WASHINGTON -- June 29--That’s the day industry lobbyists expect the narrowly divided Supreme Court to rule on King v. Burwell, the biggest challenge to the Affordable Care Act since 2012. If the court finds in favor of the plaintiffs, it could end subsidies in 34 states and largely defang the employer mandate for convenience stores and other businesses.
Unlike 2012’s challenge on the constitutionality of the law, King v. Burwell addresses the legitimacy of its funding mechanism. The Affordable Care Act says that each state will set up an insurance exchange and the federal government will offer subsidies to anyone making less than four times the federal poverty line ($95,400 for a family of four). But 34 states have either opted to allow the federal government to set up and administer their “state” exchange for them or entered into a partnership arrangement where they run it jointly. The legal challenge is whether or not the federal and partnership exchanges will qualify for subsidies.
A Win for Retailers?
Lobbyist Neil Trautwein, who also serves as the vice president of healthcare policy for the National Retail Federation, told CSP Daily News a ruling for the plaintiffs will free many larger c-stores from the employer mandate. While any employer with more than 50 full-time equivalent employees is required to provide affordable health insurance to anyone working 30 or more hours a week, they’re only penalized if an employee who is not offered a plan gets subsidized coverage through the exchanges.
“If King prevails that means subsidies will not be available in those states,” Trautwein said. “For those covered employers, they’ll no longer face penalties.”
While enforcement of the law was delayed until 2016 for c-stores with 50–99 full-time equivalent employees, retailers with 100 or more are required to offer coverage to 70% of full-timers this year and 95% next year. Trautwein said a June 29 decision in favor of the plaintiffs could take effect quickly.
“Very likely the month following the Supreme Court decision subsidies would no longer be available,” Trautwein said.
Emergency Legislation
But NACS external counsel Scott Sinder, who is a partner and chair of the Government Affairs and Public Policy Group at law firm Steptoe & Johnson, said neither outcome is likely to have such a strong effect.
“One outcome is the IRS is fine with what it did, [and there is] no impact,” Sinder told CSP Daily News. “The other option is the court says no, the subsidies cannot be paid on a federal exchange. That doesn’t eviscerate the law.”
Sinder said that if the court rules in favor of the plaintiffs, Congress will likely pass emergency legislation to extend the subsidies until the end of the year. After that, there are two possible options.
1. Democrats and Republicans may come to a compromise under which the law is re-written so that subsidies are allowed for the federal exchanges, but in turn other concessions are made—like raising the definition of “full-time” from 30 to 40 hours per week.
2. Or, supporters of the law may do nothing and force a showdown. Some states may compromise by setting up their own exchanges or converting to a partnership model (assuming partnerships are eligible for subsidies). States firmly opposed will have a battle on their hands.
“There are going to be states like Florida and Texas who won’t do it,” Sinder said. “The governor is going to have to defend his choice.”
C-Store Fallout
Surprisingly, c-store owners may find themselves on the side of the ACA this time.
It’s true that larger chains that only operate in states with no subsidies will benefit greatly from not having to buy insurance. But smaller stores, which would have enjoyed a slight competitive advantage if their rivals were forced to pay out for insurance, are unlikely to approve. More significantly, multi-state chains with even one store in a state that does offer subsidies will have to offer insurance across the board in order to avoid massive penalties.
What will this mean for your store? After the Supreme Court rules, check back to CSPnet.com for an update on what’s coming next.
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