It's time to go back to the Supreme Court. (AP Photo/Carolyn Kaster, File)

It's already been a dicey week for the president's health-care law with the Republicans taking back the Senate, and now this: The Supreme Court announced Friday it will take a case that could unravel the president's health-care law.

Here's why. The heart of the case deals with subsidies that help people purchase insurance coverage through the Affordable Care Act. The justices have agreed to hear a lawsuit alleging that the government should not be providing subsidies to people who purchase coverage in the 36 states that have opted not to run their own health insurance marketplaces.

If these subsidies are struck down by the Supreme Court, millions of people could see their insurance become much more expensive, causing them to drop out of the program. This could lead to what's known as the "death spiral," in which the healthy drop out of the individual insurance market, leaving mostly sick people who will tolerate paying higher insurance prices to get guaranteed coverage.

Obamacare critics say the law explicitly only allows subsidies in exchanges that are run by the states. In those states that declined to set up their own exchanges, the federal government has stepped in. And those challenging the law say that as a result, the subsidies shouldn't be allowed.

ACA supporters say the critics are focusing on a very narrow section of the law. They say that a broader reading clearly indicates that Congress intended for every state to access insurance subsidies, no matter who's running the exchange.


The court agreed to take up the challenge in the case, King v. Burwell, after the 4th Circuit Court of Appeals in Virginia this summer sided with the administration, 3-0, declaring the subsidies are legal. At the same time, the entire D.C. Circuit Court of Appeals is scheduled to re-hear a similar challenge, Halbig v. Burwell, next month.

What's really important to understand is that Obamacare advocates are much more nervous about what the Supreme Court could do to the law--even more than they're concerned about a Republican-controlled Congress, since President Obama still has the veto pen.

A Rand Corporation study last month helps explain just why the subsidy challenge is a huge deal. Of the 5.4 million people who signed up for health insurance on federal-run exchanges this past year, 87 percent of them received subsidies.

So if you take away those subsidies from the marketplaces, here's what Rand says what would happen in 2015, as I wrote last month:

Premiums would be 43.3 percent higher on average in the individual market in 2015, while enrollment — on and off the exchanges — would drop by 68 percent, according to the research firm's microsimulation model. In all, 11.3 million fewer Americans would have health insurance, according to its analysis.

An important caveat: The Rand projection includes state-run marketplaces in 14 states and the District of Columbia, which aren't being challenged by these cases. So the effects would be at least somewhat smaller than what the Rand projection found.

It's hard to predict right now what the Supreme Court might do, but it's worth remembering that the whole law would have been struck down two years ago if Chief Justice John Roberts didn't find a way to save it.