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

Supreme Coun, U.S.

FILED

JAN 28 201

No. 14-114 | _OFFIGE OF THE CLERK

3n the

Supreme Court of the United States

DAVID KING, ET AL.,

Petitioners,

Vv.

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 THE CATHOLIC HEALTH

ASSOCIATION OF THE UNITED STATES AND

CATHOLIC CHARITIES USA AS AMICI

CURIAE IN SUPPORT OF RESPONDENTS

Lisa J. Gilden Christopher J. Wright

THE CATHOLIC HEALTH Counsel of Record

ASSOCIATION OF THE Stephen W. Miller

UNITED STATES HARRIS, WILTSHIRE &

1875 Eye St. N.W. GRANNIS LLP

Suite 1000 1919 M Street N.W.,

Washington, DC 20006 Eighth Floor

Washington, DC 20036

(202) 730-1300

cwright@hwglaw.com

JANUARY 28, 2015

i

TABLE OF CONTENTS

Page

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INTEREST OF AMICI CURIAE ....................c0sceeeeeeeee 1

INTRODUCTION AND SUMMARY OF

EN tech nh LUM AB cat Maite dene Ace SMT Ae MO or 4

F_un a Pate Patt S08 ote Aa Sree Re an ner eh Bye 7

I. The ACA Makes Tax Credits Available To Low

and Moderate Income Americans Regardless

of the State in which They Live. ...................... 7

II. Eliminating Subsidies on Federally-

Facilitated Exchanges would have

Devastating Consequences for Catholic

Hospitals, Their Patients, and the

Communities They Serve. ................. ) SEES 14

SE ING osicsssanetsacvaterecudblakacsisicttncmrovessimeenaumonuiies 22

i

TABLE OF AUTHORITIES

Cases Page(s)

Abramski v. United States,

po ee | eee 6, 11,13

Chevron U.S.A. Inc. v. NRDC, Inc.,

— gS gE ea Rn ear 6,12

Mayo Found. For Medical Educ. & Research v.

United States, 131 S. Ct. 704 (2011) ................... 13

Mobile Comm’s Corp. v. FCC, 77 F.3d 1399 (1996) .14

National Ass’n of Home Builders v. Defenders of

soe tk F.C, , a eee 1]

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

a 4, 7,9, 13, 15

Robinson v. Shell Oil Co., 519 U.S. 337 (1997)........ 11

Util. Air Regulatory Grp. v. EPA, 134 S. Ct. 2427

SN na esesbaddnlebaonn 10

Statues and Other Legislative Authorities

vt oc RS RRR ain ctel ean mene 6, 12

Be ee i earincnasccicaccccchedsnnssctsoucnasexerscummens 6, 12

I I aaa iin sinese sccerees 5, 9, 10, 12, 13

0, II assesses esecssnsnensnarenncceedos 4,8

Oe i onic cacers ecctposcnsencesceins 4,8

ee, IND siencecennistensnomcasnervaieneumisivdopadcdensoanin 4,8

lil

I a cca cae eceiccmeddas alone 4,8

Oe ie I ho reinnntdcidedoscnsddassdnbceindasnasdundidd 4,8

ee I asics cicrctcteceencacnaenssbnarecesenaiacien 4,8

RE OE I ota cnciinicceapionaicentamenqioidetemmadadainaenta 5,11

ee I Gia isiidicdtsdncetcrmastsienckonnnnenbicnnanss 5, 8,11

157 Cong. Rec. S737 (daily ed. Feb. 15, 2011)

(statement of Senator Franken)............................ 9

Patient Protection and Affordable Care Act, Pub. L.

a EE ee Gs OP CD iviccinccdccsissnccoicnccecs 4

Other References

A. Burke, et al., ASPE Research Brief: Premium

Affordability, Competition, and Choice in the

Health Insurance Marketplace, 2014, (Dep't of

Health and Human Servs., June 18, 2014).....9, 15

American Hosp. Ass’n, Summary of 2010 Health

Care Reform Legislation (Apr. 19, 2010)............. 19

American Hosp. Ass’n, Uncompensated Hospital

Care Cost Fact Sheet (Jan. 2014).................0.00.0.. 18

ASPE Issue Brief: How Many Individuals Might

Have Marketplace Coverage After the 2015 Open

Enrollment Period? (Dep’t of Health & Human

= SN oamsmanssdaedduasmmunia 15

B. Semro, Potential Impacts of New Federal Policies

on Provider Reimbursement Rates (The Bell

le” |) 19

iv

C. Babcock, Uninsured Americans Get Hit With

Biggest Hospital Bills, Bloomberg,

NIN IIE (axis) 2nd ta clean eenedeuaaneasebeinsboases 16, 17

Catholic Health Ass’n, Catholic Health Care in

the United States Fact Sheet (Jan. 2015).......... 1.3

Changes in Health Care Financing & Org.,

Challenges Facing the Health Care Safety Net

I Se a aaa edeiiecnnaeeebeseda 18

Congressional Budget Office, An Analysis of

Health Insurance Premiums Under the Patient

Protection and Affordable Care Act,

SN, HIG TI hig igo cee erg cand ra cds densaniaccen cna 13, 15

E. Saltzman, Ejibner, C., The Effect of Eliminating

the Affordable Care Act’s Tax Credits in Federally

Facilitated Marketplaces (Rand Corp., 2015) .....16

Institute of Med., America’s Health Care Safety Net:

Intact but Endangered (The National Academic

Re nnomeen och a wane amerne mre 8,18

J. Hadley, et al., Covering the Uninsured In 2008:

Current Costs, Sources of Payment, &

Incremental Costs, (Henry J. Kraiser Family

SI. UNRE T- II Sesicccrnsiotseunitotscnsesarcetciien 8

L. Blumberg, et al., Characteristics of Those

Affected by a Supreme Court Finding for the

Plaintiff in King v. Burwell (Urban Institute, Jan.

SE oo: ants aiccineuecd annes eauwadeakanesonaumuamastinnssausntiiios 17

L. Blumberg, et al., The Implications of a Supreme

Court Finding for the Plaintiff in King v. Burwell:

8.2 Million More Uninsured and 35% Higher

Premiums (Urban Institute, Jan. 2015).............. 16

Open Enrollment Week 9: January 10, 2015 -

January 16, 2015, Dept. of Health and Human

Servs. Blog (January 21, 2015)

http:/hwww.hhs.gov/healthcare/facts/blog/2015/01/

open-enrollment-week-nine. html. ........................ 9

Pope John XXIII, Pacem in Terris (Apr. 11, 1963) ...2

Press Release, U.S. Dep’t of Health & Human Servs.,

New Data Say Uninsured Account for

Nearly One-Fifth of Emergency Room

Visits (July 15, 2009) ............cccccecceceeeeeeee. 8, 17,18

S.M. Miller, Robert Wood, Johnson Foundation, The

ACA Helps Correct Incentives for Patients to Use

the Health Insurance System Inefficiently (Aug.

30, 2013)

Sr. Carol Keehan, Sisters of Charity Health System,

Remarks at Cleveland City Club: Next Steps for

the Affordable Care Act (Aug. 17, 2012)

aces 19, 20

T. Coughlin, et al., Strategies in 4 Safety-Net

Hospitals to Adapt to the ACA (The Kaiser

Comm’n on Medicaid and the Uninsured,

I ocean cinanrancianihubeseuauecbeusiiuesnnnresss 20

The Kaiser Comm’n on Medicaid & the Uninsured,

The Uninsured & The Difference Health Care

Makes (Sept. 2010)

The Kaiser Comm’n on Medicaid and the Uninsured,

Uncompensated Care for Uninsured in 2013: A

Detailed Examination (The National Academic

Press, May 30, 2014)

Vi

U.S. Conference of Catholic Bishops, Ethical and

Religious Directives for Catholic Health Care

Services, (5th ed. Nov. 17, 2009).......................0000

INTEREST OF AMICI CURIAE'

The Catholic Health Association of the United

States and Catholic Charities USA respectfully

submit this brief as amici curiae.

The Catholic Health Association of the United

States is the national leadership organization for the

Catholic health ministry in the United States.

Consisting of more than 600 hospitals and 1,400 long

term care and other health facilities in all 50 states,

the Catholic health ministry is the largest group of

nonprofit health care providers in the nation. One in

six hospital patients in the United States receives

care in a Catholic hospital,? and those hospitals serve

a high percentage of poor, low income, and

underinsured Americans.

Catholic Charities USA is the national office for

Catholic Charities agencies nationwide. For more

than 100 years it has guided and supported the vast

network of Catholic Charities agencies nationwide in

a common mission to provide service to people in

1 Pursuant to SuP. CT. R. 37.3(a), amici certify that both parties

have given blanket consent to the filing of amicus briefs in

support of either party. Pursuant to SUP. CT. R. 37.6, amici

certify that no counsel for any party authored this brief in

whole or in part, no party or party’s counsel made a monetary

contribution to fund its preparation or submission, and no

person other than amici or their counsel made such a monetary

contribution.

2 Catholic Health Ass'n, Catholic Health Care in the United

States Fact Sheet, (Jan. 2015) available at

http://www.chausa.org/docs/default-source/general-

files/cha_miniprofile_final.pdf?sfvrsn=0.

need, to advocate for justice in social structures,

reduce poverty, support families, and empower

communities. In 2014, Catholic Charities agencies

provided a wide range of services to over 9 million

poor and needy persons, and saw firsthand the

devastating impact on individuals and families of not

having access to affordable healthcare.

Amici’s missions are informed by Catholic social

teaching, which is grounded in a respect for human

dignity and instructs that health care is a basic

human right essential to human flourishing.? Amici

believe that a just society requires taking care of

vulnerable and marginalized populations, such as

those who lack health care coverage. Indeed, the

Catholic health ministry seeks to distinguish itself

by serving and advocating “for those people whose

social conditions puts them at the margins of our

society and makes them particularly vulnerable to

discrimination: the poor; the uninsured and the

underinsured; children and the unborn; single

parents; the elderly; those with incurable diseases

and chemical dependencies; racial minorities;

3 See Pope John XXIII, Pacem in Terris, para. 11 (Apr. 11, 1963)

(“Man has the right to live. He has the right to bodily integrity

and to the means necessary for the proper development of life,

particularly food, clothing, shelter, medical care, rest, and,

finally, the necessary social services. In consequence, he has the

right to be looked after in the event of ill health; disability

stemming from his work: widowhood; old age; enforced

unemployment; or whenever through no fault of his own he is

deprived of the means of livelihood.”).

3

immigrants and refugees.” Catholic hospitals are

more likely to provide public health and specialty

services, such as HIV/AIDS care, children’s wellness

and neonatal ICU, despite the often negative

financial implications.

In advancing their mission, Catholic hospitals

and Catholic Charities agencies have witnessed

firsthand the devastating impact of the lack of

affordable health insurance and health care on

vulnerable members of our society. The Catholic

Health Association therefore advocated for the

passage of the Patient Protection and Affordable

Care Act (ACA or Act), which expands health care

coverage to those without it in all 50 states and

decreases the cost to society of providing health care.

Subsidies provided by the ACA enable more

Americans to obtain health insurance and therefore

are integral to the Act’s aims. Limiting those

subsidies would have a tremendously negative effect

on the ministry's mission and millions of low and

moderate income Americans who have already

benefitted from increased access to health care.

4 U.S. Conference of Catholic Bishops, Ethical and Religious

Directives for Catholic Health Care Services at 11, Nov. 17, 2009

(5th ed.).

5 Catholic Health Ass'n, Catholic Health Care in the United

States Fact Sheet, (Jan. 2015) available at

http://www.chausa.org/docs/default-source/general-

files/cha_miniprofile_final.pdfsfvrsn=0.

4

INTRODUCTION AND SUMMARY

OF ARGUMENT

1. Congress enacted the Patient Protection and

Affordable Care Act, Pub. L. No. 111-148, 124 Stat.

119 (2010), “to increase the number of Americans

covered by health insurance and decrease the cost of

health care.” Natl Fed’n of Indep. Bus. v. Sebelius,

132 S. Ct. 2566, 2580 (2012) (NFIB). In doing so,

Congress addressed both (a) the problem that

millions of Americans lacked sufficient health

coverage or any way to pay for it, and (b) the problem

that hospitals that provided emergency care and

other medical care to the uninsured or underinsured

incurred billions of dollars in uncompensated care

costs. Indeed, before the ACA, uninsured Americans

annually made more than 20 million trips to hospital

emergency rooms and received just shy of $100

billion in health care services. Although some of the

uninsured were able to pay for a portion of the care

they received, much of the cost was passed along to

hospitals—in particular, hospitals, like many

associated with the Catholic health ministry, that

serve vulnerable patient populations. Congress

designed the ACA to address these related issues.

The ACA has three primary components that

work in concert to achieve its goals. First, the ACA

prohibits imsurance companies from denying

coverage or charging higher premiums based on a

person’s medical condition or history. 42 U.S.C.

§§ 300gg—300gg4. Second, the ACA’s individual

mandate requires individuals who are not covered by

an employer's insure.nce policy to purchase minimum

coverage. 26 U.S.C. § 5000A. The Act further

s)

provides for the establishment of health insurance

exchanges on which individuals may purchase the

required health insurance. States themselves can

choose to establish an exchange, but if they do not,

the federal government will establish such an

exchange in those states. 42 U.S.C. §§ 18031(b),

18041(c). And third, the ACA provides subsidies for

low and moderate income individuals to purchase

insurance on these exchanges. 26 U.S.C. § 36B. In

2014, approximately 7 million people purchased

health insurance through an exchange, and 5.4

million of them made their purchase through a

federally-facilitated exchange. These numbers are

increasing in 2015—to date, more than 7 million

people have enrolled or reenrolled in health

insurance coverage through a federally-facilitated

exchange.

Subsidies for insurance purchased on a federally-

facilitated exchange are designed to help the most

vulnerable throughout our nation obtain health

insurance and thus are integral to the law’s

effectiveness. Nevertheless, Petitioners contend that

subsidies are available only to individuals who

obtain their insurance on an exchange established by

a state directly rather than one established by the

federal government in the state’s stead. Without

providing any evidence in support of the claim that

Congress intended this result, they argue that

isolated snippets of the law actually function as a

poison pill that Congress tucked away in the Act,

without notice to anyone, in order to doom the law.

In doing so, Petitioners miss the forest for the

trees and choose to ignore the broader structure of

6

the law that makes clear that subsidies are available

for insurance purchased on the federally-facilitated

exchanges. Their position thus violates the venerable

canon of statutory interpretation that a statute's text

must be considered “not in a vacuum, but with

reference to the statutory context, ‘structure, history,

and purpose.” Abramski v. United States, 134 S. Ct.

2259, 2267 (2014) (quoting Maracich v. Spears, 133

S. Ct. 2191, 2209 (2013)).

Furthermore, even if the language Petitioners

cite, taken in context with the entire ACA, creates

ambiguity regarding the availability of subsidies, the

IRS permissibly interpreted the ACA through notice-

and-comment rulemaking and determined that

subsidies are available for insurance purchased on

federally-facilitated exchanges. 26 C.F.R. 1.36B-1(k),

1.36B-2(a). This was an appropriate exercise of

authority and is due deference under Chevron U.S.A.

Inc. v. NRDC, Inc., 467 U.S. 837 (1984) (Chevron).

2. The consequences of eliminating the subsidies

for insurance purchased on _ federally-facilitated

exchanges should not be minimized. By one measure,

enrollment in ACA-compliant plans sold in these

marketplaces would decline by 70 percent.

Meanwhile, unsubsidized premiums in these same

states would increase 47 percent, which would

correspond to a $1,610 annual increase for a 40 year

old nonsmoker purchasing a “silver” plan. Moreover,

these states have higher proportions of low-income

people who are less able to obtain insurance without

subsidies and thus are likely to go uninsured.

Without the subsidies the cost of caring for the

uninsured would again fall more heavily on

hospitals. Uncompensated care costs for hospitals in

2012 was $45.9 billion, or 6% of total expenses.

Notably, in one of the original compromises leading

to the ACA, hospitals accepted $155 billion in

reimbursement cuts predicated on 30-32 million

newly insured persons; trying to absorb those cuts

without the corresponding increase in coverage from

the exchanges would be devastating, especially for

hospitals that serve a disproportionately vulnerable

population. These “safety net” hospitals, many of

which are associated with the Catholic health

ministry, will still provide a significant portion of

these services as part of their charity care. But in

doing so they will have to shoulder the cost burden of

treating uninsured individuals, which in turn will

lumit their ability to assist others in need.

ARGUMENT

I. The ACA Makes Tax Credits Available To

Low and Moderate Income Americans

Regardless of the State in which They Live.

1. Congress enacted the ACA “to increase the

number of Americans covered by health insurance

and decrease the cost of health care.” NFIB at 2580.

Congress was reacting to two related problems—

millions of Americans lacked sufficient health

coverage or any way to pay for it, and hospitals that

provided emergency and other medical care to the

uninsured or underinsured incurred billions of

dollars in uncompensated care costs. Prior to the

ACA, the Department of Health and Human Services

calculated that uninsured Americans accounted for

nearly one-fifth of the total trips to hospital

emergency rooms, which in 2006 equated to more

8

than 20 million visits. Press Release, U.S. Dep't of

Health & Human Servs., New Data Say Uninsured

Account for Nearly One-Fifth of Emergency Room

Visits (July 15, 2009). In 2008, those visits led to the

uninsured receiving $86 billion in health care

services. J. Hadley et al., Covering the Uninsured In

2008: Current Costs, Sources of Payme +t, &

Incremental Costs 66 (The Henry J. Kaiser family

Found., Aug. 25, 2008). Although some uninsured

were able to pay for a portion of the care they

received, much of the costs were passed along to

hospitals—in particular, hospitals, like many in the

Catholic ministry, that serve a substantial share of

vulnerable patients. Institute of Med., America’s

Health Care Safety Net: Intact but Endangered (The

National Press, 2000). Congress designed the ACA to

address these related issues.

The ACA has three primary components that

work in concert to effectuate these goals. First, the

ACA prohibits insurance companies from denying

coverage or charging higher premiums based on a

person’s medical condition or history. 42 U.S.C.

§§ 300gg—300gg4. Second, the ACA requires

individuals who are not covered by an employer's

insurance policy to purchase minimum coverage or

pay a tax penalty (individual mandate). 26 U.S.C. §

5000A. The Act further provides for’ the

establishment of health insurance exchanges on

which individuals may purchase the required health

insurance. States themselves can choose to establish

an exchange, but if they do not, the federal

government will establish such an exchange on the

states’ behalf in that state. 42 U.S.C. §§ 18041(b),

18041(c). And third, the ACA provides subsidies for

9

low and moderate income individuals to purchase

insurance on these exchanges. 26 U.S.C. § 36B. Early

enrollment calculations for 2015 indicate that

approximately 7.1 million people already have

purchased health insurance through a federally-

facilitated exchange. Open Enrollment Week 9:

January 10, 2015 — January 16, 2015, Dep't of

Health & Human Servs. Blog (January 21, 2015).

This is an increase from the 5.4 million individuals

who made their purchase through a federally-

facilitated exchange in 2014. A. Burke et al., ASPE

Research Brief: Premium Affordability, Competition,

and Choice in the Health Insurance Marketplace,

2014 3 (Dep't of Health & Human Servs., June 18,

2014).

The three components are designed to work

together or not at all. See 157 Cong. Rec. S737 (daily

ed. Feb. 15, 2011) (statement of Senator Franken)

(describing the three “legs” of the statute and noting

“filf you take any leg out, the [ACA] collapses”). For

instance, if Congress had enacted only the rules

requiring insurers to provide coverage on

nondiscriminatory terms, with nothing more, it

would have incentivized consumers to wait to

purchase health insurance until they needed care.

This would result in the oft-referenced “death spiral”

of the reform. See NFIB, 132 S. Ct. at 2614

(Ginsburg, J., concurring in part and dissenting in

part). However, on account of the individual mandate

insurers do not face the adverse selection problem

® Available at

http://www .hhs.gov/healthcare/facts/blog/20 15/0 l/open-

enrollment-week-nine. html.

10

that leads to the “death spiral.” But those two

reforms standing alone were not sufficient—

Congress also provided for subsidies to make

insurance broadly affordable.

The subsidies under the ACA are designed to help

the most vulnerable in our society obtain health

insurance and thus are integral to the law’s

effectiveness. Nevertheless, Petitioners argue that

subsidies are available only for individuals who

obtained their imsurance “through an Exchange

established by the State under [42 U.S.C. § 18031].”

26 U.S.C. § 36B(b)(2)(A). Petitioners contend that

this section, read in isolation, means that subsidies

are available exclusively to qualifying individuals

who purchase insurance on an exchange established

directly by a state and not on one established by the

federal government on behalf of a state. Offering no

evidence that Congress intended this result but

acknowledging that a ruling from this Court in their

favor would gut the ACA, they still argue that § 36B

functions as a poison pill that Congress tucked away

in the Act—without notice ‘» anyone (including the

states}—to doom the entire law.

Petitioners miss the forest for the trees and

choose to ignore the broader structure of the law that

makes clear that subsidies are available for

insurance purchased on the federally-facilitated

exchanges. To get there, they would have this Court

violate “the fundamental canon of statutory

construction that the words of a statute must be read

in their context and with a view to their place in the

overall statutory scheme.” Util. Air Regulatory Grp.

v. EPA, 134 S. Ct. 2427, 2441 (2014) (internal

11

citation omitted). Specifically, Petitioners would have

this Court consider § 36B “in a vacuum, [and not]

with reference to the statutory context, ‘structure,

history, and purpose.” Abramski, 134 S. Ct. at 2267

(quoting Maracich v. Spears, 133 S. Ct. 2191, 2209

(2013)). This Court, however, does not confine itself

to a rigidly narrow view of the statutory language.

Indeed, “[t]he plainness or ambiguity of statutory

language is determined by reference to the language

itself, the specific context in which that language is

used, and the broader context of the statute as a

whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341

(1997); NatTl Ass’n of Home Builders v. Defenders of

Wildlife, 551 U.S. 644, 666 (2007) (“[T]he meaning—

or ambiguity—of certain words or phrases may only

become evident when placed in context.”).

An examination of the statutory scheme and

consideration of the text of the law as a whole makes

clear that Congress intended to, and did, provide

that subsidies would be available for insurance

purchased on federally-facilitated exchanges. The

key lies in how the ACA establishes exchanges. One

section of the Act provides that “Each State

shall establish an American Health Benefits

Exchange.” 42 U.S.C. § 18031(b)(1). Meanwhile, in

another section designed to afford “State flexibility,”

42 U.S.C. § 18041, the ACA provides two options: the

first is that a state itself may create its exchange, id.

§ 18041(b); the second is that, if a state elects not to

establish its own “required Exchange,” then the

federal government will “establish and operate such

Exchange within the State,” id. § 18041(c)(1)

(emphasis added). A plain reading of the text of

§ 18041(c)(1) shows that, for purposes of the ACA, a

12

federally-facilitated exchange under § 18041(c)(1) is

exactly the same as a state-established exchange

under § 18031(b)(1). Put differently, the ACA

provided that an exchange would be established in

each state, but Congress gave states the flexibility

either to tailor their own or to allow the federal

government to establish one for them. The exchange

itself, regardless of which particular. entity

established it, would be the same “required

Exchange” under the ACA.

Harmonizing these sections in light of the ACA’s

stated purpose of expanding health insurance

coverage and decreasing its costs, the text

establishes that a federally-facilitated exchange

established in a state that chooses not to create its

own is indeed an “Exchange established by the

State.” And under 26 U.S.C. § 36B(b)(2)(A), policies

purchased on these exchanges are eligible for

subsidies. Any other reading thwarts the intent of

the Act by gutting the exchanges designed to deliver

the needed reforms.’

2. The IRS permissibly interpreted the ACA

through notice-and-comment rulemaking = and

determined that subsidies are available for insurance

purchased on federally-facilitated exchanges. 26

C.F.R. 1.36B-1(k), 1.36B-2(a). This was an

appropriate exercise of authority and is due

deference under Chevron U.S.A. Inc. v. NRDC, Inc.,

467 U.S. 837 (1984).

7 The Government ably points out (Gov't Br. at 27-34, 51-54) the

various absurdities and incongruities Petitioners’ reading

would create throughout the ACA.

13

Under the familiar Chevron framework, when a

statute is susceptible to multiple interpretations this

Court defers to an agency’s interpretation as long as

it is based on a permissible construction of the

statute. Chevron, 467 U.S. at 843. An agency reading

that “give[s]) effect to the statutory provisions,

allowing them to accomplish their manifest objects,”

Abramski, 134 S. Ct. at 2269, is permissible while a

reading that renders illusory a statute’s promises is

not. Chevron deference is no less appropriate where

the question arises in the tax context. See Mayo

Found. For Medical Educ. & Research v. United

States, 131 S. Ct. 704, 713 (2011).

The IRS has the authority under the ACA to

interpret 26 U.S.C. § 36B(b)(2)(A). 26 U.S.C. § 36B(g)

(“The Secretary shall prescribe such regulations as

may be necessary to carry out the provisions of this

section.”). Its reading of the statute clearly furthers

what this Court has recognized as the broad policy

goals of the ACA: “to increase the number of

Americans covered by health insurance and decrease

the cost of health care.” NFIB, 132 S. Ct. at 2580.

And as the Congressional Budget Office (CBO)

advised Congress while it was debating the ACA,

“It}he substantial premium subsidies available in the

exchanges would encourage the enrollment of a

broad range of people,” and that subsidies “would

dampen the chances that a cycle of rising premiums

and declining enrollment would ensue.” CBO, An

Analysis of Health Insurance Premiums Under the

Patient Protection and Affordable Care Act 19—20

(Nov. 30, 2009). As explained above, the best reading

of the text and structure of the ACA is that subsidies

are available on federaily-facilitated exchanges. At

14

the least, that is a permissible construction of the

statute.

Petitioners argument to the contrary is

essentially an expressio unius est exclusio alterius

argument—the inclusion of a requirement for

subsidies on one kind of exchange clearly means that

Congress prohibited subsidies in another type. But

as Judge Williams explained, “the maxim has little

force in the administrative setting, where [courts]

defer to an agency’s interpretation of a statute unless

Congress has directly spoken to the precise question

at issue.” Mobile Comm’s Corp. v. FCC, 77 F.3d 1399,

1404-05 (1996) (citations omitted). Congress did not

clearly say that subsidies are not available on

federally-facilitated exchanges. Accordingly, the

IRS’s interpretation of the statute, which is

necessary to ensuring that its purposes are fulfilled,

should not be overturned.

Il. Eliminating Subsidies on Federally-

Facilitated Exchanges would Have Devastating

Consequences for Catholic Hospitals, Their

Patients, and the Communities They Serve.

1. As noted above, the ACA’s goal of expanding

health care coverage depends on _ three

interdependent reforms: (1) insurers must provide

coverage to all on nondiscriminatory terms; (2)

individuals must buy health insurance; and (3)

health care exchanges will provide subsidies for

those who do not qualify for Medicaid but need

assistance to buy insurance.

It is thus no exaggeration that a decision from

this Court holding that subsidies are not permitted

15

for insurance purchased on the federally-facilitated

exchanges would devastate the ACA. Four members

of this Court expressly acknowledged as much:

“Without the federal subsidies, individuals would

lose the main incentive to purchase insurance inside

the exchanges, and some insurers may be unwilling

to offer insurance inside of exchanges. With fewer

buyers and even fewer sellers, the exchanges would

not operate as Congress intended and may not

operate at all.” NFIB, 132 S. Ct. at 2674 (Scalia,

Kennedy, Thomas, and Alito, JJ., dissenting).

Moreover, the majority of insurance policies

purchased through ACA exchanges have been

obtained through those that are federally-facilitated.

Compare A. Burke et al., ASPE Research Brief:

Premium Affordability, Competition, and Choice in

the Health Insurance Marketplace, 2014 3 (Dep't of

Health & Human Servs., June 18, 2014) (noting that

in 2014 5.4 million new enrollees purchased

insurance through a federally-facilitated exchange)

with ASPE Issue Brief: How Many Individuals Might

Have Marketplace Coverage After the 2015 Open

Enrollment Period?, 1 n.3 (Dep't of Health & Human

Servs., Nov. 10, 2014) (noting overall health

insurance enrollment in the exchanges for 2014 was

just under 7 million people). And overall, the CBO

has estimated that subsidies will cover

approximately two-thirds of the premiums charged

to individuals who purchase policies through the

exchanges. CBO, An Analysis of Health Insurance

Premiums Under the Patient Protection and

Affordable Care Act 6 (Nov. 30, 2009). A recent study

calculates that if this Court were to find for

Petitioners, enrollment in the 34 states with

16

federally-facilitated exchanges would fall by 75

percent, with the most dramatic declines among the

lowest income individuals. L. Blumberg et al., The

Implications of a Supreme Court Finding for the

Plaintiff in King v. Burwell 8.2 Million More

Uninsured and 35% Higher Premiums (Urban

Institute, Jan. 2015).

The negative effects of such a holding also will

affect enrollment in ACA-compliant plans both inside

and outside the federally-facilitated exchanges. E.

Saltzman & C. Eibner, The Effect of Eliminating the

Affordable Care Act’s Tax Credits in Federally

Facilitated Marketplaces 5 (Rand Corp., 2015).

Should this Court invalidate the subsidies at issue

here, enrollment in the entire ACA-compliant

individual market is expected to decline by 9.6

million, or 70 percent. Jd. This drastic drop is

predicted because the states with federally-

facilitated exchanges “have higher proportions of

low-income people, who tend to have a higher price

elasticity of demand for insurance and who are thus

more likely to drop insurance without subsidies.” Jd.

This participation decrease in the exchanges would

cause the unsubsidized premiums in such markets to

increaseby 47 percent in states with federally-

facilitated exchanges. In practical terms, this would

correspond to a $1,610 annual increase for a 406 year

old nonsmoker purchasing a “silver” plan. Jd.

These effects will create an untenable situation

for those the ACA is designed to help. Indeed, the

majority of people without health care coverage prior

to the ACA were from “working families,’ and

“[a]bout 63 percent were in households with incomes

17

under $50,000 in 2011.” C. Babcock, Uninsured

Americans Get Hit With Biggest Hospital Bills,

Bloomberg, Mar. 11, 2013. And a just-released study

finds that of those estimated to lose coverage if this

Court accepts Petitioners’ faulty construction of the

ACA, 81 percent work full- or part-time and 82

percent are low or moderate income but not

considered poor under the federal poverty guidelines.

L. Blumberg et al., Characteristics of Those Affected

by a Supreme Court Finding for the Plaintiff in King

v. Burwell (Urban Institute, Jan. 2015).

Without the subsidies, lower income individuals

and families will not be able to purchase insurance

and will seek the only care available to them—which

often is expensive emergency care. In addition to

being extremely costly, exclusively using emergency

rooms is no substitute for regular treatment:

“[djelaying or forgoing needed care can lead to

serious health problems, making the uninsured more

likely to be hospitalized for avoidable conditions.”

The Kaiser Comm’n on Medicaid & the Uninsured,

The Uninsured & the Difference Health Insurance

Makes 2 (Sept. 2010). Patients, hospitals, and the

overstressed health care system will be hurt by a

return to the old status quo. See S.M. Miller, The

ACA Helps Correct Incentives for Patients to Use the

Health Care System Inefficiently (Robert Wood

Johnson Foundation, Aug. 30, 2013).

2. Dropping insurance coverage is not a costless

decision. Indeed, the individuals who would drop

insurance for lack of subsidies would still require

health care. Press Release, U.S. Dep’t of Health &

Human Servs., New Data Say Uninsured Account for

18

Nearly One-Fifth of Emergency Room Visits (July 15,

2009) (noting that the uninsured made more than 20

million trips to hospital emergency rooms in 2006).

The cost of care for the uninsured gets passed on to

hospitals, insurance companies, employers, and

individuals. Significantly, hospitals have provided

more than $413 billion in uncompensated care to the

uninsured and underinsured since 2000. American

Hosp. Ass’n, Uncompensated Hospital Care Cost Fact

Sheet 4 (Jan. 2014).

As an example, total uncompensated care in 2013

was $84.9 billion, 60 percent of which was incurred

by hospitals. The Kaiser Comm’n on Medicaid & the

Uninsured, Uncompensated Care for Uninsured in

2013: A Detailed Examination (The National

Academic Press, May 30, 2014). These costs fall most

heavily on “safety net” hospitals—many of which are

associated with the Catholic health ministry—that

serve a significant share of uninsured, Medicaid, and

other vulnerable patients. Inst. of Med., America’s

Health Care Safety Net: Intact But Endangered

(2000). For instance, one study showed that for these

safety net hospitals, uncompensated care costs can

amount to more than 20% of total operating costs.

Changes in Health Care Financing & Org.,

Challenges Facing the Health Care Safety Net (Feb.

2008).

While hospitals budget for providing a significant

portion of these services as part of their charitable

care, there remains significant cost in treating

uninsured or underinsured individuals that prevents

hospitals from more completely fulfilling their

missions. The effects of these costs are most strongly

19

felt in facilities, such as Catholic hospitals, that

strive as part of their mission to serve especially

vulnerable populations. Simply put, the more

resources Catholic safety net hospitals must devote

to providing emergency and other. medically

necessary care to uminsured people, the fewer

resources they have to address the many other

significant and unmet needs of their communities,

among them preventing illness and ensuring

adequate nutrition.

This particular challenge to the ACA comes at a

time when these hospitals are already under great

strain due to the ongoing and steady decreases in

Medicare and Medicaid reimbursement rates.

Compare Am. Hosp. Ass’n, Summary of 2010 Health

Care Reform Legislation 34-35 (Apr. 19, 2010)

(noting reimbursement cuts of approximately $40

billion over the next decade), with B. Semro,

Potential Impacts of New Federal Policies on

Provider Reimbursement Rates (The Bell Policy

Center, Nov. 1, 2011) (noting that the ACA would cut

provider payments by more than $150 billion in the

next decade). One of the many reasons the Catholic

Health Association supported the ACA was that,

despite this reimbursement rate decrease, the law

promised to add more people to the insurance rolls,

which should have the effect of absorbing the cuts.

See Keehan, Sr. Carol, Sisters of Charity Health

System, Remarks at Cleveland City Club, Next Steps

for the Affordable Care Act (Aug. 17, 2012) (noting

that hospitals accepted as part of the legislative

compromise leading to the ACA $155 billion in

reimbursement cuts predicated on 30-32 million

20

newly insured persons).® This reform, in turn, would

free up resources for hospitals to perform more

health care services for low income and otherwise

vulnerable populations and the communities the

hospitals serve.

Additionally, in reliance on the existence of

subsidies being available in every state, some

hospitals have already started designing and

implementing strategies to provide much needed

preventative and other primary care to those who,

for the first time in many years, will be coming into

the health system. See generally T. Coughlin et al.,

Strategies in 4 Safety-Net Hospitals to Adapt to the

ACA (The Kaiser Comm’n on Medicaid & the

Uninsured, June 2014). While Catholic hospitals

remain committed to their mission regardless of the

outcome of this case, their ability to meet all these

new needs without having increased numbers of

insured individuals will be very difficu!t.

It is also important to note that Catholic

Charities agencies in all states serve many working

class and low income persons and families who can

obtain health care through the exchanges. Too often

these agencies encounter families who have been

forced into bankruptcy and poverty as a result of a

medical catastrophe, including illnesses that could

have been avoided by regular check-ups and routine

medical care. Health emergencies coupled with the

8 Available at http://www.chausa.org/docs/default-

source/general-files/flc1f77d0e5943338373dea Ic leff5371-

pdf pdf?sfvrsn=0.

21

lack of health imsurance threatens the family

economic security of millions of Americans.

In short, a decision from this Court limiting the

availability of subsidies provided under the ACA

would further strain the U.S. health care system and

place hospitals, and low and middle income

Americans and their communities in a worse position

than they were before the reform. Congress could not

have intended this result when it enacted the ACA.

22

CONCLUSION

The judgment below should be affirmed.

Lisa J. Gilden

THE CATHOLIC HEALTH

ASSOCIATION OF THE

UNITED STATES

1875 Eye St. N.W

Suite 1000

Washington, DC 20006

Respectfully submitted,

Christopher J. Wright

Counsel of Record

Stephen W Miller

HARRIS, WILTSHIRE &

GRANNIS LLP

1919 M Street N.W.,

Eighth Floor

Washington, DC 20036

(202) 730-1300

cwright@hwglaw.com

Counsel for Amici Curiae

The Catholic Health

Association of the United

States

Catholic Charities USA