Unlike the Obamacare case the Supreme Court decided in 2012, the one it took Friday, King v. Burwell, isn’t a threat to the entire Affordable Care Act. But it could be a threat to health insurance that the law has provided to millions of Americans in 36 states.
The law set up tax credits to help Americans afford premiums in new health insurance marketplaces. These subsidies are important to the overall structure of the law, because many middle-income Americans can’t afford to pay the full price of insurance premiums. If the Supreme Court ends up ruling for the plaintiffs, the result could be to take away those tax credits for the residents of states that did not set up their own exchanges but instead allowed the federal government to run them. Removing those tax credits would widen existing inequities in health care access between red and blue states. Millions of Americans would lose their health insurance, and markets in many states could be severely destabilized.
King v. Burwell rests on a sentence in the law that many of its authors describe as a drafting error. The law says that subsidies should go to people who bought coverage “through an Exchange established by the State,” which the law’s challengers say means that the tax credits cannot be used in the federally run marketplaces. Whatever Congress’s original intention, that’s the sort of legislative issue that Congress could fix, not a constitutional problem with the structure of the law that would mean its permanent annihilation.
It’s also a problem that states themselves could address. The case’s plaintiffs say that the subsidies should go only to states where the state is running its own exchange. The law itself is actually quite sketchy on the definition of a state-run exchange, which means that the Obama administration could make approval relatively easy for motivated states to achieve.
Of course, either rescue for the subsidies would depend on political will that is lacking. Republicans made substantial gains in Congress and state governments in the election this week, with many candidates promising to do everything possible to eliminate the Affordable Care Act. It seems unlikely that the newly elected Congress will step in to clarify the law’s language — the problem has been understood for years, but couldn’t be resolved even with Democrats in the Senate majority.
Still, it’s worth remembering all of the parts of the health law that are not under attack by this case. The Medicaid expansions, now underway in 27 states, would stand. Young adults would still be able to get coverage through their parents’ health insurance. The law’s reforms of Medicare payment policy would stay on the books. Regulations on insurance companies limiting their profits and requiring that all products cover certain basic benefits would stay in effect. And the subsidies flowing to states that ran their own exchanges would continue.
An anti-Obamacare decision in the King case wouldn’t take the health law off the books. It would just make federal spending on health care more uneven than it already is.