On Wednesday, the Supreme Court will hear oral arguments in a case that represents the first major challenge to the health reform law since the justices upheld its individual mandate in 2012. If the plaintiffs in King v. Burwell are successful, the government will no longer be allowed to offer subsidies to help Americans buy insurance in the states with federally-run marketplaces.
What does that mean in practical terms, and who exactly will be affected by the court’s decision? If the justices rule against Obamacare, here’s what you need to know:
34 states will be left scrambling to figure out what to do next.
The majority of states across the country have resisted fully implementing Obamacare, refusing to accept the law’s optional Medicaid expansion or build an insurance marketplace on their own. That’s left 34 states with marketplaces that are either fully or partially operated by the federal government — leaving them vulnerable to massive fall-out if the court rules that they can no longer offer subsidized insurance to their residents. There’s no clear plan about what to do in those states if the Obama administration loses its case.
13 million Americans will lose access to health insurance subsidies.
Among the people who bought insurance through Obamacare’s new marketplaces, the vast majority — about 87 percent, according to government data from the first round of open enrollment — are eligible for some type of financial assistance to help them afford their plan. But if the court rules against Obamacare, and they live in one of the 34 states with federally-run marketplaces, that assistance will disappear. Researchers at the Kaiser Family Foundation project that about 13.4 million people could lose their tax subsidies — with the highest numbers of affected people concentrated in red states that already have high rates of uninsurance, like Texas and Florida.
Premiums could increase between 122 percent and 774 percent.
Without the federal subsidies that make monthly premiums more affordable, the price tag for insurance plans in states with federally-run marketplaces could skyrocket from anywhere between 122 percent and 774 percent, according to a recent analysis from consulting firm Avalere Health. Avalere found that all 34 states will see an average spike of 255 percent. Data from the Department of Health and Human Services suggests a similar outcome; consumers who receive a tax credit would face an average 322 percent premium hike if they lost that credit, according to reports from last fall. In dollar signs, that’s a monthly increase ranging from $82 to $346, depending on the state. Insurance actuaries have already written to the federal government asking for permission to raise their rates if the court ends up gutting Obamacare.
8 million more Americans will go uninsured.
Dramatically higher premiums would make insurance simply unaffordable for most of the Americans who currently rely on Obamacare’s tax subsidies. Millions of people would likely immediately drop their plans, sending the insurance market into what experts refer to as a “market death spiral.” Insurance companies would be forced to raise their prices by another 47 percent to stay afloat, according to an analysis from the Rand Corporation. By those researchers’ estimations, that would leave about eight million people without any access to affordable insurance whatsoever. A different analysis from the Urban Institute and the Robert Wood Johnson Foundation concurred that about 8.2 million additional people will be uninsured if the King plaintiffs prevail.
71 percent of people will disagree with the ruling.
A recent poll conducted by Hart Research Associates finds that the majority of Americans are opposed to the idea that subsidies should be limited to the 16 states that run their own marketplaces. That poll, which was conducted in the middle of February on behalf of the Service Employees International Union (SEIU), found that respondents were opposed to the arguments behind King v. Burwell even though many of them favored reforming or repealing Obamacare. Seventy-one percent of people said that tax subsidies should be available to Americans in all 50 states, and 56 percent said they would “strongly prefer” the justices to rule in favor of this outcome.