Supreme Court Split on Obamacare Subsidies
by Adam Smeltz
March 05, 2015
Source: Pittsburgh Tribune-Review
Sharp divisions fractured the Supreme Court on Wednesday over the latest challenge to President Obama's landmark health care law, energizing critics who want the justices to dump tax subsidies that help millions of Americans pay for health insurance.
As many as 329,000 Pennsylvanians and 2.8 million Americans in 33 other states could lose their insurance policies if they don't have that assistance, according to the Urban Institute in Washington.
Other observers said a court decision to end the aid would be less dire, arguing Congress could address the gap with an amended — and more practical — version of the Affordable Care Act that Obama signed in March 2010. State legislatures might step in with their own programs, several scholars said.
“Congress does have to be prepared for a decision to strike down the subsidies, but they don't have to panic. I don't think states are going to panic,” said John R. Graham, a senior fellow of the Dallas-based National Center for Policy Analysis.
He said an order striking down the subsidies wouldn't be “a fatal blow” to the controversial health care law but would offer “an opportunity for Congress and President Obama to finally agree on some bipartisan compromises” to adjust the legislation.
Justices forcefully quizzed Solicitor General Donald Verrilli Jr. and lawyer Michael Carvin during 80 minutes of oral arguments in King v. Burwell, which follows a failed Supreme Court case to overturn the health law, known as Obamacare, in 2012.
The new case spotlights one phrase in the 906-page legislation. Its language indicates tax credits will be available through online marketplaces “established by the state.”
Since the law passed, 34 states — including Pennsylvania — chose to rely on the online marketplace established by the federal government instead of developing their own.
The Internal Revenue Service ordered in 2012 that the subsidies would be available in all states, regardless of whether they have their own online markets or use the federal website at healthcare.gov. Plaintiffs believe that blanket approach breaks the law, which critics say offers tax credits to encourage states to build their own exchanges.
“It may not be the statute Congress intended, but it may be the statute Congress wrote,” Justice Antonin Scalia said of the Obamacare provision in dispute.
His colleague, Ruth Bader Ginsburg, said allowing subsidies only for people in some states “would be disastrous.” Advocacy groups such as the Center for American Progress aired similar worries, calling the case a political maneuver that could undercut access to care and reverse proven reforms.
Yet it remained unclear how the court is likely to split on the matter, a decision for which is expected by late June. Chief Justice John Roberts said almost nothing in the back-and-forth, and questions from Justice Anthony Kennedy, often a swing vote, did not make clear how he will emerge.
Roberts was the decisive vote to uphold the law in 2012.
In Pennsylvania, about 81 percent of 471,930 residents who enrolled for insurance through healthcare.gov at the end of open enrollment Feb. 15 qualified for a tax credit, according to the Department of Health and Human Services. It said the average tax credit for Pennsylvanians enrolled is $230 a month.
“Whether anyone would lose coverage (if the subsidy disappears) is up to the individual, who would have to decide whether to keep the coverage at greater cost without the tax credit, see if a lower-cost plan were available or opt to pay the tax penalty if they forgo coverage,” state Insurance Department spokesman Ron Ruman said in a statement.
It wasn't clear how Gov. Tom Wolf might respond if the court nixes the subsidies. His spokesman, Jeff Sheridan, said the administration wants to make sure “a state-based exchange is an option for Pennsylvania.”
“Right now, the administration is working with the federal government and foundations to review options,” Sheridan said in a statement.
Downtown-based health insurer Highmark Inc., which has sold more than 178,000 policies to Pennsylvanians through the federal exchange, declined to comment on ramifications of the Supreme Court case. Rival UPMC Health Plan, which reported selling individual commercial plans to nearly 60,000 people this year, said it would collaborate with state and federal authorities if policy changes materialize.
Even if Pennsylvania were to develop its own exchange, the Pennsylvania Health Access Network worries that affected policyholders could experience some interruption during a transition phase.
“Our major concern is that there could be a disruption in care while folks try to figure out a solution for people not to lose health insurance or the tax credits,” said Antoinette Kraus, director of the statewide health coalition.
In the meantime, she and other observers agreed on one point: They wouldn't guess what the Supreme Court justices will decide.
“The easiest way to look like a fool is to predict what they're going to do,” Graham said.