(Bloomberg View) — If the U.S. Supreme Court rules against the government in the latest court challenge to Obamacare, conservatives will have done more than undercut the Patient Protection and Affordable Care Act. They will also have crippled a cause they have long supported: weakening the link between health insurance and employment.
The court will hear arguments Wednesday in King vs. Burwell, a case that challenges the authority of the federal government to subsidize Obamacare premiums in states that failed to establish their own insurance exchanges. The U.S. Department of Health and Human Services (HHS) says that if the court rules for King, there will be no easy fix. It’s unlikely that Republicans in Congress could agree on a legislative solution, their assertions to the contrary notwithstanding.
What happens then? As Margot Sanger-Katz writes in the New York Times, a ruling for the plaintiffs wouldn’t just hurt those who get subsidies; it would generate mayhem for anybody who buys coverage on the individual market in the affected states. The loss of subsidies would raise the real cost of coverage, pushing those who need it least — people who are healthy — to stop buying it.
That would make those who remain sicker, on average, and therefore more expensive to cover — increasing premiums, pushing out yet more healthy customers and increasing premiums even more. This process is called a death spiral for a reason. It would probably happen quickly. It would be hard to reverse. And it would render the individual market toxic for people and employers alike.
This is where the effects of King vs. Burwell start to clash with another deep trend in U.S. health care: the shift away from employer-sponsored coverage. From 2000 to 2010, the share of Americans who got health insurance through work fell from 70 percent to 60 percent. Obamacare has contributed to that trend, in part by making the individual market a more palatable option.
Separating health insurance from work appeals to conservatives, on the grounds of personal freedom, market efficiency and economic growth. “Americans are limited in their choices of health insurance plans based on what their employers can afford — if a health plan is even offered at all,” Republican Rep. Paul Ryan wrote in 2010. His solution was replacing the tax preference for employer-sponsored insurance with personal tax credits to buy insurance: