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Millions Could Lose Coverage in Latest Challenge to Affordable Care Act

04/02/2015 07:38 pm ET | Updated Jun 02, 2015

The Supreme Court, once again, holds the fate of the Affordable Care Act in its hands. The first challenge to the law involved significant constitutional questions. This time, not so much.

The latest challenge, King v. Burwell, does not raise important constitutional issues -- the ACA was already ruled constitutional. However, the potential impact could do real damage. Millions of Americans could lose insurance coverage, premiums would increase dramatically -- making insurance unaffordable for many in the individual market -- and hospitals would lose funding for uncompensated care. Historic changes that have made affordable health care accessible to more Americans would be erased.

From the beginning, the ACA has been the focus of a hard-fought battle between opposing ideologies and political parties.

A quick recap: The act passed in the Senate and House on party-line votes. To avoid a filibuster after the Massachusetts special Senate election in 2010, Democrats resorted to a little-used process known as "reconciliation" to push the legislation into law. Since then, the House of Representatives has voted 54 times to repeal all or part of the law and in 2013 actually shut down the federal government for 16 days to block its funding. Every House budget proposal since 2011 has contained a provision to repeal the law.

In 2015, the ACA is still on the front line of that political fight. According to March's Kaiser Health Policy Tracking Poll, 74 percent of Republicans have an unfavorable opinion of the ACA. Alternatively, 65 percent of Democrats have a favorable opinion.

Given this political divide, amending or revising the law in Congress is all but impossible, and the near-term fate of the law is once again up to the Supreme Court. The first time the court ruled on the health care law was in March 2012.

Whether you love or hate the ACA, at least the first Supreme Court case involved significant constitutional issues.

In NFIB v. Sebelius, the issue before the court was whether the federal government could force American citizens to purchase a private product, in this case health insurance. The law's drafters argued that Congress had the power to do so under the Constitution's Commerce Clause -- as a matter of interstate commerce. In its ruling, the Supreme Court held that the ACA's individual mandate was not justified under the Commerce Clause but that it could be implemented under Congress' power to tax.

The second issue, in Florida v. HHS, was whether the government could force individual states to expand Medicaid by threatening to cut off all of a state's Medicaid funding if they refused. The core of the debate was whether the threatened budget cut was "unconstitutionally coercive" to individual states. By a vote of 7-2, the Supreme Court decided that this provision of the ACA was, in fact, a bridge too far.

Both issues raised constitutional questions that involved potential precedents and lawmaking.

Unlike the cases in 2012, there are no great constitutional issues at stake in King v. Burwell. The challenge is strictly about the ACA and will probably have no real importance for future laws, federalism or constitutional precedent. It is about one phrase -- "established by the state" -- repeated 10 times in the 2,000-page law.

The petitioners in King v. Burwell claim that because of that phrase, the ACA's drafters intended to provide insurance subsidies only to those states that set up their own insurance exchanges. They claim that the language was an obvious attempt by Congress to coerce states into setting up marketplaces.

However, there is no evidence that states felt they were being coerced. No states raised public objections based on the idea that subsidies would be restricted to state-based exchanges. No state filed a regulatory or legal challenge. Nor was there any attempt by Congress or the administration to force the IRS, which manages the subsidies, to stick to a coercive game plan.

On top of everything else, if the petitioner's interpretation of the law is correct, then more than 50 other provisions in the law would be unworkable. If the key phrase was sprinkled into the law to coerce states into setting up their own marketplaces, it failed on all counts.

In comparison, the provision on Medicaid expansion left nothing to chance. If a state did not expand Medicaid, Congress had the option to slash federal funding. Congress indicated its willingness to do so, and the states clearly recognized the threat. Twenty-six states took the legal challenge all the way to the Supreme Court. Not one state joined King v. Burwell.

In the King case, the petitioner's claim of harm is about as tenuous as the claim of congressional coercion. They claim that the federal subsidies are so generous that they can no longer qualify for a hardship exemption from the mandate to buy insurance. In other words, the subsidies would make health insurance too affordable to exempt them from buying insurance.

It makes one wonder whether this case truly has merit or is just the latest manifestation of the long effort to kill or wound the law. In an opinion piece in the New Yorker, writer Jeffrey Toobin cited a 2010 statement from Michael Greve, a board member of the Competitive Enterprise Institute, which brought the King case to court. "This bastard (referring to the Affordable Care Act) has to be killed as a matter of political hygiene. I do not care how this is done, whether it's dismembered, whether we drive a stake through its heart, whether we tar and feather it and drive it out of town, whether we strangle it."

Even though the King case appears to be motivated by political ideology and its claims frivolous, a ruling in favor of the petitioners would have very real and harmful consequences for millions of Americans. More than 7 million Americans in states with federal exchanges currently receive subsidies to purchase coverage. If those individuals lost access to subsidies, the cost of coverage would be unaffordable for the vast majority of them. According to the Commonwealth Fund, a subsidy shutdown could result in 9.6 million fewer people with coverage by 2016, a 70 percent decline. The resulting adverse selection caused by healthy people leaving the risk pool could increase insurance premiums in the individual market by 47 percent.

Health care providers and health insurers would be hit especially hard if newly insured patients suddenly or even gradually lost coverage. Hospital Corporation of America, the largest for-profit hospital chain in the U.S., reports that it collects zero payment from nearly 90 percent of its uninsured patients. Health insurers could see a 70 percent decline in enrollment. The loss of a healthier risk pool would create unprecedented premium price growth, and insurers leaving the marketplace would create an even more uncompetitive insurance market.

Five years after the ACA was signed into law, it is delivering good results. There are problems with the law, to be sure. Among other changes, Congress could fix the "established by the state" wording with a single amendment. But with our current political dysfunction, that is virtually impossible.

Social Security, Medicare and Medicaid -- each a sprawling, landmark piece of legislation -- went through similar legislative and legal challenges for both political and ideological reasons. Those laws were ultimately modified and made better through legislative amendment and regulation. One day, that same basic function of legislating will be what's required to make changes to the Affordable Care Act. Unless the Supreme Court deals it a crippling blow in June.