If the Supreme Court sides with the challengers in the latest legal targeting of the Affordable Care Act, which is a very real possibility, the immediate impact would be to invalidate federal subsidies to millions of people in around three dozen states.
This would not bring down the law as a whole, since the states that have agreed to set up exchanges would remain untouched. But this gets at another reason the stakes are so high here. Such a SCOTUS decision could exacerbate a trend we’ve already seen develop as GOP states declined to opt in to the Medicaid expansion: It could further deepen the divide between blue and red states when it comes to access to health insurance.
If SCOTUS does invalidate the subsidies to people in states on the federal exchange, some states impacted by the decision, presumably, would move to set up their own exchanges, to prevent their constituents from having health coverage yanked violently out from underneath them (crazy idea, but it just might happen). However, it seems reasonable to assume more conservative states might be less likely to do this.
Two studies released last year by the Kaiser Family Foundation found that the refusal of GOP states to opt into the Medicaid expansion risks worsening geographic and racial disparities when it comes to health coverage, with the burden falling more heavily on southerners and non-whites.
If subsidies stop flowing to those states that did not opt to create their own exchanges, the disparity between states that are doing all they can to enable their constituents to benefit from the law, and those who are resisting that course of action at all costs, could deepen. Most of the southern states declined to set up exchanges, as did all of the Deep South states.
“States that did not expand Medicaid by and large did not create their own exchanges,” Len Nichols, a professor of health policy at George Mason University, tells me. “This will further expose the chasm between states that are fully implementing the law and states that aren’t.”
“Many of the poorest states with the highest uninsured rates would lose an infusion of federal dollars if the Supreme Court disallowed the tax credits and the states decided not to set up exchanges on their own,” Larry Levitt of the Kaiser Family Foundation adds.
Over at the Incidental Economist, Bill Gardner explains what such a SCOTUS decision would mean in related political and philosophical terms:
In the states that have not established exchanges, a Court decision for the plaintiffs would throw the responsibility of establishing health care exchanges back on those states. If they want the subsidies for their citizens they still have the option of establishing an exchange. Some may do this, because their citizens will be harmed by the loss of insurance and their health care systems will be stressed by increased numbers of uninsured patients. However, it’s also likely that at least some of those states will not establish exchanges, so that millions may lose their subsidies and their insurance….
The constitutional outcome of a victory for the King plaintiffs would be a radically decentralized federalism. It would mean that increasing access to health care through the ACA would require political validation at the state as well as the federal level.
As Gardner argues, this alone is a reason why John Roberts, the expected swing vote on the court, may side with the challengers, since such an outcome would be “consistent with the constitutional philosophy that Roberts and many other conservatives espouse.”
And so, perhaps these deepening disparities will better be seen as a feature, not a bug.