It is clear from both the first paragraph and closing comments in the Supreme Court’s decision upholding Obamacare subsidies that the justices listened more closely to the insurance industry than perhaps any other party.
In an amicus brief it filed with the court in King v. Burwell, America’s Health Insurance Plans, the industry’s main trade group, painted a dire picture of what would happen to the private health insurance market—and to people who cannot enroll in an employer-sponsored health plan—if the court ruled in favor of the plaintiffs. According to AHIP, under that scenario, you could pretty much kiss the private health insurance industry goodbye in two-thirds of the states.
The plaintiffs argued that because of the way the Affordable Care Act was worded, the government was unlawfully providing financial help to millions of people in 34 states— the states that had defaulted to the federal government to operate their health insurance marketplaces, or exchanges, rather than set one up on their own.
A sentence in one section says the subsidies will be made available through the exchanges “established by the state.” Members of Congress who wrote the law insisted they never intended for the subsidies to be available in just the states that set up their own exchanges. But attorneys for the plaintiffs insisted that the justices should interpret those four words literally (and out of context).
They asked the Court to strike not only the subsidies in the 34 states that didn’t set up their own exchanges —but also the law’s requirement that most Americans must buy coverage or pay a penalty. The plaintiffs, however, did not ask the court to strike another provision: one that makes it illegal for insurance companies to refuse to sell a policy to any applicant willing to pay.
A victory by the plaintiffs would have created a situation in which many of the newly insured—especially low- and moderate-income individuals in good health—would have dropped their coverage. Without the subsidies many of them have been getting from the federal government since January 2014, they wouldn’t be able to afford the premiums. Had the plaintiffs prevailed, the only people who could be expected to continue buying coverage in the individual market in those 34 states would be those with conditions requiring expensive care.
AHIP wrote in its brief that without the mandate to buy insurance, young and healthy people would once again opt to go uninsured, leaving the marketplace to sicker and older consumers. AHIP wasn’t just blowing smoke; the trade group noted what happened a few years back when New York and several other states tried to force insurance companies to accept all applicants without a mandate to buy coverage. Premiums in every one of the states spiked dramatically and almost immediately. Most insurers quit selling policies in those states because of this developing “death spiral.”