The Affordable Care Act, a.k.a. Obamacare, dodged a bullet in 2012 when the Supreme Court upheld the individual mandate. Wednesday, it faces a second major legal challenge; this one to the taxpayer-funded premium subsidies that underpin the entire law.
The nine justices will hear arguments over whether it’s legal to give out the subsidies in 34 states where the federal government established and runs the insurance exchanges, HealthCare.gov.
The debate centers on interpretation of a four-word phrase buried in the 2000-page law that says financial aid is available through “exchanges established by the state.”
The stakes are high: About 7.5 million Americans have received subsidies to purchase health insurance coverage in those 34 states.
If the court strikes them down, the “vast majority” will be forced out of coverage almost immediately because their premiums will become prohibitively expensive, experts say.
"There could be chaos," said Abbe Gluck, a Yale Law School professor who specializes in health law.
An average American receiving Obamacare subsidies pays just $105 a month out of pocket for insurance, according to the Kaiser Family Foundation. Take away the aid and the cost spikes to $373 a month – for many, a price out of reach.
“The horror stories will be real,” Republican Sen. Ben Sasse of Nebraska warned in the Wall Street Journal. “Chemotherapy turned off for perhaps 12,000 people, dialysis going dark for 10,000.”
Experts are also sounding alarm bells about a broader impact: the upending of individual insurance markets and a likely “death spiral.” Premiums would skyrocket for everyone in those 34 states, not just those who purchased Obamacare, a study in the New England Journal of Medicine found.
And if you think the states, Congress or the Department of Health and Human Services could enact a quick, even temporary, fix, then think again. There has been little-to-no preparation for a court decision striking the subsidies down.
“We’ll have to wait and see what the Supreme Court decides,” President Obama told Reuters Monday. “If they rule against us, we’ll have to take a look at what our options are.”
There will be just 25 days to look at those options after the court releases its opinion, which is expected in June, leaving precious little time for lawmakers and those relying on subsidized Obamacare insurance to act to come up with an alternative plan.