Some experts have counseled a zen-like patience while awaiting the Supreme Court's consideration of the King case, which involves federal subsidies for Affordable Care Act insurance plans and is expected to yield a decision sometime in July. We've observed that the prospect of subsidies being overturned in as many as three dozen states could or should spur action in those states, or in Congress, to head off the consequences.
Julie Rovner of Kaiser Health News has made her own tour d'horizon of expert opinion, and finds that things may not be so simple. An adverse ruling by the court could be very hard to counteract in the affected states, she finds.
That's worrisome, especially because the data showing the effects of the ACA are very encouraging. The latest figures, compiled by a team from the Department of Health and Human Services and published Wednesday in the journal Health Affairs, indicate that medical costs in the U.S. rose in 2013 at their lowest rate in 50 years; the rate is expected to be about the same for 2014.
Healthcare spending rose last year at 3.6%, they found. That's a half of a percentage point slower than the year before. That kept healthcare's share of the economy stable at 17.4%. The authors attributed the slowdown to slower growth in Medicare spending, private health insurance premiums and spending for hospital and physician care and medical equipment. They said at least some of the slowdown might be a hangover from the recession, but that a few key provisions of the ACA "exerted downward pressure on health spending growth."
Meanwhile, enrollments in Medicaid and individual insurance plans as open enrollment commenced this year remains robust, with 765,000 enrollments reported by the government for the first two weeks of the enrollment period, Nov. 15-28. Just under half of those were new enrollments, and the rest renewals. Plainly, the glitches that afflicted healthcare.gov a year ago are gone. Obamacare appears to be picking up a head of steam -- and will continue, if not derailed by the Supreme Court.
First, a brief primer on King vs. Burwell, the case coming before the court. The plaintiffs apply a fairly tortured reading of the Affordable Care Act to argue that the law bars federal tax subsidies for residents of states that have not established their own Obamacare insurance exchanges but relied on the federal government to do it for them.
This viewpoint has been rejected by several federal judges and denounced by a large number of constitutional law experts; among other things, it's contradicted by a 30-year-old precedent allowing federal agencies great leeway in implementing drafted statutory language. For those reasons, the court's decision to take up the case came as a surprise, and for supporters of the ACA, not a pleasant one.
Among Rovner's sources are legal experts who caution that creating state exchanges to counteract a court decision "is not child's play," as Nicholas Bagley of the University of Michigan put it. "An exchange has to be a governmental entity or a nonprofit entity ... able to carry out a variety of functions" including working with consumer assistance groups and overseeing compliance with the law’s requirements, he told her. It won't be enough to just create an exchange on paper and contract with the feds to operate it. "States would have to do more than just the bare minimum," he said.
Adding to the complexity, the availability of federal ACA funding to help states create exchanges has expired.
Then there are the political obstacles: In seven states, governors can't create exchanges on their own; the legislature has to play a role. And in many of those states, the political establishment is still hostile to Obamacare. There may be pressure from residents faced with losing their federal subsidies and therefore their insurance, and from hospitals whose finances will crater if they have to go back to paying for uninsured patients themselves, but it's unclear whether that will be enough for legislatures in many states to act.
There's little doubt that in those states, a failure to act is likely to bring the individual insurance market crashing down. The loss of the insurance subsidies would make insurance unaffordable for most people in receiving them in those states -- so much so that they'd be exempted from the ACA mandate that they carry coverage. The residents most likely to bail out are the healthiest, leaving insurers with an increasingly aged and sick coverage pool. The insurance industry says that's not sustainable.
"I don’t think there are any rosy scenarios," Timothy Jost, a law professor at Washington and Lee University, told Kaiser Health News' Rovner. Overturning the subsidies would be "a complete disaster."
Given the consequences, and the success of the ACA thus far, one can only wonder at the motivations of anyone aiming to overturn the law.