At issue in the court case is whether it is legal for the government to provide subsidies to consumers in the almost three dozen states that have not set up their own insurance exchanges and instead rely on the federal marketplace.
Many conservative critics say that the subsidies should be struck down and that such a ruling could be the first step in overhauling a flawed law. They would eliminate the law’s requirement that most Americans have insurance and call for a larger role for the states.
The American Enterprise Institute supports a temporary extension of subsidies for people now receiving them but not for new enrollees. The group also backs alternative ways to help people pay for insurance. Heritage Action for America, the advocacy arm of the Heritage Foundation, opposes any extension of the subsidies.
On the other side, Families USA, a liberal consumer group, and hundreds of other consumer and patient organizations say that if the administration loses the case, the states and Congress should take immediate steps to ensure consumers continue receiving subsidies. They cite government data showing that 6.4 million people in 34 states would lose their subsidies, resulting in a rise in the number of uninsured.
Beginning Tuesday, Families USA is conducting regional media briefings and releasing a series of state maps that detail by congressional district how many people could be at risk.
The latest swirl of activity is not aimed at the justices, who presumably voted on the outcome of the case some time ago. Rather, it targets the American public, the media, and especially federal and state officials who may be confronted with the uncomfortable prospect of millions of people being unable to afford health coverage.
“A lot of what’s going on now among the groups and on the Hill is sort of pre-spinning the decision to try to get the upper hand in the debate that would ensue if the court sides with the challengers,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation.
The decision in King v. Burwell, the latest challenge to the Affordable Care Act to reach the nation’s highest court, is expected by the end of the month. The plaintiffs argue that, under a straightforward reading of the law, only residents of states that set up their own exchanges are entitled to government subsidies to help them pay for their insurance. The administration counters that the law obviously intended for the subsidies to go to anyone who qualifies based on income, whether they signed up through a state or federal exchange.
Sixteen states and the District of Columbia have created their own exchanges, but three of them — Nevada, New Mexico and Oregon — are having technical problems, so they are using the federal exchange, HealthCare.gov. The remaining 34 states rely to varying degrees on the federal exchange.
About 85 percent of those who have bought insurance on state and federal exchanges receive a subsidy, and the average amount is $272 a month, according to government data. Consumers who are receiving subsidies could see their costs for insurance almost triple, according to an analysis by the Kaiser Family Foundation. That could lead to people dropping their coverage and an overall unraveling of the law, some health experts say.
Many Americans who may lose their subsidies are only vaguely aware of the case.
Bea Cote, 56, a Charlotte resident who runs an organization that works with domestic-violence offenders, signed up for health coverage in March through the federal exchange; North Carolina does not have its own marketplace. Cote, who makes about $25,000 a year, gets a hefty subsidy and pays just $66 a month for health insurance. Without the subsidy, her premium would be $578.
“There’s no way I could pay that kind of money,” said Cote, who needs medication for high blood pressure and arthritis, as well as a machine for sleep apnea that keeps her airways open at night. “I would have to drop insurance,” she said.
Many supporters of the law say they are optimistic that the justices will not strike down the subsidies but want to be ready in any case. And many in the healthcare industry say that even if the court disallows the financial aid, they expect it to allow payments through the end of this year, to give policymakers a chance to respond.
If the court strikes down subsidies in the federal marketplace, the simplest fix will be for Congress to pass a law saying subsidies are permanently legal in all states. But there is little chance a Republican-controlled Congress would do that; many Republican lawmakers want to dismantle the law.
For example, a bill by Sen. Ron Johnson (R-Wis.) that has 31 co-sponsors would extend the subsidies until September 2017 for those currently receiving them but not permit them for new enrollees. It would also repeal the individual insurance mandate and other federal requirements.
“We want to protect the people that are harmed by the president’s illegal actions if the Supreme Court rules that way, but we’re not going to protect the law,” Sen. John Barrasso, R-Wyo., said at a recent news conference.
Administration officials have said they have no contingency plans if they lose in court, and they have vowed to reject any proposal to wreck the law. “Something that repeals the Affordable Care Act is something the president will not sign,” Health and Human Services Secretary Sylvia Mathews Burwell recently told a House panel.
In the face of a federal standoff, states could try to fix the problem themselves by setting up their own marketplaces. Pennsylvania and Delaware recently announced plans to do so. But in many affected states, there is strong political opposition to anything that would preserve Obamacare.
Even without the political hurdle, states face logistical obstacles — not enough time or money — in trying to get new state exchanges up and running before the next round of open enrollment in the marketplaces begins in November.
A possible remedy suggested by the consulting firm Leavitt Partners — run by Mike Leavitt, HHS secretary under President George W. Bush — would be for the Obama administration to drastically reduce the administrative and financial requirements for setting up state exchanges. For example, the administration could allow states to create exchanges without first setting up a governing board, the proposal said.
AEI’s longer-term remedy calls for a new system that would allow states without exchanges to provide subsidies — but ones based on a consumer’s age rather than income.
If the pending court decision represents a threat to Obama’s legacy, it also carries political risks for Republicans, who largely back the challenge to the law and could be blamed if coverage is made unaffordable.
“If you prolong this, there will be enormous anxiety out there in the country for people and their brothers and sisters and co-workers, and the Republicans are going to take a horrible hit for this,” said Robert Laszewski, a longtime health insurance consultant. Politicians can say they support or oppose the law, he said, but the average person’s reaction will be, “Why are you screwing these people, what did they do wrong?”
Families USA hopes its plan to single out the most-affected congressional districts will increase pressure on elected officials.
For example, Florida, which did not set up its own exchange, has 1.3 million people at risk of losing their subsidies, or about 20 percent of the total across the country, according to the government’s data. Topping the list is the state’s 25th Congressional District, which includes the Miami suburbs, home to 91,000 consumers who could lose the payments.
Meanwhile, Heritage Action for America’s four lobbyists have been spending the run-up to the court decision trying to discourage Republican lawmakers from passing even a short-term extension of subsidies. Much would be gained by an administration loss in court, the group argues — if, for example, it ultimately led to the collapse of the law and the repeal of federal mandates, insurance premiums could drop.
“What we’re advising is to go with a completely different approach, saying we’re not going to refund or put back in place these subsidies, but what we will do is allow the states that are impacted by the decision to be able to opt out of all the mandates and all the insurance regulations that have driven up the price of insurance,” said the group’s communications director, Dan Holler.
“There’s a lot of fear that this could go poorly for Republicans if they win, and we’re trying to encourage them to see it as an opportunity to really help make the case about everything that was wrong with the law,” he said.
Washington Post staff writer Niraj Chokshi contributed to this report.