Ruling Against Health Reform Subsidies Would Be Wrong — and Harmful

As the Supreme Court hears oral arguments in King v. Burwell this morning, it’s critical that the Court recognize that the Affordable Care Act (ACA) provides premium tax credits for consumers in all states, as we’ve explained.  Invalidating the credits for people in states that didn’t create their own exchanges would be wrong from a legal perspective and would harm millions of Americans.

The ACA clearly states that if a state elects not to establish its own exchange, “the Secretary [of Health and Human Services] shall . . . establish and operate such Exchange within the State.”  In other words, the federal government stands in the shoes of states that elect not to operate their own exchanges by establishing and operating the exchanges on their behalf.

As Chief Justice John Roberts has said, the exchanges are “an element of a comprehensive national plan to provide universal health insurance coverage” (emphasis added).  Leaving millions of people in 34 states unable to afford coverage is not a national plan — yet that’s exactly what would happen if residents of states with federally operated exchanges weren’t eligible for help buying coverage in the exchange.

If the Supreme Court invalidates premium credits in the federal exchange, the number of uninsured Americans would jump by roughly 8 million, as many people would find coverage unaffordable without subsidies, according to studies from the RAND Corporation and the Urban Institute.

Millions more would face dramatic premium increases because younger and healthier people would be especially likely to go without coverage, leaving those who continue to buy coverage older and less healthy, on average — and thus costlier to cover.  RAND estimates that premiums would jump by 47 percent; the Urban Institute estimates a 35 percent increase.

A diverse group of Americans would be hurt.  Most tellingly, 81 percent are full- or part-time workers who don’t get coverage at work.

While some health reform critics claim they have alternative reform plans in case the Supreme Court rules against the premium credits, their claims are hard to take seriously.  The recent “plan” from three Senate Republican leaders — Health, Education, Labor and Pensions Committee Chairman Lamar Alexander; Republican Policy Committee Chairman John Barrasso; and Finance Committee Chairman Orrin Hatch — is extremely vague and would likely undo consumer protections and market reforms that help millions of Americans get affordable coverage, as we’ve noted.

Similarly, the recent proposals from three House Republican leaders — Education and the Workforce Committee Chairman John Kline; Ways and Means Committee Chairman Paul Ryan; and Energy and Commerce Committee Chairman Fred Upton — lack essential details and would likely make marketplace coverage unaffordable for millions of Americans, especially people who are older or have pre-existing conditions, forcing many back to the ranks of the uninsured and underinsured.

Millions of Americans have benefited from the coverage they’ve received under the ACA. It’s imperative that the Supreme Court make the right decision on the merits and not turn back the clock on health reform.