What Happens if Supreme Court Upends Health Law?

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The King v. Burwell case is focused on determining if it is legal for the government to provide subsidies to consumers in 34 states that have not set up their own insurance exchanges and rely on the federal marketplace. Most conservatives want to eliminate the subsidies and the Affordable Care Act's requirement for Americans to obtain insurance.

The American Enterprise Institute believes that people currently receiving subsidies should be granted a temporary extension, but new enrollees should not be given any subsidies. Meanwhile, the Heritage Action for America does not want any extension of the subsidies. On the other hand, Families USA (a liberal consumer group) wants to ensure that eligible consumers continue to receive subsidies because 6.4 million people would lose their subsidies, resulting in a large number of uninsured.

The King v. Burwell case is the latest challenge to the Affordable Care Act, as the plaintiffs argue that via a straightforward reading of the law, only residents of states that set up their own exchanges can receive government subsidies. On the contrary, the administration claims that the law is intended for the subsidies to go to those who qualify based on income, regardless if they signed up through a state or federal exchange. Approximately 85% of people who bought insurance via a state or federal exchange receive a subsidy that averages about $275 per month. According to the Kaiser Family Foundation, if the subsidies are eliminated, some may see their costs for insurance almost triple, leading to people dropping their coverage.

If the court decides to eliminate subsidies in the federal marketplace, it seems that the easiest alternative would be for Congress to pass a law saying that subsidies are permanently legal in all states. However, it is unlikely that a republican- controlled Congress would be willing to pass such a law. One possible suggestion by the consulting firm Leavitt Partners advises that the Obama administration reduce the administrative and financial requirements for states to set up exchanges. Furthermore, if the decision threatens subsidies, there may be a major political risk for the Republican party, who may be blamed if coverage is unaffordable.

Written by Caroline Smith

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Caroline Smith is currently a senior at the University of Notre Dame and is a contributor to Medical Groups. She is majoring in Science-Business and Spanish. After graduation, Caroline plans on entering the field of healthcare consulting. She is most interested in the evolving policy changes in the healthcare industry and enjoys learning about new technologies that are being developed.