The Fallout of a SCOTUS Health-Care Decision

On the legal merits, the argument is absurd. Its prospects at the Supreme Court are accordingly dim. Chief Justice John Roberts has already rejected two much stronger challenges to the ACA. And Justice Brett Kavanaugh may also be skeptical: He has recently written about the need, in constitutional litigation, to […]

On the legal merits, the argument is absurd. Its prospects at the Supreme Court are accordingly dim. Chief Justice John Roberts has already rejected two much stronger challenges to the ACA. And Justice Brett Kavanaugh may also be skeptical: He has recently written about the need, in constitutional litigation, to salvage as much of Congress’s handiwork as possible. If Roberts and Kavanaugh side with the remaining liberal justices, as seems likely, there will be five votes to reject the challenge.

Making strong predictions about the Supreme Court, however, is treacherous. The three Republican-appointed judges who have heard the case in the lower courts have all backed it so far. Some or all of the six conservative justices may too. The risk to Obamacare is small but real.

At its core, the Affordable Care Act made two big changes: It expanded Medicaid to cover everyone earning at or around the poverty level, and it reformed and subsidized the individual insurance market for the rest of the uninsured.

Because health care is expensive, both changes depend on billions and billions of dollars in federal funding. That’s why the Affordable Care Act, though it does a fair amount of regulating, is probably best understood as a spending program. In 2020 alone, for example, federal outlays under the law will total $125 billion, according to a CBO estimate. That money would evaporate if the Supreme Court were to strike the law down.

That would affect a lot of people. Nationwide, 14.8 million are covered under the Medicaid expansion. Most of them are enrolled in private Medicaid managed-care plans, which terminate coverage 30 or 60 days after they don’t get paid what they’re owed. (The precise grace period will depend on the contracts that plans have signed with the state Medicaid program.) The rest would be pitched from the Medicaid program almost immediately. These millions of people don’t have the means to buy coverage on their own.

Matters are somewhat more complicated for the private insurance market. Though current enrollees have signed one-year contracts for their health plans, those enrollees depend on premium subsidies to cover their monthly payments. The subsidies are large: They total about $5,900 a year for those subsidy-eligible individuals who buy health insurance through the exchanges. Without the subsidies, some people will still be able to make their monthly payments—but most will not. Thirty days after their first nonpayment, they too will lose coverage.

A Supreme Court decision against the ACA would also create turmoil for the individual insurance market in 2022. The end of the Affordable Care Act would mean the end of key insurance regulations, including protections for people with preexisting conditions and the requirement that insurers cover essential health benefits, such as prescription-drug coverage and maternity care. Insurers would have to redraft insurance policies in order to limit their exposure to sick enrollees—and they would have to do so in a chaotic and confused health-care environment. Most, if not all, would exit the market and wait for the dust to settle.

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