Supreme Court's Upcoming Obamacare Case Could Kill The Healthcare Law For Good

Is this the end for Obamacare? On Friday, It was announced that the Supreme Court would hear a lawsuit against Obamacare. Supreme Court Justices released an order to review King v. Burwell, which will evaluate whether the federal government is overstepping its powers by extending its program of subsidies to health insurance buyers. The lawsuit argues subsidies helping individuals buy health insurance are only available in exchanges run by an individual state, not by the federal government.

If the lawsuit succeeds, it will likely spell the demise of the Affordable Care Act, because higher premiums will prompt healthcare buyers to drop out of the market, which will cause a chain reaction of higher premiums and more dropouts. Eventually, many states will see their health insurance markets crash.

The Affordable Care Act allows Americans to purchase competitively priced health insurance on exchanges that are run by either the individual state or the federal government if a state chooses not to set up its own healthcare market. The law also authorizes a federal tax credit for lower-income individuals who purchase insurance through Obamacare. And therein lies the problem.

The plaintiffs in King v. Burwell, as well as pponents of Obamacare in general, say that the Affordable Care Act only authorizes tax credits for individuals who purchase from state-run exchanges, and that the federally provided subsidies are illegal. While one federal appeals court has upheld the Internal Revenue Service's regulation confirming that the federal tax credit is available to financially eligible Americans in all 50 states, regardless of whether they purchase insurance through a state exchange or a federal exchange, others have handed down contradictory rulings.

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In September, a federal judge in Oklahoma ruled that the health law's subsidies only applied to healthcare customers in the 14 states that have set up insurance marketplaces and not to purchasers in states that provide insurance on the federal marketplace, which includes Oklahoma. In July, two federal appeals courts issued contradictory rulings on the subsidies, with a Richmond, Virginia court upholding the law and a D.C.-based court siding with the challengers.

Now the case is making its way to the Supreme Court for the second time. SCOTUS accepted the appeal on Friday after opponents urged the court to resolve the issue as quickly as possible because it involves billions of dollars of public money.

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Currently, nearly five million people are getting affordable health insurance through the subsidies, which cover about 76 percent of their premiums. Obamacare customers pay an average of $82 per month on premiums that average at $346 a month. If the lawsuit succeeds, millions of Americans will be stripped of their affordable health care.

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