SOURCES: Deborah Bachrach, J.D., partner, Manatt, Phelps & Phillips, L.L.P., New York City; Elizabeth Carpenter, director, Avalere Health, Washington, D.C.; Lynn Blewett, Ph.D., professor, health policy and management, University of Minnesota School of Public Health, Minneapolis, Minn.; Carol Taylor, benefits advisor, D&S Agency, Roanoke, Va.; Feb. 24, 2015, The Commonwealth Fund Blog; Feb. 26, 2015, Avalere Health analysis; January 2015, The Implications of a Supreme Court Finding for the Plaintiff in King vs. Burwell; Feb. 24, 2015, letter, American Academy of Actuaries
TUESDAY, March 3, 2015 (HealthDay News) -- The latest legal showdown over the Affordable Care Act could make health insurance unaffordable for millions of Americans, some health policy experts say.
But opponents of the health-care law say the matter is cut-and-dried -- and a clear violation of the controversial legislation.
At issue are the federal subsidies that help lower monthly health-plan premiums for people in 34 states that use HealthCare.gov -- the federally run marketplace to buy insurance online.
Petitioners in the case, King v. Burwell, argue that people who use the HealthCare.gov website to purchase insurance aren't entitled to receive subsidies to defray the cost of health insurance coverage. They say the subsidies, which come in the form of premium tax credits and cost-sharing reductions, were meant only for people who buy health plans through state-operated health insurance exchanges -- not HealthCare.gov.
The Galen Institute, an Alexandria, Va.-based free-market health policy research group and "Obamacare" opponent, argues in an amicus brief that the Affordable Care Act "unambiguously limits" premium assistance to taxpayers who enroll in health plans through exchanges established by the states, not the federal government.
But the Obama administration defends the Treasury Department's interpretation of the law, allowing subsidies to be used at the federal and state exchanges.
The U.S. Supreme Court on Wednesday will hear oral arguments in the closely watched case. A decision is expected in June.
Affordable Care Act advocates say a decision in King v. Burwell invalidating the subsidies could be disruptive, undermining access to health insurance coverage in the 34 states that use HealthCare.gov, destabilizing the individual insurance marketplace and driving up health-plan premiums.
"For millions of people who were finally able to access coverage and care, they're going to have the rug pulled out from under them," said health attorney Deborah Bachrach, a partner with Manatt, Phelps & Phillips, in New York City.
3rd ACA case to land in Supreme Court
This is the third Supreme Court case in three years tackling aspects of the Affordable Care Act, which was championed by President Barack Obama, signed into law in 2010 and remains popular with Democrats and unpopular with Republicans.
In 2012, a divided court upheld the law's so-called individual mandate requiring most U.S. citizens to have health insurance, but also allowed states to opt out of the law's expansion of Medicaid, the federal-state insurance program for lower-income Americans.
Last year, the high court ruled that family-owned for-profit companies can't be required to cover contraception for their workers.
One of the key provisions of the Affordable Care Act is the subsidies to low- and middle-income Americans for whom buying insurance coverage on their own would be a struggle. Tax credits are based on household income and the number of individuals in a family. People earning up to 400 percent of the federal poverty level may qualify for the subsidies. (In 2015, those earning up to $46,680 for an individual and $95,400 for a family of four may qualify.)
On average, tax credits reduce by 72 percent the monthly premiums paid by people who shop for coverage through HealthCare.gov, according to the U.S. Department of Health and Human Services (HHS).
Petitioners in the Supreme Court case insist that only people who enroll in health coverage through a marketplace "established by the State" may receive tax credits to help pay their premiums. Only 13 states and the District of Columbia operate their own online health insurance marketplaces. Consumers in those states won't be affected by the outcome of the case.
But the case directly affects people in 34 of the 37 states that use HealthCare.gov. Those states rely on the federal government to handle Obamacare insurance applications and enrollment.
Consumers in three other states -- Nevada, New Mexico and Oregon -- must use HealthCare.gov to apply for and enroll in coverage. But because those states perform other marketplace functions, their subsidies would not be affected, experts say.
Health-plan premiums are locked in for 2015. If the Supreme Court decides to pull the plug on the subsidies, nearly 7.5 million people would be faced with paying 100 percent of the premium, boosting their average contributions by 255 percent, according to an Avalere Health analysis.
"Taking away that subsidy leads to a pretty dramatic increase in their overall contribution requirements," said Elizabeth Carpenter, a director at the Washington, D.C.-based research and consulting firm.
Dems, GOP remain at loggerheads over ACA
If the high court invalidates the subsidies, an estimated 9.3 million people would lose $28.8 billion in assistance in 2016, a recent Urban Institute analysis found, and the number of uninsured people in states using the federal marketplace would jump 44 percent to 8.2 million.
Cutting off subsidies could also roil the insurance markets, health policy experts at the Urban Institute said. Young, healthy people in the affected states would be more likely to drop coverage, driving up insurance prices inside and outside the Obamacare marketplaces, the analysts said.
"With no action on the part of the U.S. Congress or states, the individual market will likely face a tsunami effect, as it will make setting of rates quite unpredictable," said Carol Taylor, benefits advisor with D&S Agency in Roanoke, Va.
Anticipating "upward pressure on premiums" if the subsidies disappear, the American Academy of Actuaries has asked HHS Secretary Sylvia Mathews Burwell for some flexibility for health insurers who must submit proposed 2016 premiums by May 15. It asked that HHS consider allowing health insurers to submit two rates -- with and without subsidies -- or to accept rate revisions after the filing deadline.
Experts say if the Supreme Court strikes down subsidies to people using the federal marketplace, Congress and the administration would likely scramble for solutions. That could include a temporary extension of funding or some loosening of the definition of a state marketplace.
"On the Congressional front you have leaders in the Republican party beginning to talk about approving some kind of short- to longish-term patch that essentially would allow the exchange market to remain stable while they considered what a preferred, reformed ACA would look like," Carpenter said.
Lynn Blewett, a professor of health policy and management at the University of Minnesota School of Public Health, expects to see some creative thinking to get the Affordable Care Act back on its feet -- if it comes to that.
"I just feel like there's going to be a way to figure it out," she said.
But Bachrach said it remains unclear whether the GOP-led Congress -- where many Republicans have pledged to dismantle the Affordable Care Act -- or the Obama administration "can turn on a dime" to fix the problem.
"I think it is unclear whether there is a fix in the long term and it's very clear there's no short-term fix," she said.
For more on the King v. Burwell case, visit Families USA.