It's anyone's guess whether the U.S. Supreme Court will invalidate or uphold federal premium subsidies in 36 states when it hears King v. Burwell next year. Loss of those subsidies almost certainly would cause several million people to lose health coverage because they could no longer afford the premiums.
But experts are already speculating about what the justices will decide—and what it would mean for insurers, healthcare providers and millions of Americans in the individual insurance market. The case is widely expected to be a nail-biting replay of the court's bitterly divided 2012 ruling upholding the constitutionality of the Patient Protection and Affordable Care Act, with Chief Justice John Roberts perhaps once again casting the deciding vote.
The court unexpectedly announced Friday it will hear the case, which centers on whether the ACA's language allows consumers to receive premium tax credits in the 36 states that are relying on the federal HealthCare.gov exchange. It's expected that the justices will issue their ruling around June 2015.
The court's decision to take the case is likely to create uncertainty in the healthcare industry and could shake consumers' confidence just before open enrollment for 2015 coverage begins Nov. 15. “What it means is the rest of us have to work doubly hard to make sure people understand there are still subsidies available,” said Kathleen Oestreich, CEO of Meritus, a not-for-profit insurer in Arizona.
If the Supreme Court rejects subsidies, “then all hell breaks loose,” said Moody's Investors Service insurance analyst Steve Zaharuk.
Following news of the court's decision to take the case, major health insurers and hospital operators saw share prices tumble. Aetna closed Friday with a 2.85% drop in its share prices from Thursday's close. Cigna Corp. saw a similar drop of 2.32%. UnitedHealth Group ended with share prices down 2.7%. WellPoint dropped 2.86%. Hospital operators saw similar declines. Shares dropped 6.51% for Tenet, 5.51% for Community Health Systems, 5.04% for LifePoint Hospitals and 4.67% for HCA.