As early as this week, the Supreme Court is expected to issue a ruling that could radically change -- and perhaps even doom -- Obamacare.
The case the justices are mulling, King v. Burwell, poses a legal challenge to the tax credits offered to consumers in 34 states who bought health insurance through the Affordable Care Act's (ACA) federally run exchanges. About 6 million people in those states who used the government program to buy insurance could lose their subsidies if the High Court agrees that the law's wording -- "established by the state" -- limits federal assistance only to those states running their own exchanges.
For opponents to Obamacare, meanwhile, the ruling likely represents the final chance to challenge the 2010 law.
If the Supreme Court rules in favor of the lead plaintiff, 64-year old Vietnam veteran David M. King, many of those 6 million Americans would likely drop their insurance plans, which would suddenly become unaffordable without the subsidies. There would likely be a shakeout period as consumers, states and the federal government try to deal with the fallout. Already, discussions are underway at the state level about legislative fixes, while President Obama has noted that Congress could make a "one-sentence provision" if the court upends the current system.
"If the court rules in favor of the plaintiffs, it will have a devastating impact in at least 34 states," predicted Ron Pollack, executive director of Families USA, a nonprofit advocacy group focused on affordable health care. "A vast majority of [those who will lose their subsidies] will join the ranks of the uninsured. The people who are most likely to drop out are younger, healthier people. The people least likely to drop out are older, sicker people. That means premiums will skyrocket for everybody."
The end result, he said, "will be what you would call a death spiral" for Obamacare.
Pollack, a former law school dean, said he believes the Supreme Court will uphold the subsidies in all the states, calling the plantiffs' case "weak."
"What's so strange about this situation is there isn't anything a consumer can do except wait and see," said Rick Lindquist, chief executive of Zane Benefits, an online provider of health insurance reimbursement for small businesses. "Congressmen and women are waiting to see what will happen before introducing legislation. Employers are waiting before modifying plans."
Below are five things to know about how a court decision in favor of King, and effectively against Obamacare, could impact millions of Americans.
Subsidies will be dropped, not insurance. If the Supreme Court rules in favor of the plaintiff, subsidies will be dropped for people who receive them in the 34 states with federally run exchanges. Consumers will still have their health insurance under the ACA, so those who can afford a sharp spike in their premiums will be able to maintain their policies. States with their own insurance marketplaces, such as Vermont and New York, wouldn't be impacted.
The people would be affected are mostly white, middle-class and work full-time. Americans who would become uninsured if the court invalidates the subsidies are most likely to be white, working full-time, and earning middle-class to low-income pay, although they aren't poor, according to the Urban Institute. Almost six out of 10 live in the South. The surge in health-care premiums might be impossible for many to handle, with the Washington think tank finding that the costs for families making between 200 percent to 400 percent of the federal poverty level -- or $48,500 to $97,000 for a family of four-- would see their annual premiums under Obamacare more than triple to $15,563.
Some states are considering their own fixes. "States can absolutely fix this issue by taking on the burden of running their own exchanges," noted Zane Benefit's Lindquist. Some states are already taking preliminary steps toward this end, including Pennsylvania, Delaware and Arkansas. However, officials in some states, including Wisconsin and South Dakota, insist the fix needs to be at the congressional level.
Congress could take action and make a fix. While President Obama earlier this month said a ruling against the subsidies "would be hard to fix," he also noted that "Congress could fix this whole thing with a one-sentence provision." Families USA's Pollack added, "You could prepare a one-page bill that would fix this completely. It would restore subsidies and make sure no one is harmed." But given the complexity of politics, that's not a sure thing, or it could come with a catch, such as providing only a short-term fix through the 2016 election, he said.
Be prepared for the worst. For consumers who could be affected by the Supreme Court's ruling, it's important to have a handle on the financial impact and to start crafting a backup plan, Lindquist said. First, be aware of what your subsidy is and how much you'll need to pay to keep your insurance if the subsidies are dropped, he said. "Make sure you have at least three months of that additional cost in savings," Lindquist advised. Lastly, he said, "Have a backup plan to maybe go to a lower-grade insurance plan that costs less."