Potential Fallout from King v Burwell

The U.S. Supreme Court’s decision surprise announcement on November 7 that it would hear King v. Burwell struck fear in the hearts of supporters of the Affordable Care Act.

Nicholas Bagley, J.D. David K. Jones, PhD, and Timothy Stoltzfus Jost, J.D,, “Predicting the Fallout from King v. Burwell – Exchanges and the ACA,” New England Journal of Medicine, January 8, 2014

In my tetralogy of E-books on the story of ObamaCare, in each book I have a section in each book called “Political Fallout.” (only one of these books The Road to Hell Is Paved with Good Intentions is currenltyon the market). In politics, “fallout” is a word that has come to connote what happens when a disagreement among rivals cannot be settled. There is no more pitched rivalry than those who support or oppose ObamaCare, a principle issue of contention between a Republican Congress and President Obama and followers.

In the words of three legal scholars writing in the January 8 New England Journal of Medicine, “At stake is the legality of an Internal Revenue Service (IRS) rule extending tax credits to the 4.5 million people who bought their health plans in the 34 states that declined to establish their own health exchanges under the ACA.” There are 13 million people eligible for tax credits in these credits in 2016.

Two long shadows hang over ObamaCare’s future.

One is a GOP Congress repealing, replacing, underfunding, or otherwise undermining ObamaCare in the next two years.

Two is a Supreme Court decision in June 2014 declaring it illegal to offer tax credits, i.e. subsidize, healt plans for patients in 34 federal health exchanges.

Under the first scenario, President Obama could rescue his “signature domestic achievement” through a President veto.

But in the second scenario, ObamaCare might be unsalvageable and might end in an insurance death spiral with collapse of the health law.

To ACA supporters, the second scenario is unimaginable on moral grounds. How could millions of people in a civilized nation be deprived comprehensive affordable health care? To ACA deniers, the ACA is more of a monetary issue. How could a government impose an unaffordable law on people, the overwhelming majority of whom oppose the law?

Our three legal scholars say ObamaCare supporters have “good reason to worry.” By so quickly agreeing to hear the case on November, the Court signaled it was willing to consider the U.S. Treasury stopping issuing tax credits to those receiving subsidies in the federal exchanges. The Court was willing to face the consequences of a death spiral in the insurance industry with “immediate destabilization” of state’s insurance exchange markets with large losses.

At that point, “picking up the pieces would not be easy.” States might be able to set up their exchanges, but they have so far shown no ability or capability of doing so, and many would have legal objections or would erect barriers. The states would be under enormous pressure – from taxpayers, health plans, and hospitals - to do something – but they would not or could not, and ObamaCare would collapse. A Republican congress might come to the rescue with an alternative plan but just how they would work has not been spelled out.

The three commentators on the “fallout” from an adverse King v. Burwell decision conclude"

“ACA supporters thus have good reason to worry. For at least several years, and perhaps for much longer, the outcome of King could determine whether millions of people continues to have access to affordable comprehensive health insurance.”