As Supreme Court weighs Obamacare, these Americans weigh their options

Virgil Porterfield in southern Missouri minces no words when he says what it would mean for him and his wife if the US Supreme Court rules against the Obama administration in a case this month.

“It would be the difference between having medical insurance and not,” says Mr. Porterfield, a former worker in the oil and gas industry who, at age 63, is not yet eligible for Medicare.

At their age and in their rural part of Missouri, the “silver” level of health insurance under the Affordable Care Act (ACA) carries a hefty price tag of about $1,100 per month, he says.

The King v. Burwell lawsuit, which the Supreme Court is expected to rule on by the end of June, could potentially void the subsidy tax credits that help Porterfield and several million other Americans afford to be insured.

Legally, the court case is a battle over whether four words in the ACA (“established by the state”) mean that subsidies should only be paid to qualifying enrollees in 16 states that established their own marketplaces for people to buy insurance under the 2010 law, not to enrollees in all 50 states.

Politically, the case could be about the survival of President Obama’s signature domestic-policy achievement – the law that many Americans know as “Obamacare.”

But on the ground, in places from Pensacola, Fla., to tiny Pineville, Mo., the court case could have major financial repercussions for many Americans like Porterfield.

The Obama administration has implemented the law with the goal of providing subsidies to qualifying people in all 50 states, regardless of whether a state set up its own ACA marketplace to shop on or deferred that task to the federal government.

For people who don’t qualify for Medicare, Medicaid, or employer-sponsored insurance, the marketplaces connect consumers with insurance providers, and most of the consumers qualify for some level of “premium tax credit” – available to people with income up to four times the poverty level.

The Americans potentially affected by King v. Burwell range from low to middle income, and from young workers to small-business owners or the near-retired.

For Porterfield and his wife, for instance, the subsidy currently covers their entire $1,100 monthly premium, leaving out-of-pocket costs like deductibles as their main medical expense. Her income as certified nursing assistant keeps them above the poverty line (so they’re not eligible for Medicaid), but would not be enough to pay that premium if the subsidy were canceled.

Porterfield says his long working career ended in 2013 when he developed a disability. Family and friends helped the couple afford insurance before the Obamacare marketplaces launched for the 2014 calendar year.

'This is not welfare'

In Kalamazoo, Mich., Michelle Serlin is another person who worries about the potential loss of subsidies. She runs a counseling and therapy practice, and says the ACA has delivered an affordable option that she hadn’t been able to find before.

She qualifies for subsidies, because her practice welcomes Medicare and Medicaid recipients – which holds her income to “probably less than half” of what many other therapists earn.

“I have the best insurance I've ever had in my life,” Ms. Serlin says of the $480-a-month plan that covers her family of three.

As Serlin sees it, small businesses long got the short end of the stick in health insurance. While large employers could offer reasonable deals, small businesses couldn’t easily get the financial benefit of being part of an insurance pool. “What the marketplace did is it changed that,” she says.

“This is not welfare for people that are not working,” she says, explaining that the subsidies help everyone from business owners to college instructors who don’t teach enough to be covered by their employer.

If her subsidies end, Serlin says it would stretch the family budget, but she’d still find a way to buy insurance.

Because of the wide range of people affected, it’s hard to know how a ruling against the Obama administration would play out. Health-care experts say many who lose subsidies would become uninsured, while others would find a way to maintain coverage.

And if states or the federal government didn’t act to restore the subsidies, insurance companies might feel compelled to jack up prices. The result could be a vicious cycle that some call a “death spiral” for the ACA – with a shrinking pool of participants prompting the price hikes, which would cause still more people to drop coverage, leading to further boosts in premiums, and on.

These impacts wouldn’t happen in states such as California and New York, which set up their own marketplaces. But some 34 states, locate primarily in the South, Midwest, and Great Plains, opted not to establish an insurance exchange – often because of political opposition to Obama and the ACA.

The lawsuit comes from plaintiffs (one named King) in one of the 34 states (Virginia) against Sylvia Mathews Burwell, Obama’s current Secretary of Health and Human Services.

In all, some 9.3 million people could lose subsidies for the 2016 year, according to an estimate by the Urban Institute and Robert Wood Johnson Foundation. Another study, released this week by the consulting firm Avalere, estimated that 6.4 million people could be affected if the court rules that subsidies must end in 2015.

In part, what explains the gap between those estimates is that more people are expected to enroll with subsidies in 2016 than are currently enrolled for the 2015 plan year, says Elizabeth Carpenter, a director at Avalere.

Affected consumers would see their premium contributions spike by an average of $3,300 a year in 2015, the Avelere analysis concluded. The precise amounts would depend on people’s age, income, and the cost of insurance in their regions.

Some of the largest affected states, by population, would be Illinois, North Carolina, Ohio, and Pennsylvania.

Texas or Florida would lead the pack in number of people losing subsidies.

'I don't think people really understand'

Near Houston, Mike Siegel is a small business owner who got coverage through Obamacare for his family of three.

He’s been providing technology services to clients for about 12 years, and says his health insurance prices had “slowly escalated,” out of proportion with general inflation.

“I don't think people really understand what Obamacare is,” Mr. Siegel says, referring to opposition to the law from his Republican friends. “From my perspective all Obamacare is, is going to a website and getting insurance” at a better price.

“All of a sudden, instead of being in a pool of one, I'm in a [much larger pool],” he says.

If the court nixes subsidies, Siegel says he’d go shopping in the private insurance market, possibly finding a plan for about $1,000 per month with a very high deductible. And if that happens, “I'm going to have to get rid of something else in my budget.”

Currently, he says subsidies bring the premiums for his plan down from $1,500 a month to about $450.

Like Porterfield in Missouri, Paula Kelman is another ACA consumer who’s not yet eligible for Medicare, but getting close.

She does some work as an independent contractor, but says, “I don’t have an employer to give me health insurance.” The Houston resident found insurance through the Obamacare marketplace that, thanks in part to the subsidy, cut her costs in half compared with what she had paid before.

Court ruling or no, she pledges to find a way to stay insured, but describes her old insurance rate as “a little hard to afford.”