For Millions of Families, There’s a Lot Riding on How the Supremes Read 4 Little Words

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The Justices of the US Supreme Court sit for their official photograph on October 8, 2010 at the Supreme Court in Washington, DC.
Close readers.Photo: Tim Sloan/AFP/Getty Images

This morning, the Supreme Court heard oral arguments in King v. Burwell, a legal challenge that could strip Americans in 34 states of the insurance subsidies that make their coverage affordable. In the coming months, a decision resting on a single four-word phrase could leave millions of families suddenly uninsured. And across the street from the Supreme Court, in the Capitol, there’s no plan for how to soften that blow if and when it comes. 

The four words in question are established by the state. At issue is whether the law permits the payment of subsidies to families in states with an exchange built by the federal government, or only families in states that created their own exchanges. It’s a complicated bit of legal semantics, given that the law indicates that the federal government should step in to create a state’s exchange if it fails or chooses not to do so itself.

Were the court to side with King, states could step up and create their own exchanges. But the insurance subsidies would probably lapse immediately, throwing the coverage market into disarray. Some states might not build their own exchanges, given the unpopularity of the law in red states, just as some states chose not to take the Medicaid expansion. Health experts’ best guess is that chaos would ensue, rendering insurance unaffordable for millions. What’s more, for the first time, millions of Americans would lose a major entitlement. They’d go to bed with affordable insurance and wake up without it. There’s no real precedent for that happening. 

That’s why my colleague Jonathan Chait argues that the Supremes won’t gut the law, being the image-conscious, political people that they are. He also argues that if they did, over time, state after state would build exchanges under pressure from the millions of middle-class families suddenly stripped of subsidies. He might be right. But in the meantime, pressure would be on the Republican Congress to help clean up the mess. 

Don’t worry, we got this,” they want you to know. “Republicans have a plan to create a bridge away from Obamacare,” Senators Orrin Hatch, Lamar Alexander, and John Barrasso wrote in the Washington Post this month. “We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.” 

House Republicans have made their assurances, too, describing the ruling as no more or less than an opportunity for states to move away from Obamacare. “Any state that uses our off-ramp would be able to opt out of Obamacare’s insurance mandates,” Paul Ryan, John Kline, and Fred Upton wrote in The Wall Street Journal. “Our proposal will also allow participating states to opt out of Obamacare’s burdensome individual and employer mandates, allowing Americans to purchase the coverage they want.”

But there are a lot of reasons to be skeptical of these plans. Stripping the mandates from the law would almost certainly drive up costs, for instance, since younger, healthier, and cheaper-to-cover people would skip insurance, rendering the pool of covered individuals older, sicker, and more expensive. And any post-hoc Band-Aid would have to clear the Senate and the House, which has voted repeatedly to repeal the whole shebang. It would also need the president’s signature. 

A molten insurance hellscape potentially made worse by congressional action seems the likeliest outcome if the Supremes side with King. So there’s a lot riding on four little words.