A victory for the petitioners in King v. Burwell will not return the healthcare insurance marketplace to the pre-Affordable Care Act status quo.
For the 7.5 million people in at least 34 states whose health insurance subsidies are at risk, undermining the federally run exchanges will exacerbate the nation's growing economic inequality. Since most of these people live in states that refused to expand Medicaid—an out offered under the U.S. Supreme Court's 2013 decision in NFIB v. Sebelius—their economic burdens, especially for those with severe or chronic conditions, will soar.
Meanwhile, in states with exchanges, the uninsured rate will continue to fall, leading to a two-tier system across the country. Healthcare providers in states with exchanges will see shrinking uncompensated-care costs and stable finances. The others will suffer the opposite fate.
We're in this predicament because the nation's fragmented approach to offering health insurance—employer-based coverage and special government-run programs set up in 1965 for the old and very poor—never did reach the entire population. Deindustrialization and the emergence of the service economy over the past 40 years further shrank the share of the population with employer-based coverage. The Great Recession pushed the uninsured total to include more than 17% of all Americans and created the groundswell for the ACA.
Today, the 14% who remain uninsured (a major victory for the reform law) are mostly low- to moderate-income families whose breadwinners work for employers that do not provide health insurance. The uninsured ranks include the self-employed, unemployed and people who are between jobs.
Given the rapid rise of healthcare costs over the past half century, most people in those situations (not to mention most of the middle class given health insurance by their employers) could never afford adequate policies on their own. Subsidies available under the ACA cover about 72% of premiums for the more than 11 million people who have already signed up for coverage.
There's no question what effect canceling subsidies will have in states that use the federally run exchanges. Because the insurance regulations contained in the ACA will remain in place—non-discrimination against people with pre-existing conditions, limits on premium differentials for older or sicker people, an “essential” benefits package, limits on out-of-pocket costs—only those immediately desperate for coverage will be willing to pay the full cost.
Healthy people will drop out of the pool. Most won't have to pay the individual-mandate penalty since the cost of the full premium will exceed 8% of their income. As the individual mandate unravels, premiums will soar at the few insurers that don't withdraw from the market. The “death spiral” of the individual insurance market in those states will ensue.
Democrats are licking their chops at the prospect of standing up for sick and dying people robbed of their health coverage during the 2016 election campaign. Not only the White House is at stake. Twenty-four of the 34 Senate seats up for grabs are held by Republicans opposed to the ACA.
But that's not necessarily a winning strategy. Most people these days care far less about the uninsured or the financial plight of hospitals than they do about the rise of high-deductible plans and their own escalating copays and deductibles. Both are symptoms of the decline of the employer-based system and one possible scenario for the future of health insurance should the Republicans gain control of all three branches of government.
Last week, new Sen. Ben Sasse (R-Neb.), a tea party-backed candidate who graduated from Harvard and has a doctorate from Yale, called for a post-King v. Burwell transition program that will continue to pay subsidies in COBRA-like fashion for 18 months, (i.e., beyond next year's presidential election). “Unless those of us who oppose Obamacare unite behind an approach that offers Americans a better alternative, we could lose the whole war,” he wrote in the Wall Street Journal.
So by all means, enjoy this week's Supreme Court posturing around the meaning of the word “such” and other legal intricacies. But realize that at the end of its current term, Chief Justice John Roberts and his conservative colleagues on the high court will be making a calculated political decision about whether they think Americans are ready for a very different insurance system than the one envisioned by the ACA.
As the court mulls its decision over the next few months, I hope we'll be hearing a lot more about what that might look like. Americans—and the healthcare system—deserve to know.
