Supreme Court poised to rule on Obamacare: What it could mean for coverage and costs
For the second time in three years, the U.S. Supreme Court could determine the fate of the president’s health care law with a case coming up for oral arguments in March. While a limited number of seniors are covered under the health care law, a Court decision could have a big impact financially on your health care costs if the High Court rules the law unconstitutional.
With President Obama controlling the veto pen over Congress, lawmakers and the White House will continue their health care legislative standoff. Two years ago, the Supreme Court voted 5-4 in favor of the law. Now, the Court will hear a new challenge to the law, in the case of King v. Burwell. The fight is over whether the Obama administration is improperly providing tax credits to consumers who purchase health insurance through the federal exchanges.
When the Supreme Court upheld the Affordable Care Act last time, it was on a constitutional challenge to the individual mandate that you must have health insurance or pay a tax penalty. This time the issue is about the authorization for tax subsidies for low and middle income folks. The lawsuit alleges that the government should not be providing subsidies to people who purchase coverage in the 36 states that have opted not to run their own health insurance marketplaces.
Critics say the law explicitly allows subsidies in exchanges that are run by the states. In all the remaining states, the federal government has stepped in. But because of a typo that got into the final version of the law, it says states are the only ones that can provide subsidies. Those challenging the law say the subsidies shouldn’t be allowed for the states that didn’t set up exchanges.
The apparent ambiguity in the text of the law, the one specifying that subsidies are available “through an Exchange established by the State under [section] 1311 of the Patient Protection and Affordable Care Act,” comes because Congress hasn’t been behaving like it usually does. Normally, after any major legislation is passed, lawmakers often find typos, and minor errors that need to be fixed and usually pass a corrective piece of legislation by unanimous consent.
But because the Obamacare legislation was extremely partisan with Democrats pushing through the vote without a single Republican vote, no one dared to try and pass another bill correcting errors, typos and minor fixes. Congress was so divided at the time that even routine corrections would never have passed. So errors and typos in the Obamacare law became law.
Two U.S. appeals courts in July issued conflicting rulings on health-law subsidies, raising questions about the fate of tax credits provided to millions of Americans which the Supreme Court will have to resolve before it rules in June. The legal question will revolve around the actual writing of the law and Congressional intent when the law was written. Supporters of the law say the critics are focused on too narrow a reading of the intent of the lawmakers.
Why not ask the guys who wrote the bill, you wonder? Reporters have, and virtually everyone who was involved in the writing acknowledges that Congress intended to have the federal exchange allow subsidies as well as the states.
But the Supreme Court is not bound by what Congress intended at the time. That’s the power of the Court. While they can cloak things in upholding precedents, the Court can rule however it wants to. And if Congress doesn’t like it, they can rewrite the law – if they can get the legislation passed by both chambers and signed by the president.
Whatever the High Court rules, there are consequences. If the Court rules against the administration in King v. Burwell, more than 5 million people would lose their subsidies and far fewer people would be able to buy coverage on the insurance exchanges. Most of the payments insurers were planning to receive this year — about $32 billion, according to the Congressional Budget Office — would disappear as well.
This could have enormous implications that could upend the entire ACA. To understand what’s at stake, a Rand Corporation study last month explains just why the subsidy challenge is such a big deal. Of the 5.4 million people who signed up for health insurance on federal-run exchanges last year, 87 percent of them received subsidies. So if you wiped away those subsidies, Rand predicts that premiums would be 43.3 percent higher on average in the individual market, while enrollment – on and off the exchanges – would drop by 68 percent.
That means 11.3 million fewer Americans would have health insurance, according to the think tank’s analysis. The fallout would put more pressure on Medicaid and Medicare, which already provides health care to the vast majority of seniors. It could mean millions of Americans would see dramatic price increases in their insurance, causing many of them to drop out or be unable to afford health care insurance. That would likely undermine the individual insurance market altogether, leaving mostly sick people left to fund the program, which is not a financial model that can succeed.
Also contributing to this story were: Politico, the Hill, Bloomberg, the Washington Post, Fiscal Times and the National Journal.