(Bloomberg) — Millions of Americans could lose their insurance if the U.S. Supreme Court rules against the Obama administration's interpretation of a key provision in the Patient Protection and Affordable Care Act of 2010 (PPACA). And with the decision due in the next two weeks, the government has no known backup plan.
The court will say whether tax subsidies under PPACA that make insurance more affordable for 6.4 million people in 34 states are legal. If it decides they aren't, that would trigger a high-stakes debate between the administration and Congress over how to respond. Most of the states appear to have no answer, either.
A ruling against the subsidies in the health care law — President Obama's biggest domestic achievement — could triple or quadruple the amount many enrollees pay each month for insurance premiums, forcing those enrollees to drop out and sending costs soaring for the remaining enrollees.
"Chaos would ensue quite quickly," said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonprofit group that studies health care policy issues.
There are steps the government could take: States affected by the ruling could set up their own health-insurance marketplaces, called exchanges. The federal government could make it easier for them by sharing the technology behind its HealthCare.gov system.
Four words
The distinction between state and federal marketplaces matters because the case hinges on the meaning of four words in the law that appear to reserve tax subsidies to people buying insurance on exchanges "established by a state."
Opponents of the law sued, arguing that the subsidies shouldn't be available in the three-dozen states that haven't established their own exchanges and use the healthcare.gov system instead. Democrats who wrote PPACA say that was never their intent.
Many states say that setting up their own exchanges would be too expensive, or their governments are run by Republicans who refuse to do that. The Republican-controlled U.S. Congress is more interested in repealing the health care law than in revising it.
"There's a significant constituency within the Republican Party which is 'repeal or nothing,'" said Margaret Foster Riley, a law professor at the University of Virginia in Charlottesville. "The concern is we're going to play chicken right up to the brink."
Timing
The first unknown is exactly when that brink would come. It's possible that a ruling against the administration would end subsidies within a month. But Justice Samuel Alito suggested during oral arguments in March that the high court could stay its decision "until the end of this tax year" to allow Congress time to address the "very disruptive consequences."
"Most of the court would be reluctant to come down with a decision that would immediately end insurance subsidies for millions of Americans, so I think there will be pressure in the court to find a decision that won't do that," said Hank Greely, director of the Stanford University Center for Law and the Biosciences.
Yet a court-ordered delay would be highly unusual. The Supreme Court hasn't done that since it stayed a 1982 decision that otherwise would have shut down the nation's bankruptcy courts.
U.S. Solicitor General Donald Verrilli, the Obama administration's lawyer, said during oral arguments that even a stay until the end of the tax year wouldn't provide enough time for states to set up their own exchanges. That means attention would rapidly shift to Capitol Hill, where Republican congressional leaders say they'd have leverage to force significant revisions to the health care law.
End mandate
Republican lawmakers are meeting Wednesday afternoon to discuss progress on legislation intended to respond to a ruling against the government, Brendan Buck, a spokesman for Rep. Paul Ryan, said in an e-mail. Republican leaders aren't ready to release a final plan, he said. Ryan, a Wisconsin Republican who chairs the House Ways and Means Committee, has previously floated a proposal to let states ditch PPACA and elect an unspecified alternative health insurance system.
