Every Monday and Thursday until the current SCOTUS term ends–probably within the next couple of weeks–we will see massive anticipation and anxiety over the two expected landmark cases, one involving marriage equality, Obergefell v. Hodges, and the other involving Obamacare subsidies, King v. Burwell. And each “opinion day” when the decisions are not announced (today’s opinions will be rolled out at 10:00 AM EDT) the din of speculation will grow louder.
A couple of things are now reasonably clear about the reaction to King v. Burwell: Republicans have not, in fact, gotten their act together on an Obamacare subsidy “fix” that can be seriously entertained if the plaintiffs win. Yes, the House in particular may offer a “replacement” bill that the presidential will have to veto, but it will all be part of a spin war. The state response is less predictable, beyond the Republican-controlled states (e.g., Florida, Louisiana and Wisconsin) where GOP leaders have already made it clear they will do nothing.
On another front, however, the outlook is a bit brighter in case the worse happens at SCOTUS: while it would likely cause millions of people to cancel health insurance policies they can no longer afford, it probably will not immediately hit those in states not directly affected, and also will not capsize a large number of insurers. On this latter issue, Reed Abelson of the New York Times points out that the mix of policies on which a given insurer depends will determine the impact:
A much-diminished individual market would not cripple the large companies, Mr. Zaharuk [of Moody’s Investors Service] said, because they are diversified, handling insurance for employers and participating in government programs like Medicare. “If they lose this business, it doesn’t really trip them up that much,” he said.
For smaller insurers, however, the story is different. The blow from a court decision invalidating the subsidies “would be disastrous,” Mr. Zaharuk said.
Many of the consumer-oriented so-called co-op plans, created under the law to foster competition on the exchanges, would be especially hard hit because they are so focused on the individual market. They are also more vulnerable financially because they are start-ups.
“We would be at risk,” said Tom Zumtobel, chief executive of Meritus, a co-op serving Arizona that now has 54,000 people enrolled in its plans. While Meritus expects to be able to eventually broaden its base of customers, 90 percent of its policies are now sold to individuals, and almost 80 percent of those people are receiving subsidies.
“We wouldn’t be done, but we would have to retool and refocus our products,” Mr. Zumtobel said.
Other co-ops say they have already diversified. “We can weather it,” said Shaun Greene, an executive at Arches Health Plan in Utah, which has increasingly been selling policies to large employers.
Too bad there’s no “public option,” eh?
In any event, insurers join Democrats in praying for a decision against the plaintiffs. And it’s a good bet that even with the frenzy in Washington, a majority of affected policyholders won’t know what’s hit them for a good while, and if the decision is benign, won’t know how close they came to a big problem.