King v. Burwell: What you need to know leading up to the Supreme Court decision

Sometime this month--perhaps even days from now--the Supreme Court will release its long-awaited ruling on the King v. Burwell case.

Ever since the Supreme Court heard the oral arguments back on March 4, speculation has mounted throughout the industry. Will federal subsidies disappear for Americans in states that rely on the federal exchange? Will the Court side with the defendants and uphold subsidized coverage for all Americans regardless of their state's exchange status?

With plenty of time to ponder a potential win, opponents of the Affordable Care Act have crafted and proposed more than a dozen alternative plans. Here some examples:

  • Republican Senators Orrin Hatch (Utah) and Richard Barr (N.C.), as well as Rep. Fred Upton (Mich.) crafted the Patient Choice, Affordability, Responsibility, and Empowerment Act (Patient CARE Act), which focuses on replacing the individual mandate.
  • Sen. Ben Sasse (R-Neb.) wants to maintain subsidies for qualified individuals yet have them gradually disappear over a course of 18 months.
  • Another plan would halt Medicaid expansion, repeal both the individual and employer mandates, and reduce federal regulation of certain insurance policies, such as no longer requiring policies to include maternity care coverage.  

Should the plaintiffs prevail in the case, the result "would damage the entire healthcare system, since the markets are integrated. Premiums will rise dramatically everywhere, and ultimately, affect everyone," Danielle Gray, former assistant to the president and cabinet secretary, said on a call with reporters prior to the oral arguments. The result would be "devastating," she added.

For payers specifically, it's been difficult to predict how the Court will rule. Payers proposed their 2016 premiums rates a month preceding the oral arguments, and such rates slowly are being released. While many insurers have proposed drastic rate hikes--some as much as 36 percent--a ruling against the defendants could cause insurers to increase their prices even more should subsidies disappear. This, in turn, could then cause healthy enrollees to drop out of the market, as the tax penalty for not being insured would pale in comparison to the cost of keeping insurance.

While the Obama administration has been mum on contingency plans if subsidies disappear, President Barack Obama remained confident about his signature healthcare reform law. He told reporters this week, "You have a model where all the pieces connect. If somebody does something that doesn't make any sense, then it's hard to fix. This would be hard to fix. Fortunately ... it doesn't need fixing."

Be sure to read our Special Report: King v. Burwell Supreme Court case: What you need to know and check back with FierceHealthPayer for breaking news updates.