Is Obamacare Doomed?

March 4, 2015 Updated: March 4, 2015

The Supreme Court’s pending decision on a key provision in the Affordable Care Act, informally known as Obamacare, could essentially crush the health care law and President Barack Obama’s legacy alike.

Arguments for the case, King v. Burwell, were heard by the Supreme Court on Wednesday. It’s the third time the highest court in the land will rule on an Obamacare provision. Reporter in the  Supreme Court noted that the justices were sharply divided, and justices aggressively questioned lawyers on both sides of what Justice Elena Kagan called “this never-ending saga.” 

But the case isn’t like the previous two legal challenges. In 2012, the National Federation of Independent Business v. Sebelius resulted in a 5-4 decision to uphold the constitutionality of the individual mandate for most Americans to obtain health insurance, and in 2014, the court ruled against Obamacare’s birth-control coverage rule.

The case focuses on four words in the law, “established by the state.” The challengers say those words are clear and conclusive evidence that Congress wanted to limit subsidies to those consumers who get their insurance through a marketplace, or exchange, that was established by a state. As a result, those words make it illegal for the government to hand out tax credits for health insurance in 34 states in federal insurance exchanges. About 7.5 million people could lose their subsidies.

If the justices decide to rule against it, the consequences could be dramatic and long-lasting. The Obama administration has said that it’s not possible to implement the Affordable Care Act without the subsidies.

However, a ruling in favor of the challenge might not be that big of a deal, as some experts have noted.

If the Supreme Court rules against it, “Congress will more than likely delay any immediate action in order to allow states to build their own state run public exchanges,” said Doug Foshee, a business development manager with Health Partners America, in an e-mail.

In the near future, a ruling against the provision likely won’t jeopardize Obamacare, he adds. “Even with a key provision gone and a possible repeal…the alternative is to keep the subsidies available for state run exchanges. This means the states will have to take on the burden of running an exchange or, and this is my hope, they will contract with a third party administrator and use the Federally built exchange anyway,” he said.

For people who purchased coverage on the website, they “might potentially lose their reduced premiums and cost-sharing subsidy,” Foshee added, but this won’t “happen the day of the ruling.”

Others have said that if the Supreme Court rules in favor of Obamacare’s latest challenge, it sends the wrong message.

“It will be ignoring clear Congressional intent and context,” said Mark Kende, who is a constitutional law expert at Drake University in Iowa. “Many individuals will lose the credit/subsidy that allows them to afford the kind of insurance that can actually save lives,” he added. “It would be a terribly inhumane result (especially given that over 10 million people have now started to rely on the coverage), and it would be based on a misreading of the law.

A Supreme Court ruling could “move the U.S. backwards in our effort to join most of the rest of the developed world which already provides health security to its citizens. And health insurance prices could skyrocket more generally as well,” Kende added.

The Associated Press contributed to this report.