What If The Supreme Court Had Gone The Other Way On Obamacare?

Jun 25, 2015
Originally published on June 25, 2015 12:50 pm

This post was updated at 12:15 p.m. ET to reflect the Supreme Court's ruling.

The Supreme Court ruled Thursday that state-based subsidies under the Affordable Care Act are legal. A different decision could have affected the health care of millions of Americans. In King v. Burwell, the court chose to allow the exchanges set up under the Affordable Care Act (Obamacare, to many) to continue operating as-is. It could have ended the subsidies in most states allowing many lower-income Americans to afford the insurance offered through those sites.

At issue in the case was a phrase in the law stating that the government will subsidize patients in exchanges "established by the state." In King v. Burwell, the question was whether those subsidies should then go to people participating in the exchanges in the 34 states that didn't set up their own — that is, in states where the exchanges are federally run to some degree.

There are two broad paths the Supreme court could have taken here, but within those, there is a lot of room for variation:

1. A ruling for Burwell

Everything stays the way it is — people keep getting their subsidies in all states, regardless of whether the government, the state, or a mix of the two, runs their exchanges.

2. A ruling for King

Obamacare customers in states using federal exchanges would have likely lost their subsidies altogether. That means an estimated 6.4 million people could have lost the tax credits that helped them pay for their insurance through the exchanges.

But there were other potential, more mixed outcomes in which fewer people would have lost their subsidies. Because there were different configurations of federal-state cooperation, residents of some states could have kept their subsidies, while others could have lost them. For example, five states have state-run marketplaces using federal websites — it was possible that the court could have decided either way on those states, as they use federal resources, even while operating their own state marketplaces.

So what could have ended up mattering here was the question of what a state-run exchange is. It was possible the court could have defined that, but it could have also sent it to the administration. And depending on how the administration set the bar on what makes a state-run exchange, this path could have led to still more litigation from Obamacare opponents, challenging how the administration set that definition, explains Linda Blumberg at the Urban Institute.

More Uninsured, Higher Premiums Possible

In the 16 states (plus the District of Columbia) with state-run exchanges, nothing would have changed with this outcome. But the effects in the other 34 states could have gone beyond just more expensive health care. One study from the Urban Institute estimated that 8.2 million more people would have joined the ranks of the uninsured in this case. Not only that, but because so many healthy individuals would have exited the exchanges, premiums would have gone up by an estimated 35 percent for people remaining on the exchanges in the states that lost their subsidies.

Florida, by far, leads the pack in having the most people who were at risk of losing their credits. There, a staggering 1.3 million people could have lost subsidized health insurance, missing out on an average subsidy of $294 per month, according to data from the Kaiser Family Foundation. In Alaska, fewer than 17,000 people could have been affected, but their price tags could have grown in a huge way — by $536 per month on average.

With reporting from Gisele Grayson and Joe Neel.

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