at http://www.cbo.gov/sites/default/files/11-30-

premiums.pdf.

27 Available at http://aspe.hhs.gov/health/reports/2014/pre

miums/2014mktplaceprembrf.pdf.

existing health conditions (and countless other,

healthier Americans) would be ineligible for tax

credits, simply because they happen to live in Feder-

al Exchange states. That result would strip millions

of Americans of insurance coverage, as described in

the section that follows.

B. The ACA’s Successful Insurance Re-

forms Would Collapse If Petitioners

Prevail

The ACA has extended affordable health cover-

age to millions of Americans, providing them securi-

ty and peace of mind regarding their health. In the

ACA’s first year, more than 10 million previously-

uninsured adults secured insurance, causing the un-

insured rate to plummet by approximately 5.3 per-

centage points. See, e.g., Sharon K. Long et al., Tak-

ing Stock: Health Insurance Coverage under the

ACA as of September 2014, at 1 (Dec. 3, 2014);

Benjamin D. Sommers et al., Health Reform and

Changes in Health Insurance Coverage in 2014, 371

New Eng. J. Med. 867, 871 (2014). Over 8 million

people obtained that insurance through the Ex-

changes. See Health Insurance Marketplace: Sum-

mary Enrollment Report for the Initial Annual Open

Enrollment Period (Initial Annual Open Enroll-

ment), Department of Health and Human Services

12, 37 (May 1, 2014).29 Sixty percent of them were

previously uninsured. Liz Hamel et al., Survey of

Non-Group Health Insurance Enrollees, Kaiser Fam-

28 Available at http://hrms.urban.org/briefs/Health-Insur

ance-Coverage-under-the-ACA-as-of-September-2014.pdf.

29 Available at http://aspe.hhs.gov/health/reports/2014/mar

ketplaceenrollment/apr2014/ib_2014apr_enrollment.pdf.

ily Foundation (Jun. 19, 2014).°° Like the individual

amici, many of those individuals have pre-existing

health conditions that, prior to the ACA’s enactment,

could have resulted in high premiums or coverage

restrictions. Pre-Existing Conditions at 12.

The majority of individuals purchasing Ex-

change insurance did so on federally-facilitated Ex-

changes. Indeed, by January 16, 2015—with a

month remaining in the ACA’s second open enroll-

ment period—7.1 million Americans had purchased

insurance on federally-facilitated Exchanges. See

Department of Health and Human Services, Open

Enrollment Week 9: January 10, 2015 January 16,

2015 (Jan. 21, 2015).3! Critically, nearly all of those

individuals purchased plans at least partially offset

by tax credits, resulting in net premiums that were,

on average, 76% lower than the full amount. ASPE

Research Br. at 3. Those tax credits allowed many

individuals to receive coverage and thus care they

would not have been able to access or afford prior to

the ACA. Sara R. Collins et al., Gaining Ground:

Americans’ Health Insurance Coverage and Access

to Care After the Affordable Care Act’s First Open

Enrollment Period, Commonwealth Fund 11-12 (July

2014).32

% Available at http://kff.org/health-reform/report/survey-of-

non-group-health-insurance-enrollees/.

31 Available at http://www.hhs.gov/healthcare/facts/blog/

2015/01/open-enrollment-week-nine. html.

32 Available at http://www.commonwealthfund.org/~/media/

files/publications/issue-brief/2014/jul/1760_collins_gaining_

ground_tracking survey.pdf (75% of previously-uninsured indi-

viduals nationwide obtained access to affordable care).

A ruling for Petitioners would reverse these

gains, because tax credits would no longer be availa-

ble in Federal Exchange states. Individuals with

pre-existing health conditions like amici would no

longer be able to obtain affordable healthcare cover-

age, returning them to lives full of financial instabil-

ity and insecurity. Millions of healthy individuals

would decline to enroll in the individual market—a

recent study by Rand Corporation projected that 8

million people would forgo insurance altogether in

Federal Exchange states. Evan Saltzman & Chris-

tine Eibner, The Effect of Eliminating the Affordable

Care Act’s Tax Credits in Federally Facilitated Mar-

ketplaces 2 & n.4 (Jan. 2015) (Rand Study).*° People

would purchase costly insurance only when they be-

came sick—no sooner—and projections show that the

absence of offsetting revenue from healthy individu-

als would cause premiums to rise by almost 50%. Id.

at 2.

The effects of a ruling in Petitioners’ favor would

not merely be limited to individuals who already re-

ceive tax credits. As healthy individuals leave the

insurance market and sick people remain, premiums

would rise for all purchasers, including individuals

who currently purchase insurance without tax cred-

its. Linda J. Blumberg et al., Characteristics of

33 Available at http://www.rand.org/content/dam/rand/pubs/

research_reports/RR900/RR980/RAND_RR980.pdf. In particu-

lar, the RAND Study found that “fe]nrollment in the ACA-

compliant individual market, including plans sold in the mar-

ketplaces and those sold outside of the marketplaces that com-

ply with ACA regulations, would decline by 9.6 million, or 70

percent,” in Federal Exchange states. Rand Study at 2. Of

those 9.6 million people, “8.0 million become uninsured. The

remaining 1.6 million find coverage through another source.”

Id. at n.4.

Those Affected by a Supreme Court Finding for the

Plaintiff in King v. Burwell 7 (Jan. 2015) (Character-

istics) (“Those not receiving tax credits under the

current implementation of the law would be affected

by a finding for King, as well, as the premiums for

everyone would increase due to the worsening health

status of those involved.”)*4; Linda J. Blumberg et

al., The Implications of a Supreme Court Finding for

the Plaintiff in King vs. Burwell 1, 6 (Jan. 2015)

(Implications) (“Without federal tax credits, the pop-

ulation purchasing nongroup coverage would be in

worse health, on average. As a result, premiums for

nongroup coverage would be notably higher in FFM

states than they would be with the credits in

place.”).25 Some of those individuals, in turn, would

leave the market, because of the premium spikes.

See Characteristics at 3; Implications at 7. The

market would be dominated by the precise adverse

selection “death spiral” that the tax credits were de-

signed to avoid. See NFIB, 132 S. Ct. at 2614 (Gins-

burg, J., concurring in part, concurring in the judg-

ment in part, and dissenting in part).

Petitioners’ reading of the phrase “Exchange es-

tablished by the State” would thus unravel the core

reforms of the ACA—reason enough to reject their

view. Congress would not have set out to make in-

surance accessible and affordable and then have un-

dermined that plan by including a trapdoor statutory

phrase in a small handful of provisions. Basic prin-

34 Available at http://www-.urban.org/UploadedPDF/20000

78-Characteristics-of-Those-Affected-by-King-v-Burwell.pdf.

35 Available at http://www.urban.org/UploadedPDF/20000

62-The-[mplications-Kingvs-Burwell.pdf.

ciples of statutory interpretation—and common

sense—compel rejection of Petitioners’ arguments.

lil. CHIP AND THE ACA’S INSURANCE RE-

FORMS HAVE ALLOWED CHILDREN AND

INDIVIDUALS WITH PRE-EXISTING

HEALTH CONDITIONS TO LIVE WITH

DIGNITY

CHIP and the ACA have allowed many Ameri-

cans to obtain a degree of personal and financial lib-

erty and security that was previously impossible.

The stories that follow provide discrete, real-world

examples of those benefits, and underscore how Peti-

tioners’ arguments stand squarely at odds with Con-

gress’s design.

A. CHIP Has Provided Essential

Healthcare Coverage To Vulnerable

Children

1. Congress has repeatedly heard testimony re-

garding the ways in which CHIP has improved the

health of children across the country.

In 2007, for example, the Senate heard the story

of a single mother named Kitty Deames Burgett.

See 153 Cong. Rec. S10,537, 10,555-56 (Aug. 1, 2007)

(statement of Sen. Stabenow). Burgett’s husband

died before CHIP came into existence, and the mon-

ey from her Social Security survivor's benefits put

her and her two young children over the Medicaid

eligibility levels. Jd. at S10,555. Burgett was able to

purchase insurance for her children on the private

market, but eventually had to forgo it because the

premiums grew more expensive each year. /d.

Things changed once Ohio agreed to participate in

CHIP—Burgett was able to obtain insurance cover-

age for her two children. Jd. That insurance allowed

her daughter to obtain comprehensive treatment for

serious, often-debilitating psychiatric problems. Jd.

at S10,555-56. Today, Burgett’s daughter is a pro-

ductive, contributing member of society and a loving

mother. Jd. at $10,556.

Congress also heard about Graeme Frost, a 12

year old who might have died if not for CHIP See,

e.g., 153 Cong. Rec. $12,835, 12,840 (Oct. 15, 2007);

153 Cong. Rec. H11,471, 11,472 (Oct. 10, 2007).

Graeme’s mother, brother, and sisters were involved

in a car crash in 2004 that caused serious injuries to

the entire family. 153 Cong. Rec. at $12,840. Grae-

me had a brain injury and was in a coma for weeks.

Id. One of his vocal cords was paralyzed, and one of

his eyes was permanently damaged. Id. CHIP pro-

vided coverage for all of Graeme’s treatments, which

his family might otherwise have been unable to af-

ford. Id.; see also 153 Cong. Rec. $10,401, 10,404

(July 31, 2007) (Sen. Brown) (Ohio’s CHIP has al-

lowed a family to obtain insurance coverage for their

son’s Down Syndrome).

2. Since Congress reauthorized CHIP in 2007,

countless other parents have shared CHIP success

stories with the public in an effort to ensure that the

program remains in effect. CHIP has allowed chil-

dren in California to obtain treatment for pre-

cancerous growths, hearing loss, broken bones, and

diabetes. See Portraits of Healthy Families: Why All

California Children Need Health Insurance: Success

Stories For Parents, Kids, and the State.** It has

permitted children in Colorado to receive treatment

for growth hormone deficiencies and debilitating

% Available at http://ccf.georgetown.edu/wp-content/uploads

/2012/03/california-story-pamphlet.pdf.

neurological conditions. See All Kids Covered, CHIP

Stories.?’ And it has ensured that children in Utah

can receive treatment for leukemia and injuries sus-

tained in a car accident. Utah Department of

Health, CHIP Success Stories.**

B. The ACA Has Allowed The Individual

Amici To Obtain Affordable Insurance

And Lifesaving Treatments For Their

Pre-Existing Medical Conditions

1. Aidan Robinson has a condition called

Marfan Syndrome, which is a genetic disorder affect-

ing the body’s connective tissue. Individuals with

the disorder have a defect in the gene that tells the

body how to make a key protein in connective tissue,

putting them at risk for glaucoma, collapsed lungs,

and heart and blood vessel problems that can culmi-

nate in death.*9

Aidan’s parents, Eric and Martha, had insur-

ance for most of his life through Martha’s job as a

school psychiatrist. When Martha left that job to

found a smal) charter school and start her own busi-

ness, she purchased COBRA continuation health in-

surance coverage for a year and a half. Once that

insurance expired, however, Martha could not obtain

private coverage for her family—time after time, in-

surers turned her down because of Aidan’s condition.

Aidan was unable to obtain necessary medication

37 Available at http://www.allkidscoveredcolorado.org/issues

-initiatives/chip-works/chip-stories/.

38 Available at http://health.utah.gov/chip/sucessstories.

htm.

38 The Marfan Foundation, What Is Marfan Syndrome?

http://www.marfan.org/about/marfan.

and screening, meaning he was deprived of the most

basic liberties. He could not travel (or leave the

house), work, or engage in even moderate physical

activity.

Things changed once the ACA was enacted. Ai-

dan’s family was immediately able to purchase in-

surance coverage through Indiana’s Exchange and

obtain tax credits to offset the premiums. So long as

the tax credits are available, Aidan can live a normal

life, free of the fear that his medical condition will

bankrupt his family.

2. David Tedrow and his wife, Mary, owned a

successful business in South Carolina until David

was diagnosed with end-stage liver failure disease.

David desperately needed a liver transplant, and

moved to North Carolina to be closer to a surgeon at

Duke University who specialized in treating patients

like David. Upon moving to North Carolina, David

purchased temporary insurance and was placed on

the liver transplant waiting list. Shortly thereafter,

David's insurer folded, placing David in a precarious

position: He needed insurance to remain on the

transplant list, but every private insurer denied him

coverage because of his pre-existing condition.

The ACA solved that problem. David was able

to obtain insurance, offset by tax credits, on North

Carolina’s federally-assisted Exchange—insurance

that paid the costs of his liver transplant. Unfortu-

nately, the transplant did not bring David to full

health—during the transplant surgery, doctors

found a tumor on David’s liver, and diagnosed him

with cancer. But David’s coverage under the ACA

has allowed him to obtain the necessary treatment

for his cancer. Without the ACA, David would be

facing a life-threatening disease without any insur-

ance and any realistic hope of paying for therapy.

3. Steve Orofino was diagnosed with prostate

cancer in 2010. At the time, he had employer-

provided insurance through his job as a chemist, and

was able to obtain surgery and follow-up treatments

at minimal cost.

One year later, Steve’s cancer returned, just as

he was downsized at work. Like the Robinsons, Ste-

ve purchased COBRA extension coverage, but he

was unable to obtain private insurance coverage

once the COBRA coverage expired—both because of

his cancer and his wife’s diabetes. Steve purchased

coverage from North Carolina’s high-risk pool, but

the costs of treatment almost bankrupted his family.

The ACA’s insurance coverage and tax credits

have turned things around for Steve and his wife.

They now receive affordable and effective treatment

for their conditions, and no longer have to face a

choice between liquidating their life savings and

their health.

4. Jared Blitz was born with aortic valve steno-

sis (a narrowed aortic valve opening). As a child, the

costs of his treatment—including a $200,000 open-

heart surgery—were covered by his parents’ health

insurance. But after obtaining his college degree,

Jared’s insurance expired. The only plan he could

find on the private market contained an exception

for his heart condition. A few years later, Jared

looked for a new plan, but the best available option

covered only 60% of his heart condition with no out-

of-pocket maximum. Once Arizona’s Exchange

opened, however, Jared obtained a plan that will al-

low him to obtain treatment and potential future

procedures without incurring financial! ruin.

* 7 *

The stories just described illustrate the ways in

which CHIP and premium tax credits allow children

and adults to experience the liberty and dignity that

accompany good health. Congress would not have

conditioned the well-being of some of the most vul-

nerable members of society on their home states’ de-

cisions to obtain federal assistance in establishing an

Exchange. The ACA was meant to help amici and

the people they represent; it should not be construed

in a manner that would affirmatively harm them.

CONCLUSION

For the foregoing reasons, the judgment of the

court of appeals should be affirmed.

Respectfully submitted.

DANIELLE GRAY WALTER DELLINGER

O'MELVENY & MYERS LLP (Counsel of Record)

Times Square Tower wdellinger@omm.com

7 Times Square RAKESH KILARU

New York, N.Y. 10036 5 ea cane eg

ASON RO

KARA M. KAPKE O’MELVENY & MYERS LLP

JOEL T. LARSON

1625 Eye Street, N.W.

DAVID A. FRAZEE Washington, D.C. 20006

BARNES & THORNBURG LLP (202) 923 5300

te disnapotio IN 2020 : * Admitted in California only

Counsel for Amici Curiae

January 28, 2015

APPENDIX

APPENDIX: LIST AND DESCRIPTION OF

AMICI CURIAE

The American Academy of Pediatrics (AAP)

is an organization of 62,000 primary care pediatri-

cians, pediatric sub-specialists, and pediatric surgi-

cal specialists dedicated to the health and well-being

of all infants, children, adolescents, and young

adults. AAP seeks to ensure that all children have

access to continuous and comprehensive care.

The American Academy of Family Physi-

cians (AAFP), headquartered in Leawood, Kansas,

is the national medical specialty society representing

family physicians. Founded in 1947 as a not-for-

profit corporation, its 115,900 members are physi-

clans and medical students from all 50 states, the

District of Columbia, Guam, Puerto Rico, the Virgin

Islands, and the Uniformed Services of the United

States. The AAFP seeks to improve the health of pa-

tients, families, and communities by advocating for

the health of the public and serving the needs of

members with professionalism and creativity.

Children’s Health Fund (CHF) was founded

in 1987 with the goal of providing healthcare to chil-

dren in rural and urban communities throughout the

country. CHF has provided care to over 200,000

children, and has sponsored public education and

advocacy campaigns designed to promote access to

healthcare for low-income children.

The Children’s Hospital Association repre-

sents more than 220 children’s hospitals nationally

and advances child health through innovations in

the quality, cost, and delivery of care. On average,

more than 52 percent of children served by children’s

hospitals rely on Medicaid or CHIP for their

healthcare coverage.

First Focus is a bipartisan advocacy organiza-

tion that is committed to making children and fami-

lies a priority in federal policy and budget decisions.

In all of its work, First Focus strives to ensure that

every child in America has access to the high quality,

comprehensive, affordable healthcare they need to

grow up to become healthy and productive adults.

March of Dimes (MOD) is a nonprofit organi-

zation that advocates for mothers and children.

MOD was founded by President Franklin Delano

Roosevelt in 1938 to combat polio, and has expanded

its mission to improve the health of babies by pre-

venting birth defects, premature birth, and infant

mortality.

The National Physicians Alliance (NPA) is a

non-partisan, non-profit organization that creates

research and education programs that promote

health and foster active engagement of physicians

with their communities to achieve high quality, af-

fordable healthcare for all. NPA represents physi-

clans across medical specialties who share a com-

mitment to professional integrity and health justice.

Jared Blitz, Steve Orofino, Aidan Robin-

son, Martha Robinson, David Tedrow, and

Mary Tedrow are individuals or family members of

individuals who suffer from life-threatening health

conditions. Prior to the ACA’s enactment, they were

unable to maintain adequate insurance coverage on

the individual market on account of those conditions.

Today, they receive tax credits that allow them to

purchase insurance on federally-facilitated Exchang-

es—insurance that has allowed them to obtain life-

saving treatments. They would lose those tax cred-

its, and thus their insurance coverage, if Petitioners

prevail in this case.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.