Health Insurance

What, me worry about Obamacare subsidies? Nope, she says.

Never let them see you sweat. Or, keep whistling past the graveyard.

Those may be the mottos of the top official in charge of Obamacare in the face of an existential threat to the health-care reform law now pending before the U.S. Supreme Court.

Health and Human Services Secretary Sylvia Burwell testifies before the Senate Appropriations Committee on Capitol Hill in Washington.
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The official, Health and Human Services Secretary Sylvia Burwell, on Tuesday repeatedly refused to say whether the Obama administration is making any contingency plans for an adverse ruling from the high court, which is hearing a challenge to the legality of billions of dollars in subsidies given to millions of customers.

Read hit 6.4 million sign-ups

Instead, Burwell said she's confident the administration will win that case, and that the subsidies will continue flowing next year to millions of people in 37 states insured through that federally run exchange. The subsidies to customers of state-run Obamacare exchanges are not in peril from the case, known as King v. Burwell.

"What we're doing right now is focusing on open enrollment," said Burwell, at a news conference announcing that now has 6.4 million customers signed up for insurance plans that will go into effect in 2015.

"We believe we are in a place where our argument and our position will prevail," she said.

Burwell held firm to that line even as reporters asked what the administration planned to do if those subsidies were ruled illegal by the Supreme Court, which is hearing arguments in the case March 4, and which is expected to rule on the issue by June.

Enrollees at risk?

"One can create any kind of hypothetical about anything," Burwell said when pressed on the question of what would happen if people lost their often-valuable subsidies.

"What she's doing is utterly indefensible," said Michael Cannon, the Cato Institute's health policy studies director, and one of the intellectual godfathers of the challenge to the subsidies.

" enrollees have a right to know that their premiums could quadruple, would quadruple by June, and be on the hook for a $5,000 tax liability," Cannon said. He noted that the retail price of the premiums wouldn't change if the Supreme Court invalidated the subsidies, but customers' personal cost from the premiums would leap significantly if the subsidies went away.

"Secretary Burwell doesn't want them to know about it," Cannon said. "She's not being upfront with enrollees."

However, even in announcing what is for the administration the positive news about a big surge in sign-ups, Burwell was underscoring the big risk Obamacare faces.

About 85 percent of's current 6.7 million customers receive federal tax credits that help them pay for their 2014 insurance plans. Many of those low- and middle-income people would find the retail cost of the plans unaffordable, or not bother to buy those plans without those subsidies, experts agree.

Four separate, but related, federal court lawsuits have challenged the legality of those subsidies. Those suits claim that the Affordable Care Act does not authorize the issuance of financial aid to customers on a federally run exchange such as

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The plaintiffs point to language that explicitly authorizes those subsidies to customers of state-run Obamacare exchanges; the ACA is silent on subsidies being given to enrollees on a federal exchange. The subsidies are available to people earning between one and four times the federal poverty level, or $23,850 for single adults and $95,400 for a family of four.

The Obama administration and its supporters have said the subsidies are legal given the overall intent of the ACA to provide health coverage to the uninsured, coupled with language talking about the creation of a federal exchange in the event states fail to build their own.

Supreme Court sets date for Obamacare hearing

But the Supreme Court, in a surprising move in November, agreed to hear the plaintiffs' challenge. That worried Obamacare supporters, given the fact that four out of the nine justices on the court voted against the legality of the ACA in 2012.

At stake are not only the subsidies in 37 states. If a substantial number of currently subsidized people exited the plans because the high court invalidated the financial aid, it would be likely to leave sicker, older customers in the plans, because they would be the ones most anxious about maintaining coverage, experts have said.

That, in turn, could lead insurers to significantly boost premium rates to compensate for the burden of providing benefits to those remaining pools of customers.

A Supreme Court ruling against the administration also would cripple Obamacare's individual mandate in the 37 states, and destroy the so-called employer mandate there.

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The individual mandate requires most Americans to have some form of health insurance or pay a fine. However, people would be exempt from that mandate if they did not have an affordable option for buying insurance, which would be the case for many customers without access to subsidies.

And the employer mandate that starting in 2015 will require firms with 100 full-time workers or more to offer them affordable health coverage plans or face a fine would be gutted in states, because that fine is only triggered if a worker at a firm that doesn't offer such coverage buys a plan with subsidies from an exchange.

Potential workarounds

Some analysts have suggested the Obama administration could deal with an adverse Supreme Court ruling by loosening restrictions on the creation of a state-run exchange, or other workarounds that would help keep the subsidies flowing.

When asked about Burwell's refusal to talk about contingency plans, Washington and Lee University School of Law professor Timothy Jost said, "It doesn't really strengthen their litigating position to talk about what we're going to do if we lose, so I can understand taking that position."

Jost, a leading Obamacare expert, said Cannon and the plaintiffs in the challenges to the subsidies are asking the Supreme Court justices "to cherry pick four words out of a 900-page statute," and to go against the high court's practice of deciding a case based on how an entire law is written.

"It seems to me the administration has done their job, they've properly interpreted the statute," Jost said.

He said a decision invalidating the subsidies would deprive millions of people not only of health insurance, but also health care.

"I hope that they take that into account," Jost said, referring to the justices. "These are the people that Congress intended to help. They're getting that help, and it would be cruel for the Supreme Court to take away that help for political reasons."