The upcoming Supreme Court decision on the Affordable Care Act could
wipe out insurance for millions of people covered by the president’s
health care plan, leaving states that didn't set up their own health
care markets scrambling to subsidize coverage for those left uninsured.
Twenty-six of the 34 states that would be hardest hit by the ruling
have GOP governors. Twenty-two of the 24 Senate seats that are up for
re-election in 2016 are currently held by Republicans. What that means
is that it’s the GOP – and not the White House –that’s working on damage
control.
President Obama’s landmark legislation offers subsidized private
insurance to those without access to it on the job. In the Supreme Court
case, opponents of the law argue that its literal wording allows the
government to subsidize coverage only in states that set up their own
health insurance markets.
The justices will determine whether the law makes people in all 50
states eligible for federal tax subsidies -- or just those who live in
states that created their own health insurance marketplaces. The
question matters because about three dozen states opted against their
own marketplace, or exchange, and instead rely on the U.S. Health and
Human Services Department’s Healthcare.gov.
If the court rules against the Obama administration, insurance subsidies for people in those states would be in jeopardy.
If the court invalidates the subsidies in those states, the results
would be “ugly,” former Kansas insurance commissioner Sandy Praeger told
The Associated Press.
"People who are reasonably healthy would just drop coverage," she
said. "Only the unhealthy would keep buying health care. It would really
exacerbate the problem of the cost of health insurance."
Praeger, a Republican who retired this year, called it "a classic death spiral," using a term for market collapse.
In March, the Supreme Court appeared divided along ideological lines
after hearing the challenge that, if struck down, could affect up to 8
million policy holders.
If the subsidies survive, the ACA will look like settled law to all
but a few passionate opponents. However, if they are overturned, the
shock could carry into next year’s elections.
Here are just a few of the potential consequences:
BAD TIMING
Around the time when the court announces its decision, insurers will
be working to finalize premiums and plans for the coming year. Contracts
with the government for 2016 health law coverage have to be signed by
early fall. If the subsidies are overturned, insurers would have to tear
up their projections about markets in more than half the states.
Populous states such as Texas, Florida, Ohio, Illinois, New Jersey, Georgia and Pennsylvania would be among those affected.
State lawmakers could mitigate the impact by setting up their own
insurance markets, or exchanges. But that can't be done overnight.
States might try authorizing an exchange, and then contracting with
the federal government to run it. But that sort of end-run might prompt
lawsuits from opponents of the law.
In any case, most state legislatures will be out of session by the summer.
During arguments, Associate Justice Samuel Alito raised the
possibility that the court might be able to delay the effective date of
its decision. Even a delay through the end of this year wouldn't buy
much time. Enrollment for 2016 health law plans is scheduled to start
Nov. 1.
HOUSE OF CARDS
The health law was designed as a balancing act. Insurers can't turn
people away because of health problems, but most healthy people are
required to contribute to the insurance pool, and the government
subsidizes most of the premium for low- to middle-income households.
Take away subsidies, and the other two parts become unstable.
The law's requirement to carry insurance, never popular, would probably become the biggest target for repeal.
"My guess is there would be overwhelming political support for the
elimination of the individual mandate if people can't afford the
premiums," said former Sen. Tom Daschle, D-S.D., who was an influential
Obama adviser on health care.
Insurers would demand relief from provisions of the law intended to
limit premium increases, or they might drop out of the insurance
exchanges.
STICKER SHOCK FOR SELF-PAY CUSTOMERS
Many people still buy individual health care policies directly from
an insurance company, bypassing the law's markets and paying the full
cost. They tend to be small-business owners, self-employed professionals
and early retirees.
But even they would not escape the tumult in states losing subsidies.
The health law created one big insurance pool in each state,
combining customers who purchase their policies directly with those who
buy through the government market. If healthy people exit the insurance
exchanges in droves, premiums for those buying directly would go up.
Some may be unable to afford the higher cost.
"It would set off cascading events," said Larry Levitt of the
nonpartisan Kaiser Family Foundation. "The individual market would empty
out as premiums rise significantly."
REPUBLICANS TO THE RESCUE?
Leading congressional Republicans have been walking a fine line,
opposing the law in the Supreme Court case while pledging to protect
consumers if their side wins.
If the subsidies are overturned, Republicans will first try blaming
Obama and the Democrats for writing flawed legislation and then trying
to paper over problems with regulations. Then they'll move ahead with a
patch to appease angry constituents.
A bill introduced by Sen. Ron Johnson, R-Wis., would continue the
subsidies for existing customers only on the federal exchange until
September 2017. That would open a window for states to act, but it would
ultimately leave the problem for the next president and Congress.
Senate Majority Leader Mitch McConnell, R-Ky., is a co-sponsor.
Johnson's bill would repeal the requirements for individuals to have
insurance and for larger employers to offer coverage to workers.
Obama is unlikely to accept any of those changes.
"The president is likely to veto whatever we would propose, because
we don't have a willing partner," said Sen. John Barrasso, R-Wyo.,
leader of a GOP working group on health care.