After Supreme Court ruling, what next for Obamacare?

The Supreme Court decision upholding Obamacare subsidies creates some stability, but neither the political or fiscal future of the law is yet settled.

President Obama’s health care reform law cleared a major hurdle Thursday, with the United States Supreme Court giving its stamp of approval to the way the president has implemented subsidies in 34 states that didn't establish insurance exchanges of their own.

Even with the ruling, however, the debate about Obamacare isn't over, both because of practical challenges facing the law and ongoing political debate.

Although President Obama quickly cast the decision as a sign that the Affordable Care Act (ACA) is "here to stay," he also said the work of health care reform remains unfinished.

Defenders of the law say further steps are needed to achieve its goals of expanded access to insurance and affordable costs. Critics point to data that suggest premiums in many locales are poised to rise considerably next year and beyond. And big questions remain unsettled, such as whether more Republican-led states will opt to expand Medicaid to cover people just above the poverty line, as the law encourages.

On the political right, many criticized the King v. Burwell ruling on legal grounds, but they didn’t all lament the court’s decision.

“If Obamacare fails, it's best that the American people drive that change through their elected representatives, not a panel of nine justices,” Merrill Matthews of the conservative Institute for Policy Innovation said in an e-mailed comment on the ruling

In an NBC News/Wall Street Journal poll this month, half of Americans said the law should be repealed or get a major overhaul, compared with 40 percent who called for “minor modifications” and 8 percent who said the law is working well.

Republicans haven’t yet been able to unite around a plan of their own. And the court ruling, coupled with Mr. Obama’s veto power, signals that any “repeal and replace” strategy is dead at least until the 2016 election.

But the Republican-led Congress may push to alter the ACA on a number of fronts, some health policy experts say. These including possible repeal of a medical device tax and an “employer mandate.” (The law calls on firms with 50 or more full-time employees to offer coverage or face a tax penalty).

A tax on so-called “Cadillac” health plans could also come up for repeal. Labor organizations like the AFL-CIO join with some employers in opposing this tax on employer plans that offer stronger-than-average coverage. The tax, starting in 2018, could prompt employers to scale back the generosity of health benefits – including benefits that unions have won at the bargaining table.

Richard Trumka, who heads the AFL-CIO, lauded the court’s ruling but said "much more needs to be done if we are to achieve quality, affordable health care for all. We can start by expanding Medicaid for low-income workers in every state and making changes that will protect and strengthen the health coverage workers have fought for on the job."

Many liberal health policy advocates hope the court ruling, by solidifying the ACA, will prompt Republican governors to rethink their rejection of the law’s expanded Medicaid funding.
 
 But critics say that, even with the court upholding subsidies, Obamacare’s financial footing remains slippery.

The law has enrolled only about 40 percent of the subsidy-eligible market in its first two years of open enrollments, writes Robert Laszewski, a consultant to the insurance industry, on his health-policy blog. “That level of consumer support does not make Obamacare either financially sustainable or politically sustainable.”

At the ACA’s core is the premise of coaxing more people who are uninsured to buy insurance – through the carrots of subsidies and the stick of possible tax penalties for lacking coverage. The idea is that broad insurance pools in each state, including the young and the healthy as well as those who use more care, can help hold costs down.

Mr. Laszewski points to early signs that insurers are seeking double-digit premium increases for the enrollment that starts this fall. And about a year after that, he adds, costs could rise still more as the law phases out a reinsurance program that was designed to shield insurers from the cost of unexpectedly high claims.

Supporters of the law say it’s still too soon to say how big the 2016 rate hikes will be.