A clearly divided Supreme Court on Wednesday put Obamacare under the microscope once again, with the tentative prognosis looking rather positive for the president’s signature healthcare law.
During an unusually long oral argument, several members of the court, including potential swing Justice Anthony Kennedy, warned of a “death spiral” that might occur from a ruling that cuts off insurance subsidies in 34 states that rely on a federal health exchange.
“You get these disastrous consequences,” Justice Ruth Bader Ginsburg declared.
Immediately at stake are the tax-credit subsidies that have helped make health insurance affordable for millions of Americans in dozens of states.
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At issue is the legality of the subsidies for an estimated 7.5 million subscribers in the 34 states that chose not to run their own health insurance exchanges, leaving it to the federal government. Critics argue that the law, as written, permits the subsidies to go only to people who use state-run exchanges. The administration says the subsidies were intended to be available in all states.
In Florida, 1.18 million consumers stand to lose their subsidies if the court rules in favor of the plaintiff, according to a recent report by the Urban Institute. That’s an average of $3,290 in subsidies per person that would be lost.
In 2015, 1.6 million Floridians enrolled in an insurance program through the state’s federally-facilitated marketplace, more than any other state. If the subsidies are taken away, 1.07 million people in Florida are expected to become uninsured
Justices Elena Kagan, Sonia Sotomayor and Stephen Breyer posed questions or made statements that suggested sympathy for the Obama administration’s position. Pointedly, Kennedy also identified what he termed a serious problem with the argument made by the law’s opponents.
In particular, justices questioned whether the opponents’ interpretation of the law puts the federal government in a position of coercing states, which the court generally frowns on.
“There is something very powerful to the point that if your argument is accepted, the states are being told, ‘Either create your own exchange or we'll send your insurance market into a death spiral,’” Kennedy told Michael A. Carvin, the attorney for the law’s opponents.
Possibly keeping his powder dry, Chief Justice John Roberts Jr. was uncharacteristically quiet during much of the 85-minute argument.
Once considered an esoteric, long-shot, the case, King v. Burwell, could still shake the foundations of the Affordable Care Act, the 900-plus-page healthcare law that Congress passed and Obama signed in 2010.
The court previously upheld the law against an explicit constitutional challenge, in a 2012 decision written by Roberts that concluded Congress had the authority to impose the so-called individual mandate. The mandate requires individuals either to buy insurance or pay a penalty.
The new challenge is focused more on the text of the law than on the Constitution, although the Constitution might still come into play.
The healthcare law encourages states, but does not require them, to establish exchanges to offer one-stop shopping for insurance coverage. As inducement, the law offers tax credits to people qualified by income who buy insurance through an exchange “established by the State.” The challenge turns on this four-word phrase.
Julie Mansfield of Miami is among the people who could lose their coverage, depending on the court’s interpretation of the phrase. On Wednesday, she stood on the steps of the U.S. Supreme Court to share her story. Before she was covered by the ACA, Mansfield would not have been able to stand there — or anywhere.
For years she had a medical condition that made it too painful to stand without assistance. She was diagnosed with uterine fibroids, painful noncancerous growths, in 2009. Shortly after the diagnosis, the former director of cultural arts at the City of Miami was laid off.
Unable to afford COBRA coverage, Mansfield went without proper care for more than four years while struggling with the debilitating fibroids.
“Walking upright was impossible. Getting out of bed was impossible,” Mansfield said.
In 2013, Mansfield signed up for coverage in the first wave of ACA enrollment, choosing a $265-a-month Florida Blue plan with a subsidy of $232. Four months later she had a long-awaited partial hysterectomy and the pain went away. The surgery cost her about $1,000.
The threat of losing the subsidies could mean returning to the uncertainty she endured for years.
Mansfield, who now does freelance consulting, has to have more surgery to remove scar tissue. Without the subsidies, she won’t be able to afford it.
“To dangle the carrot and then snatch it once you have a hold of it is unconscionable,” she said. “It would be reverting to a life of constant worry and stress. No one should have to live like that.”
Driven primarily by Republican resistance, 34 states declined to establish health insurance exchanges. Nevertheless, the Internal Revenue Service has extended tax credit subsidies to residents of these states who buy insurance through the federal exchange, HealthCare.gov.
Challengers say the law’s black-and-white text means what it says: A health exchange must be established by “the state” for the subsidies to be available. The federal government, by this reasoning, cannot substitute when states have declined to act.
“It may not be the statute they intended,” Justice Antonin Scalia said. “The question is whether it’s the statute they wrote.”
Even the possibility of “disastrous consequences,” Scalia added, shouldn’t distract the court from its understanding of the text.
Defenders of the law say, as well, that Congress wouldn’t bury a big burden on the states beneath such ambiguous language.
“Their reading produces an incoherent statute that doesn’t work,” Solicitor General Donald Verrilli Jr. said of the health care law’s opponents. “It revokes the promise of affordable care for millions of Americans.”
Miami Herald Writer Chabeli Herrera contributed to this report.
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This story was produced in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.