Roosevelt Institute | Cornell University

Obamacare: Where it Stands in 2015 and the Challenges that it Faces

By Alexander GomezPublished February 22, 2015

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After a successful year of increasing coverage, the Affordable Care Act is being challenged on the basis of the wording of a provision included in the act that allows federal subsidies to be given to those who purchase healthcare coverage through state exchanges. If successful, the lawsuit would remove subsidies to these people, dramatically reducing Obamacare participation.
By Alexander Gomez, 2/22/2015

With the deadline to sign up for Obamacare coverage approaching in mid-February and the first year of coverage coming to a close, the Affordable Care Act is finally beginning to shape up and serve the American people. As of December 2014, 2.5 million people have signed up using their state's individual marketplace, adding on to the 7 million people who signed up using the federally run exchanges. This caused the number of uninsured Americans to drop from 41 million people in 2013 to 31 million people in 2014. Healthcare has also improved in other capacities, with 28 states expanding their Medicaid programs, and Washington D.C providing federal subsidies to 87 percent of their citizens. Of these people, one-third are under 35 years of age and more than half of the people are signing up for a second year of coverage. 

However, the Supreme Court has recently agreed to entertain a case that challenges the Affordable Care Act. The case, called King v. Burwell, is scheduled to be heard on March 4th and will challenge a provision within the overall act that states that low-income American people who buy insurance through state exchanges qualify for a federal subsidy. The issue with this provision is that it does not clarify whether subsidies are available for those who purchase insurance through the federal exchange. This type of purchasing is being used in 34 states. If the Supreme Court were to enforce this ruling, 5 million Americans would lose their subsidies and the average premium would jump from 80 dollars per month to 345 dollars per month. 

The ruling would be disastrous for Obamacare. A prediction by the Rand Corporation states that if the provision were overturned, 9.6 million fewer people would buy health insurance. Healthy, young participants would be most affected by this ruling and would opt out of coverage at alarming rates. This would effectively change the demographic of the insurance pool, with the average age of members increasing and average health decreasing; this would cause services to move away from relatively cheap preventative care and towards more involve and expensive critical care.  In turn, insurance coverage would become more expensive and more participants would drop their coverage, multiplying the initial effect of the overturned provision.

The White House has stated that the case is a partisan attack on the current law, meant to undermine the validity of Obamacare, after Republicans took control of the Senate. However, they are adamant that the challenge will not be successful. Regardless, this ruling has the potential to completely change the current landscape of America's healthcare system. Despite the progress seen leading up to 2015, the ruling could cause Healthcare to dramatically regress and for millions of Americans to lose their healthcare coverage.

Note: As of publication, the lawsuit has come under intense media scrutiny and the credibility of the plaintiffs and their standing has been brought into question.