Could the Supreme Court Destroy Obamacare?
Earlier this month, the Supreme Court announced it would hear oral arguments in King v. Burwell, a case that could play a vital role in the future of Obamacare. At the heart of this case is one particular aspect of the Affordable Care Act—federal subsidies getting used in federally run insurance exchanges.
What are these insurance exchanges? As part of the Affordable Care Act, each state has an open insurance market set up where consumers can shop and compare different insurance rates. Fourteen states (and Washington D.C.) set up and currently run their own proprietary markets while the other 36 states are yielding to the federal government to run their exchanges. To help keep consumer costs low, the federal government gives subsidies to these markets, thereby cutting down on the cost of insurance premiums and making health care, well, more affordable.
This could all change though, depending on how the Supreme Court rules in King v. Burwell. The plaintiffs in the case say that, if you look at the language of the ACA, these federal subsidies were intended only for those 14 states with their own insurance exchanges. By allowing the subsidies to be rolled out nationwide, they say, the IRS violated the law. The Obama administration and ACA defenders, however, maintain that the law was always intended to act the same in all 50 states, regardless of who is running the exchanges.
If the Court sides with the plaintiffs, it could jeopardize health care for some 4 to 5 million people. They would lose their federal subsidies and their premiums would increase dramatically. Furthermore, according to the National Journal, such a decision would weaken two key components of the ACA. First, it would essentially eliminate the employer mandate in federally run exchanges. It would also significantly weaken the individual mandate. The law currently states that those who cannot afford insurance are not subject to the individual mandate and do not face a fine for not having insurance (hence the subsidies). However, taking away these subsidies would suddenly make health care unaffordable for millions of people.
And here is where the very core of the ACA begins to unravel. Millions of people would lose their health insurance, which is in itself a very sad turn of events. In addition, this would remove many young, relatively healthy people from the insurance pool. These are the very people that help keep insurance rates relatively low for everyone as they help spread the risk covered by insurance companies.
Pending the Court's decision, there are two possible ways to fix this problem. First, Congress could amend the ACA to clarify this one particular aspect to apply for all 50 states. Alternatively, the governors in these 36 states could just take over the insurance exchanges that are already up and running. But with the current staunchly partisan atmosphere in the U.S., that likely will not happen.
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