The Supreme Court is scheduled to hear arguments on King v. Burwell on Wednesday, setting up yet another significant legal battle over the Affordable Care Act. This time, the argument is over federal healthcare subsidies, which are given to residents who live in states without their own insurance exchanges and receive their health insurance directly from the federal government. If the high court strikes down these subsidies, it could be devastating for millions of Americans — and the federal government would have no idea how to handle it.
Currently, just 14 states operate their own health insurance exchanges. In 34 states, most of which are located in the South and Midwest, the federal government facilities the state's health insurance through the healthcare.gov marketplace, which means the Department of Health and Human Services provides all the typical insurance functions. Another three states have an exchange system that's supported by the federal government.
Quite a few people rely on these federal marketplaces for their health insurance — up to 10 million, according to some estimates. A recent report from the HHS shows that 7.5 million people signed up through the federal marketplace in these 37 states as of Feb. 15, 2015. That number is expected to increase by several million in the next year, as enrollment opens up again in the fall.
But the numbers are even more staggering: According to the HHS, residents in these 37 states who receive healthcare subsidies make up 87 percent of enrollees who have signed up through the federal marketplace. The average subsidy is about $270 and covers more than 70 percent of the health insurance premium. Without these subsidies, the HHS believes most enrollees won't be able to afford health insurance at all.
So, what's the quick fix if the Supreme Court strikes down these subsidies? Secretary of Health and Human Services Sylvia Burwell says there isn't one. In a letter sent to Congress last week, Burwell warned that eradicating federal subsidies could cause "massive damage" to millions of Americans. And there would be no way out, she wrote:
We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an averse decision.
Burwell also reiterated her department's recent findings. "Millions of people would lose their health insurance subsidies and therefore no longer be able to afford health insurance," she wrote.
The health secretary added that states without their own health insurance exchanges would revert back to the time before the ACA, when sick, uninsured individuals ended up being a larger drain on the insurance system. "[T]he recourse for those without insurance was to seek care in hospital emergency rooms, further driving up insurance costs for everyone," Burwell wrote.
Bottom line: Striking down the subsidies for people who receive health insurance through the federal marketplaces may greatly undermine President Obama's intent with the Affordable Care Act. And of course, women may receive the brunt of the damage. Half of the people at risk for losing their health insurance are women, including 1.4 million women of color.
"The Affordable Care Act is an historic step forward in improving the lives of all Americans, especially millions of women who now have access to a wide range of reproductive healthcare services they wouldn’t otherwise be able to afford," Center for Reproductive Rights CEO Nancy Northrup said Wednesday in a statement. "Just as it previously upheld the Affordable Care Act, the U.S. Supreme Court must take this opportunity to preserve the benefits this historic law provides."
Images: Getty Images (3)