The U.S. Supreme Court will decide within the next few weeks whether a small quirk of wording in the Affordable Care Act means that people can only get federal subsidies to buy health insurance if they live in a state that has set up its own health insurance exchange.
If the High Court rules against the Obama administration in King v. Burwell, around 7.3 million Americans will lose the tax subsidies they've been given to purchase health insurance plans on the federal exchange, HealthCare.gov. In South Carolina — which, like 35 other states, decided not to set up a state exchange — about 150,000 people stand to lose their subsidies. And if that happens, there's no state back-up plan.
"We in no way, shape, or form are prepared in South Carolina," says Lynn Bailey, a healthcare economist in Columbia.
Indeed, many state leaders see the potential crisis of King v. Burwell as an opportunity to force major changes to Obamacare. Forty-three S.C. House Republicans have written a letter to U.S. House Speaker John Boehner and U.S. Senate Majority Leader Mitch McConnell saying the state will not set up a state exchange if the subsidies are overturned. They ask GOP leaders in Washington to "reconsider or reexamine Obamacare."
Specifically, they urge Congress to let people use subsidies "for any health plan that meets their needs, instead of being forced to use subsidies only for exchange plans." That's one of many options being considered by congressional Republicans. Some congressional proposals call for keeping subsidies in place temporarily while Obamacare is phased out.
Gov. Nikki Haley told The Post and Courier June 2 that the state will not set up a state exchange no matter what. And Sen. Joel Lourie, a Richland County Democrat, affirms that there's no plan in the works at the Statehouse for dealing with King v. Burwell.
"We are not a state — it has to do, unfortunately, with who's in charge — that is taking the lead on any type of back-up plans," Lourie says. "That's regrettable; this is about people's lives. Any time you mention the Affordable Care Act to the governor she doesn't respond too favorably." That means South Carolina "will have to be more reactive than proactive," he adds.
If the subsidies were to vanish right away, it could dramatically alter the health insurance market. "If people lose their subsidy, they're going to drop health insurance," says Bailey, the economist. "You're just going to have chaos. The insurance companies aren't going to know what to do. It could cripple private health insurance."
The impact will be felt first by hospitals, Bailey says.
Rozalynn Goodwin, spokesperson for the S.C. Hospital Association, agrees. "You'll see an increase in emergency room visits. That really is the only place where it doesn't matter if you have insurance," she says. Hospitals are required to treat emergency patients "regardless of their ability to pay, regardless of their citizenship status, and regardless of their condition."
Goodwin says removing the subsidies will primarily affect low-income people. Around 70 percent of the people receiving subsidies are paying less than $100 a month for their health insurance — a rate that could triple or quadruple if the subsidy were removed. "Take away those subsidies, and people will not be able to afford health coverage," she says. "Probably 90 percent will not be able to afford coverage without subsidies. It's a huge impact."
According to Goodwin, the impact will be particularly bad in South Carolina, which has also rejected federal dollars to expand its Medicaid program to cover adults below the poverty line. Currently, subsidies are only available for people making more than the federal poverty limit, and Medicaid only covers categories like children, pregnant women, and disabled adults.
"We have not yet as a state decided to reclaim our dollars — right now we're just sending our dollars to other states," Goodwin says. "We're still paying for Medicaid expansion and not receiving any return on that investment."
The U.S. Department of Health and Human Services estimates that an additional 160,000 people would be covered by expanding Medicaid in South Carolina in 2016.
Lourie is leading a bipartisan charge to use federal Medicaid funding to let people buy private insurance. He was unable to get the proposal into this year's budget, though, and has instead filed a bill that will be discussed when the Legislature returns in January.
This story originally ran in the Free Times.