Peter Lee, executive director of Covered California and a former Obama administration official, said a court ruling against the Affordable Care Act "signals that subsidies don't matter."
"I think it would set a horrible moral precedent if the Supreme Court was to find that we can leave Americans without that financial leg up," Lee said in an interview. "I think it’s a fundamental flaw to not understand how every American needs a leg up."
A court ruling against the Obama administration in the King vs. Burwell case would have no immediate effect on Covered California and its 1.2 million consumers receiving subsidies because it's a state-run marketplace.
The legal challenge brought by conservative activists argues that a strict reading of the health law makes subsidies available only in states such as California that established their own exchange.
That means justices could eliminate health insurance subsidies in as many as 37 states that use the federal HealthCare.gov marketplace. A decision is expected later this month.
Michael Cannon, director of health policy studies at the Cato Institute, said Lee and other health-law allies have it all wrong in their legal analysis.
"It would be immoral for the Supreme Court to let the president get away with breaking the law," Cannon said. "The president’s allies are panicking because they are afraid people will learn how much the Affordable Care Act costs."
Lee said he is concerned that an adverse court ruling could trigger revisions to the health law that would affect all state exchanges and possibly reduce the amount of federal assistance available to consumers.
People can qualify for subsidies if they make less than four times the federal poverty level, which is about $47,000 annually for a single adult and $97,000 for a family of four.
"Any revisions to the Affordable Care Act that back away from giving folks the financial help they need is backing away from giving people the care they need," Lee said.
More than 1.3 million Californians are enrolled in the state exchange and nearly 90% receive some level of federal subsidy. About 120,000 enrollees pay less than $10 per month after accounting for that assistance.
Overall, Californians received $3.2 billion in premium subsidies during the rollout of the insurance overhaul last year. The average monthly subsidy was $436 per household, according to the state.