How SCOTUS could revoke health insurance for 8.2 million people

The health insurance equation for millions of Americans hangs in the balance as the Supreme Court gears up to make a landmark decision on the Affordable Care Act.

What’s King v. Burwell about?

Under the Affordable Care Act, states set up their own health insurance exchanges (which 18 states did) or the federal government sets up an exchange for them (the majority—32 states—went for this).

The federal government provides subsidies (in the form of tax credits) to all exchanges. The wording, specifically, says the tax rebate is available under any “Exchange established by the State under [section] 1311“ of the ACA.

In King v. Burwell, the plaintiffs are arguing that the wording means only states which established their own exchanges, not the ones relying on the federal government, should get the rebate. The government argues the intention of that paragraph was to provide subsidies to all states, and that the wording is just a technicality that shouldn’t change that.

So what’s the essential question the Supreme Court is tackling?

They’re trying to decide if, because of the language in the legislation, states that didn’t set up their own public healthcare exchanges should lose the federal subsidies they gained for health insurance.

Who are the players in King v. Burwell?

David King is a Virginia resident who doesn’t want to have to buy health insurance. A 64-year-old Vietnam war veteran and limo driver, he filed the lawsuit with three others who also live in Virginia. More broadly, the Republican party is on King’s side in this case, as a win could mean a way for them to dismantle Affordable Care Act, a prized piece of legacy legislation for President Obama.

Sylvia Burwell is the secretary of Health and Human Services, and has overseen the rollout of the Affordable Care Act’s insurance marketplaces over the last year and a half. Of course, the architects of the Affordable Care Act and the Obama administration have a huge interest in the Supreme Court ruling against King.

The eight justices on the Supreme Court could vote either way, of course, but the four more liberal judges are likely to protect the subsidies. Of the rest, three are most likely to vote against the subsidies—leaving one justice, Anthony M. Kennedy, who is harder to read.

What does that mean for me?

If you live in one of those 32 states with a federally-run exchange, yes, it could affect how much you pay for your insurance, even if you don’t buy your plan through the public marketplace.

A report from the Urban Institute found that 8.2 million people would no longer be able to afford insurance if SCOTUS sides with King, because they’ll out a collective $28.8 billion worth of subsidies allotted for next year. That could result in a 35 percent increase in premiums, the report said.

The New York Times looked at how many people rely on the subsidies in different states:

So if insurance premiums go up, healthier people would likely be the first to leave the exchange, researchers say, meaning a loss of business for insurance companies. That, in turn, would mean another increase in premiums, because the healthier customers with lower risk keep insurance premiums lower. In some states, this could mean a huge increase in premiums for the least healthy, who need coverage the most. Those increases would also affect people on plans within the exchange and those on independent plans.

And then there is also a possibility that some insurers would choose to stop offering plans on the federal exchange, since the cost-benefit picture would change.

Some states may choose to start their own exchanges to get around the situation, analysts at the Brookings Institute say. So while a ruling that scraps the subsidies would be a significant blow to the Affordable Care Act, it’s not likely to be the immediate end of it.