If you wake up tomorrow and hear a top U.S. court has issued a ruling that could end up effectively destroying much of Obamacare, don't say we didn't warn you.
At stake are the subsidies that more than 5 million people have already received to help them buy health insurance through HealthCare.gov, the federal Obamacare exchange that sold insurance in 36 states this year.
In a nutshell, plaintiffs in the case Halbig v. Sebelius claim those often-valuable subsidies are illegal because the Affordable Care Act only authorized such tax credits for people who bought insurance through one of the exchanges originally set up by an individual state or the District of Columbia—not the federal exchange. Nearly 90 percent of the people who enrolled in plans via the federal exchange qualified for those subsides because they had low or moderate incomes.
Take away those subsidies and many, if not most, of the enrollees on HealthCare.gov might not buy insurance next year because they will find it unaffordable at the full premium price. That, in turn, could create a much-feared "death spiral," where insurance pools have too many sick enrollees and not enough young healthy ones, and premium rates skyrocket.
And if those subsidies are not available to individuals in the states served by HealthCare.gov, it would also mean that businesses in those states could not be mandated starting next year to offer affordable health insurance to their workers or pay a fine. That's because the so-called employer mandate is linked to the availability of those subsidies for workers who opt to buy individual insurance.
"If the courts were to decide that the Halbig plaintiffs were right, it would be a huge threat to the ACA," said Timothy Jost, a professor at the Washington and Lee University School of Law, and leading Obamacare expert. "This is a real bomb-thrower."