Employers Weigh In on ACA Issue Before High Court

Only about one-quarter of employers support ending federal subsidies for individual coverage in states that don't operate their own exchange.

The change in the Patient Protection and Affordable Care Act (ACA) that is being contemplated by the U.S. Supreme Court is the one least favored by employers, according to a yet-to-be released Mercer survey.

As part of the survey, nearly 600 employers were asked whether they would favor or oppose a number of ACA-related changes being discussed by Congress and the courts, keeping in mind the impact of each change on their organization’s health benefit program. The change with the least backing is “Disallowing federal subsidies for individual coverage in states that don’t operate their own exchange.” Only 27% are in favor, while 31% are opposed (42% say they have no opinion).

In King v. Burwell, the 4th U.S. Circuit Court of Appeals determined that, even though the language of the Patient Protection and Affordable Care Act (ACA) says tax subsidies may be paid for insurance purchased on an exchange “established by the state,” based on the intent of Congress, any exchange would allow for the federal government to provide subsidies. However, in Halbig v. Burwell, the U.S. Court of Appeals for the District of Columbia Circuit ruled the plain language of the ACA provides that only those in state-run exchanges may receive premium subsidies. The full panel of both circuits has been asked to rehear the cases, but, the Supreme Court has agreed to review the decision.

The Supreme Court heard arguments in the case this week, and the New York Times reported that the justices seemed “sharply split” about the case. The case has implications for employers. For one thing, employer penalties for not offering affordable coverage are triggered when one employee goes to an exchange for coverage and receives a subsidy. For the 36 states, including D.C., where the exchanges are federally run, federal tax subsidies would stop, and employers would not be subject to a penalty.

In Mercer’s survey, the change most supported by employers is the elimination of the excise tax on high-cost plans (80% favor, 8% oppose), followed by the repeal of the employer mandate (64%, 16%). Fifty-nine percent of surveyed employers said they favor a change in the definition of full-time employee (FTE) to 40 hours per week, 56% support a repeal of the automatic-enrollment requirement, and 53% favor a repeal of the medical device tax. Forty-six percent of employers support a repeal of the ACA’s individual mandate.