Stage Set for Latest ‘Do or Die’ Supreme Court Decision on ACA

By Patrick Connole - June 16, 2015

Mere days from now the Supreme Court will set off a tempest in the health insurance world if it decides against the Obama administration and stops tax subsidy payments for enrollees on federally facilitated exchanges (FFE) in the King v. Burwell case. The plaintiffs in the case say the Affordable Care Act (ACA) does not specifically say that marketplaces run by the feds can dole out subsidies.

Where does this possibility of a major upheaval in the individual market leave plans? Stuart Gerson, an attorney in the Litigation and Health Care and Life Sciences practices at Epstein Becker Green, says health plans have no doubt “done the math on this” and realize what’s at stake if subsidies go away for federal exchanges.

“These are just the people the insurance companies want in the pool to avoid adverse selection. If they are not in the pool, if they don't buy insurance, that is a problem. Insurance rates will go up just by the virtue of the fact the universe will contain older, less healthy people. I think insurers know what is going on. They are on the side of the administration, but there is little they can do to influence the outcome,” he says.

Gerson says while he doesn’t expect a court decision against FFE subsidies to drive out health plans from marketplaces, premiums would definitely change. “It is going to be a sloppy situation,” he adds.

He said he senses that the administration is scrambling before the ruling by suggesting Congress could fix the situation by simply adding four words to the ACA that would allow subsidies on FFEs. But a solution in the politically charged legislature is not in the offing. Gerson also pointed to comments by President Obama recently that the disorder a negative decision would create should prevent the justices from negating the FFE subsidies. But this, he stresses, is not how things work. “Of course that is not what the court does. The court is going to try to follow the law and not focus on external matters,” Gerson says.

From his viewpoint, he expects the Supreme Court to uphold the lower court ruling and keep the status quo on ACA exchanges in place. But no one’s vote or opinion really counts, except for the nine justices holding the fate of subsidies for millions of exchange enrollees in the balance.

What do you think the Supreme Court will do? Will a negative vote for the administration send the individual market reeling, or will the FFEs be able to adapt and become state-based exchanges without too much tumult? Let us know.

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