With the Supreme Court poised to hear oral arguments in the King v. Burwell case, many are left wondering what their healthcare will look like once the decision is handed down.
Five years after Congress finished writing the hefty health care law it was fairly certain there would be challenges to the initiative. And it has certainly seen its fair share of challenges, having been voted on sixty times in an attempt to repeal it. But there are some who think that King v. Burwell is more than just an admirable foe to the Affordable Care Act (ACA); it may be its undoing.
The case itself falls to one section of the ACA
Section 36B, for anyone who’s interested. That section says that subsidies will be given to qualifying citizens who bought their health insurance “through an Exchange established by the state under 1311.” As Kenneth Yood notes for the Healthcare Law Blog, these subsidies are a vital part of the ACA’s goal to create competition and lower the cost of the healthcare market:
These credits/subsidies are considered to be a crucial element of Obamacare because they make participation possible for qualifying individuals and families who cannot afford the monthly insurance premiums applicable to policies purchased on the exchange. In fact, studies show that the credits/subsidies can reduce the cost of monthly premiums for qualifying individuals and families by as much as 89%.
The issue is, section 1311 only details exchanges set up through the state which, of the 51 exchanges that have been set up, only 14 states and the District of Columbia have established. For plaintiffs in this lawsuit the issue is the other 36 exchanges that were established by the federal government that are still collecting subsidies.
They were supposed to be the ACA’s carrot to entice states to establish their own exchanges, which last year allegedly cost the government a hefty $20 billion in total. If those states didn’t go for it, then their citizens wouldn’t get any subsidies. As it turns out, seven words may be the strongest opposition to the ACA.
If these subsidies are lost in the 36 states without their own exchange, it’s important to note that consumers wouldn’t be required to pay back the tax credits they received. But it would also leave a whopping seven to eight million people losing their subsidies, and possibly their health insurance if they can no longer afford it. Many fear that it would be the beginning in the death of the ACA, as Stephani Becker writes for The Shriver Brief:
To put this into context, 77% of Illinois consumers and an overwhelming 87% of consumers across the nation accessed financial assistance to purchase plans in the federal Marketplace. If those tax credits were stripped away, not only would this have a devastating impact on the health and lives of millions of people…but it would create what economists call a “death spiral” in the health insurance market. Without financial assistance, healthy people would leave the Marketplace, making the premiums go up for those who remain, which would cause them to leave as well.
Obviously, the simplest solution here would be for states to set up their own exchanges, since those wouldn’t be challenged by the Supreme Court’s decision no matter what. But since no one can force the state governments to do that, and that option is tied up in political red tape, it seems the ACA’s fate will fall to the courts.
And how will they decide?
Well, as Wednesday’s oral arguments draw near, most people are still debating that. After the Fourth Circuit decided in favor of the federal government on the issue, many were surprised that the issue was called up by certiorari before there was a true split in the courts, but took that to mean that at least four of the judges had doubts about how King was decided by the lower courts. Elijah Wolfson, in a post for Al Jazeera America, notes that that many can guess where the party lines fall:
It is widely assumed that Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan will side with the defense. Justices Antonin Scalia, Clarence Thomas and Samuel Alito are expected to vote in favor of the plaintiffs. That leaves Justices John Roberts and Anthony Kennedy as the swing votes. Most pundits believe Kennedy’s vote in the 2012 case challenging the ACA’s individual mandate (he voted against its constitutionality) suggests he’ll side with the plaintiffs. That means the outcome likely rests in the ink in Roberts’ pen.
However, their decision isn’t expected until at least June of this year, well after when insurers selling on the ACA will be filing 2016 rates. If a large chunk of people were to drop out in the summer with 2016 rates already locked in, insurers would suddenly be facing drastically different assumptions for what 2016 health plans would need to be. As Jason Millman writes for the Washington Post, the Obama administration is (predictably) reluctant to make any moves administratively, while others have offered undecided solutions for the potential crisis:
Republicans, on the other hand, want to show the court that a ruling against the Obama administration would not be disruptive. A trio of senior Republican senators wrote in a Washington Post op-ed Sunday that they had a plan to offer temporary financial assistance to those who would lose the subsidies. But they didn’t provide key details — such as how long they’d provide the aid, and what it would be worth — and their offices haven’t said when they might release more details. It’s also questionable how much support there would be for such a measure among Republican lawmakers.
Actuaries, who work for the insurers, are pushing for the Obama administration to let insurers to change their 2016 rates this summer if the subsidies are invalidated in the federal exchange states. They’ve also suggested allowing insurers to now propose two sets of rates — one if the federal subsidies survive, and another if they don’t.
No matter what happens, it’s likely this issue will, unfortunately, not be resolved quickly. But as oral arguments emerge on Wednesday, there may be a better sense of what consumers need to prepare themselves for.