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Policy & Politics

Obamacare Is Upheld But Other Legal Challenges Could Linger

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Mark Fisher/CC
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The Supreme Court upheld a key provision of Obamacare in June, 2015.

The Affordable Care Act passed its second major test before the Supreme Court Thursday. In King v. Burwell the Supreme Court upheld a key measure of the Affordable Care Act, ruling that federal health insurance subsidies should be allowed in all states,  regardless of whether the state has created its own insurance exchange or relies on the federal governments'.

The news means many Americans who rely on these subsidies will be able to keep their insurance. Lisa Clevenger of Muncie, Indiana says she and her husband weren’t able to afford insurance without the subsidies -- and they faced going uninsured if the court had ruled them unconstitutional.

Healthcare costs were a major issue for her. “You talk about rolling change to finally make your electric bill because you had to pay for your health costs.  Yeah, that’s a big deal,” she says.

The Supreme Court's ruling was a victory for the Obama administration. But some national and state leaders - mainly Republicans - are signaling that the effort to scrap Obamacare is far from finished. And other lawsuits that threaten the bill still loom in lower courts. Shortly after Thursday’s ruling, Indiana Governor Mike Pence called for its repeal, and Congressional Republicans have voted more than 50 times to do just that.

The Affordable Care Act still faces other judicial threats as well. There are at least a dozen challenges in the federal courts. One from Indiana and 39 of its school corporations is a lawsuit against the IRS, the Department of Labor and the Treasury Department for what that state says is an intrusion of the 10th amendment.

"This is fundamentally an issue of states’ rights,” said Jim Hamilton, an attorney with Bose McKinney & Evans, who represents the schools in the suit.

Hamilton says the lawsuit focuses on the employer mandate in the Affordable Care Act, which requires large employers to provide health insurance for all workers who clock 30 or more hours a week. If they work over that threshold and don't receive healthcare, the IRS can penalize the employer $2,000 per employee.  Hamilton says that fee is a tax and therefore violates the state's sovereignty.

"We believe that the federal government should not have the authority to directly tax these local units of government and effectively cause staffing changes the way they have," he says.

Schools in the state have had to scale back the hours of bus drivers, cafeteria workers and teacher aides an average of six hours to ensure they don't work more than 29 a week.

"When these are very low income people, every hour counts and those are hours for which they are not getting paid," he says.

Thursday’s ruling undercut part of Indiana’s argument challenging the constitutionality of subsidies. But state Attorney General Greg Zoeller says he will still pursue the lawsuit, which was put on hold last fall while King vs. Burwell was working its way through the courts.

But, Indiana University Professor of Law and Co-Director of its Center for Health Policy David Orentlicher says the case has a scant chance of succeeding. He says the $2,000 fee is a fine -- not a tax -- and the federal government has the right to collect it.

"State governments as employers are not immune from rules like that because they're government because they're just being treated in the same way as any other employer."

Orentlicher said that for the most part, Obamacare has survived its substantial legal challenges –but a bigger threat may be the outcome of next year’s presidential election.