Justice

People Who Are Alive Today Because Of Obamacare Beg Court Not To Take Their Health Insurance Away

CREDIT: AP Photo/J. Scott Applewhite, File

Disclosure: The author of this post consulted on the drafting of this brief.

David Tedrow believes that Obamacare saved his life. Near the end of 2013, he was suffering from end-stage liver failure and needed a transplant or he would die. Unable to afford the transplant or the expensive follow-up care without insurance, David was able to obtain the health plan he needed to pay for his treatment through the Affordable Care Act’s insurance exchange in North Carolina, and this allowed him to remain on a transplant list he would have been taken off of if he was uninsured.

Last April, David received the transplant that saved his life. He believes that he is still here today because of Obamacare.

David is one of several individuals with life-threatening health conditions that joined an amicus brief filed Monday in the United States Court of Appeals for the District of Columbia Circuit. The brief asks the court to reject a claim brought by opponents of the Affordable Care Act seeking to cut off health subsidies to people entitled to receive them in nearly three dozen states. Other signatories to this brief include Jared Blitz, a man born with a heart condition who is able to afford life-saving heart surgery because of the Affordable Care Act, Jennifer Causor, a woman with cystic fibrosis whose story ThinkProgress told here, and Steve Orofino, a chemist and cancer patient who says that “I would have had to declare bankruptcy or I could be dead by now if it weren’t for the Act.”

The theory behind the lawsuit, known as Halbig v. Burwell, is that a passage of the Affordable Care Act should be read out of context in order to strip health insurance from millions of Americans. The Act gives each state a choice. They can either operate their own health exchange, where the state’s residents may buy subsidies health insurance, or they may allow the federal government to operate this exchange for them. The plaintiffs latch onto a provision of the law that appears to restrict subsidies to individuals who obtain insurance through “an Exchange established by the State,” though, as we explain in detail here and here, the bulk of the law contradicts the Halbig plaintiffs’ reading. Moreover, Supreme Court precedent instructs courts not to read individual passages of a law out of context. “[A] reviewing court should not confine itself to examining a particular statutory provision in isolation,” the Court explained in 2007, as the “meaning—or ambiguity—of certain words or phrases may only become evident when placed in context.”

Much of the threat Halbig presents to people like David, Jared, Jennifer and Steve is obvious. If the courts agree to cut off subsidies in most of the states, the out-of-pocket cost of health insurance premiums will skyrocket for many individuals because their premium will no longer be paid in part through Obamacare. As the amicus brief points out, however, Halbig is actually considerably more dangerous than an initial look at it might suggest.

The reason why is because health insurers must maintain a delicate balance of sick and healthy customers in order to remain in business. The nature of health insurance is that some customers — those that are currently healthy — pay more into their health plan’s insurance pool than they are currently drawing out. Meanwhile, other customers — those that are sick or have expensive chronic conditions — receive more money out of the insurance pool than they pay into it through their premiums. Thus, an insurance company must have enough healthy customers to pay for their sick customers, or they will be unable to cover the costs of these sick customers’ care.

If the subsidies dry up, people like David or Jennifer will continue to pay for insurance at nearly any price — they have no other choice. But if the cost of insurance rises, many healthy people will decide that they would rather take their chances without insurance than pay expensive premiums. As more and more healthy people drop out of the insurance pool, however, the insurer will have no choice but to raise premiums in order to cover the costs of the sick customers that remain in the pool. Yet, as premiums rise even further, even more healthy people drop out of the pool. The result is a “death spiral” where higher premiums beget fewer customers, which beget higher premiums, which beget fewer customers.

Another amicus brief filed on behalf of several dozen economists predicted that, if the subsidies are cut off, the resulting premium spikes will render insurance “unaffordable for more than 99 percent of the families and individuals eligible for subsidies” in the states with federally-run exchanges. That could be enough to collapse the individual health insurance markets in those states, cutting off insurance entirely to people like David.

As David’s brief points out, even the Affordable Care Act’s opponents understood that this was not how Obamacare was supposed to work before Halbig was on the horizon. Justices Scalia, Kennedy, Thomas and Alito authored a dissenting opinion in 2012 calling for the entire Affordable Care Act to be repealed. Yet they also explained in their dissent that, if there are no subsidies for insurance purchasers, the health exchanges “would not operate as Congress intended and may not operate at all.” Indeed, if there were no subsidies “insurance companies w[ould] have little incentive to sell insurance on the exchanges,” as insurance sold on the exchanges is subject to additional regulation.

Indeed, the Halbig plaintiffs’ legal theory was rejected by dozens of Republican elected officials who called upon the Supreme Court to repeal the law. Thirty-six senators — all Republicans — signed an amicus brief in 2012 explaining that Obamacare is “dependent on each of its interlocking provisions,” including the insurance subsidies. Twenty-four state governors or attorneys general signed a brief in the same litigation explaining that the Affordable Care Act’s “core provisions are carefully constructed to work in unison to achieve Congress’ paramount goal of ‘near-universal’ insurance coverage.” Now, however, the law’s opponents want the courts to believe that one of Obamacare’s “core provisions” can simply be deactivated in most states, and that the law is not “dependent on each of its interlocking provisions” after all.

Should the courts accept this invitation, the losers will be David, Jared, Jennifer, Steve and millions of other Americans who depend upon the Affordable Care Act for medical care. As the brief explains, the court’s “decision will not only affect how they and millions of similarly situated Americans with preexisting conditions live their lives, in many cases th[e] Court’s decision will decide whether they live at all.”