Obamacare Case: Administration Says No Health-Care Fix if Court Kills Subsidies

Image: Deadline Approaches To Signup For Health Insurance Under Affordable Care Act
Ariel Fernandez sits with Noel Nogues, an insurance advisor with UniVista Insurance company, as he signs up for the Affordable Care Act, also known as Obamacare on Feb. 5, in Miami.Joe Raedle / Getty Images

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The Obama administration says there would be no way to fix the health care system administratively if the Supreme Court rules against the government in the Obamacare case to be argued next week.

Republicans criticized Health and Human Services Secretary Sylvia Mathews Burwell earlier this month for repeatedly dodging questions about whether the administration has contingency plans in the event of an adverse ruling.

The Supreme Court must decide whether subsidies — which reduce the cost of health insurance an average of 72 percent — are available to people who buy their insurance on the federal exchange. Only 16 states have their own exchanges set up.

In a letter to members of Congress on Tuesday, HHS Secretary Burwell said there's no available administrative fix if the Supreme Court limits the subsidies.

"We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system" resulting from a loss in the case, she said.

It says millions of people would lose the ability to buy health insurance, depleting the coverage pool, and leaving a large number of people in the system who have health problems. That, in turn, would raise the cost of insurance to those still in the system and make hospital emergency rooms once again the only resort for million of Americans.

The challengers in the Supreme Court case cite the words of the Affordable Care Act statute, arguing that the text makes subsidies available only to insurance customers who bought their policies through "an exchange established by the state" where the policyholders live.

The Justice Department responds that an exchange set up by HHS for a particular state, when the state fails to do so on its own, qualifies as an exchange "established by the state."

Among the law's provisions are requirements that insurance companies cover people with pre-existing conditions and that nearly all Americans obtain health insurance. Those components of the health care system would not work, the government says, if the subsidies that make insurance affordable for millions of people were available only on state exchanges.

The Supreme Court will hear the case March 4 with a decision by late June.