The Affordable Care Act is facing another challenge at the Supreme Court in King v. Burwell, which deals with subsidies for health insurance. The case could cut out a major provision of Obamacare, causing the law to unravel. Here's what you need to know about the case. (Julie Percha/The Washington Post)

The fate of the Affordable Care Act, the president's signature domestic policy achievement, is once again in the hands of the Supreme Court on Wednesday. The justices heard oral arguments in King v. Burwell, a challenge to the financial assistance that millions of Americans are receiving to purchase health insurance. The case is considered the greatest threat to Obamacare's future since the court considered a challenge to the law's individual mandate three years ago.

What's the lawsuit all about?

The ACA created marketplaces, or exchanges, where people can shop for individual and family health insurance if they don't have another source of coverage. The law directs the federal government to set up exchanges in states that didn't build their own, which was the case for about two-thirds of the country. The law also provides subsidies through the exchanges to people who meet income requirements.

The King challengers say the law only authorizes subsidies through exchanges established by the state. They argue that the law was intentionally designed this way to pressure states to set up their own insurance marketplaces. They contend the IRS illegally issued a rule in 2012 providing subsidies through the federal exchanges when it became clear that most states wouldn't set up their own exchanges by 2014, when the marketplaces opened.

The Obama administration, however, argues the challenge is politically motivated and wrongly focuses on just a few words in the ACA. The administration says a reading of the entire law makes clear that subsidies are available in all exchanges, regardless of who's running them. The law was intended to extend health insurance to as many Americans as possible, the administration argues, so the law's drafters would have no reason to withhold subsidies to so many people.

Who's challenging the government?

The plaintiffs are four Virginians who do not want to buy health insurance, as mandated by the ACA. They argue the IRS illegally interpreted the ACA to authorize subsidies through federal-run exchange, and that without those subsidies, they would be exempt from the requirement to purchase insurance because they don't earn enough. The challenge is funded by the Competitive Enterprise Institute, a libertarian think tank opposed to the ACA. Federal courts have also heard three other cases challenging the subsidies, but the Supreme Court is only considering King.

Why do people think this case is so important to the future of ACA?

The subsidies are a critical part of the law, working with two other major ACA pieces — the guaranteed availability of health insurance and the individual mandate. The law prevents health insurers from denying coverage or charging people more because of their medical condition. To help offset the costs of sicker customers, the law requires most people to have insurance or pay an annual penalty for not having coverage. To make that coverage affordable, the law provides subsidies to low- and middle-income families. The subsidies are paid directly to insurers, who then apply the discount to their customers' monthly premiums. On average, the subsidies knock down the price of monthly premiums by nearly 75 percent.

A ruling overturning the subsidies would cause more than 8 million people across the country to lose health insurance as a result of a ruling against the government, according to recent estimates. And it could wreak havoc on the insurance market. Without the aid, it's expected that the lower-income and healthier enrollees would quickly drop coverage, leaving just the sickest patients who need coverage the most. Insurers would look to raise their rates to cover the costs, pricing even more people out of coverage and causing problems for the individual insurance market outside of just the exchanges.

One note, however: Most people who would lose their subsidies in such a ruling would be spared from the penalty for not having health insurance since they don't earn enough.

Would there be a fix?

The immediate question is whether subsidies could be restored to those who'd suddenly lose them if the Supreme Court rules against the government. The easiest fix would be for Congress to pass a law that says federal exchanges can provide subsidies — but Republicans opposing the ACA would never go for that. A handful of Republican lawmakers, in two separate proposals this week, raised the idea that they would offer temporary financial relief to those losing subsidies. However, they haven't provided detailed plans, and it's unclear how much support they have within the party for their proposals. The Obama administration, for its part, insists it won't be able to fix anything — perhaps an effort to avoid signaling to the justices that a ruling against subsidies would be easy to rectify.

The federal exchange states, many of which are deeply opposed to the law, are in a precarious position, too. Republican governors and state lawmakers could find themselves taking the blame if millions of their citizens are suddenly cut off from coverage. States could still establish their own exchanges, ensuring that their citizens receive subsidies, but that could be a lengthy, expensive and politically difficult process. So that means states may look to possible work-arounds to establish an exchange in minimal time and cost. The state-level response will depend, though, on the details of the court's decision and whatever direction comes from Congress or the Obama administration.

Which states would be affected?

The challenge is only to the subsidies in states that didn't set up their own marketplaces, so residents of 16 states and the District of Columbia wouldn't see their financial assistance taken away if the government loses. In the following map from the Kaiser Family Foundation, residents of states with "Federally-facilitated Marketplaces" and "State-Partnership Marketplaces," as labeled below, could lose the subsidies.


(Kaiser Family Foundation)

How were past Obamacare cases decided?

This case marks the third time the ACA has been before the Supreme Court since it was enacted five years ago. In 2012, the court narrowly upheld the individual mandate, the requirement for most Americans to have health insurance, while also ruling that the federal government couldn't force states to expand their Medicaid programs. And last year, the court ruled that the government couldn't require closely held businesses to offer their employees contraceptive coverage against their religious objections.

How will the court rule this time?

That's always hard to predict. Four justices from the court's conservative wing were ready to throw out the entire law three years ago, but Chief Justice John Roberts found a backdoor way to uphold the individual mandate. It only takes four Supreme Court judges to accept a case (though, we don't know which ones opted to pick up King v. Burwell), and some observers were surprised that the court accepted this challenge as quickly as it did. Either way, it's thought that Roberts or Justice Anthony Kennedy could provide the swing votes this time.

What's next?

Oral arguments began Wednesday at 10 a.m and have now ended. Within days of the argument, the justices will likely meet privately to discuss and vote on the case. However, the court isn't expected to release its decision until late June, before the justices break for the summer. And, no, don't expect a decision to leak before the justices announce it from the bench.