The Supreme Court will hear arguments today in a case that could gut Obamacare.
The case will decide the fate of the health reform law’s financial subsidies, which help millions of individuals and families to afford coverage. In other words, Obamacare’s reason for being.
As we explained in our ACA 201 series, at issue is whether the subsidies apply only in states that set up their own health insurance marketplaces, or, as is the case now, also in states that use the federal marketplace.
More than half of all states, including Maine, use the federal marketplace Healthcare.gov. It’s geared toward people who buy their own health insurance rather than get coverage through work or the government. (Most Mainers don’t use the Healthcare.gov, they get health insurance through work or government programs like Medicaid or Medicare.)
The case hangs on some imprecise wording in the health reform law. If the court decides the subsidies, issued in the form of tax credits, can’t be issued to consumers in Healthcare.gov states, millions of consumers could drop or forgo insurance because it’s too expensive without the financial leg up.
Supporters of the ACA argue the law’s drafters clearly wanted everyone to have access to the subsidies. Opponents are exploiting the imprecise language in an attempt to undermine the law on a technicality, they say.
The plaintiffs in the case — King v. Burwell — contend that the law’s authors deliberately wrote that the tax credits are available through marketplaces “established by the State.” The intent was to compel states to set up their own marketplaces by holding the tax credits over their heads, they say.
Here’s what the ruling could mean for Maine:
- Nearly all of the 75,000 Mainers who enrolled through Healthcare.gov for coverage in 2015 could lose their subsidies. About 90 percent qualified for financial assistance, according to U.S. HHS. People who can’t get affordable health insurance through their job and earn between 100 percent and 400 percent of the federal poverty level (between $23,850 and a $95,400 a year for a family of four) are eligible.
- The Urban Institute and Robert Wood Johnson Foundation estimate that 62,000 Maine residents would lose subsidies worth $257 million come 2016, boosting the number of uninsured people in the state by 50,000. That’s exactly the opposite of the ACA’s intent, to expand coverage to millions more Americans.
- Just over three quarters of Maine’s enrollees got coverage for $100 or less after tax credits, as of December 2014. Without the financial help, Mainers would be paying much more — $434 a month on average, according to HHS.
Losing the subsidies would make health insurance so expensive that many people would drop their coverage, experts say. Most of them are likely to be young and healthy, because people who aren’t sick are more inclined to skate by without insurance. But they subsidize the costs of older, sicker people in the insurance system, so without them, premiums will skyrocket, health experts predict. That “death spiral” could upend the entire insurance market, putting us right back to square one — lots of uninsured people seeking expensive care in emergency rooms that people with insurance foot the bill for.
At the same time, taxpayers wouldn’t be paying for the subsidies, either. Congress’ Joint Committee on Taxation estimates that the subsidies, if continued, will amount to more than $100 billion by 2018.
Despite plenty of speculation, no one knows how the justices will rule. If the court rules in favor of the subsidies, nothing would change for consumers. Everyone could just go about their insurance-buying business as usual.
If the justices rule against the ACA, when would people stop getting subsidies?
- No one would have to pay back subsidies used in 2014 or during the months of this year leading up to the Supreme Court case. No matter the justices’ decision, it won’t be retroactive.
- But the subsidies affect a person’s tax status for the full tax year, so people enrolled in coverage for 2015 are potentially at risk, explained Andrea Irwin, legal and policy director at Consumers for Affordable Health Care, an Augusta advocacy group. “In terms of when the subsidies would stop flowing, we truly don’t know the answer,” she wrote to me in an email.
- The court is expected to issue its decision in June. The subsidies will keep flowing at least until then. If the justices rule against, the subsidy spigot would shut off 25 days later. “There are certainly people who would have to drop coverage immediately without the subsidy mid-year, this summer,” Irwin wrote. This morning, however, Justice Samuel Alito raised the possibility that, if the court rules against the ACA, the justices could put off the ruling until the end of the year. That way, people who signed up for coverage in 2015 wouldn’t see their subsidies yanked from them in the middle of the year.