Cathy Keaton breathed a sigh of relief on Thursday when the U.S. Supreme Court upheld the nationwide tax subsidies under President Barack Obama’s health care overhaul.
She was so afraid she might lose her health coverage that she opted for two outpatient surgeries to ease her osteoarthritis this spring, unsure that if she waited that she could afford the operations later this year.
Keaton, 63, is one of more than 150,000 South Carolinians who receive financial assistance to pay for their Affordable Care Act coverage.
The 6-3 court ruling on Thursday essentially preserves health insurance for 6.4 million Americans who receive federal subsidies and live in the so-called “HealthCare.gov states.”
“Over the past couple of months, I’ve been asking the question, ‘What if the decision goes the other way?’ ” Keaton said. “There was never anything really clear.”
In South Carolina, more than 90 percent of Affordable Care Act customers receive subsidies to reduce the amount they pay for insurance each month. In this state, they qualify for an average $281 monthly discount.
Keaton qualifies for even more assistance. She pays $107 a month for her insurance policy, discounted from $500 or $600 a month, she said. Without the subsidy, she couldn’t afford coverage.
That’s why she’s walking around with a splint on her left wrist and a cast on her left ankle these days.
“I was concerned about what this decision might mean,” she said. “I wouldn’t have been able to have (the surgeries) done. If I didn’t have insurance, I would have no way to pay. We’re talking into the thousands of dollars for these two surgeries.”
Adrian Grimes, a spokeswoman for Consumer’s Choice Health Plan, said a ruling against the subsidies would have created chaos in the South Carolina insurance industry.
“I’m ecstatic today,” Grimes said. “I’m thrilled. I really am.”
Chief Justice John Roberts, who wrote the majority opinion for the Supreme Court, acknowledged that a ruling against subsidies would “destabilize the individual insurance market in any state with a federal exchange, and likely create the very ‘death spirals’ that Congress designed the (Affordable Care) Act to avoid.”
In other words, without subsidies, only the very sickest patients would buy insurance. That would have likely caused prices to spiral out of control, further preventing healthy people from purchasing coverage.
“In reality, if this ruling would have gone the other way, everything would have unraveled,” said Frank Knapp, president of the S.C. Small Business Chamber of Commerce. “The insurance industry would have gone into a tailspin.”
Jim Ritchie, executive director for the S.C. Alliance of Health Plans, said prices probably would have gone up in the individual market if the court had ruled differently, but consumers wouldn’t have been hit with astronomical increases overnight.
“I think you would have had a substantial rise in prices, but there are mechanisms in every state Department of Insurance to address those immediate spikes,” Ritchie said.
As the court ruling stands, Ritchie said prices may go up next year anyway.
“I think you will see higher prices in the individual market for a variety of reasons,” he said, partly because doctors and hospitals are reimbursed based on the number of patients they treat, without much regard to the quality of care they provide. “We’ve not aligned payment to providers with quality outcomes. Until that’s done effectively, we’re not going to be able to get our arms around cost of care.”
Affordable Care Act opponents and critics were quick to react to the court’s decision.
Shelli Quenga, programs director for Palmetto Project in Mount Pleasant, said her organization helped 20,000 people make choices about their insurance options during the 2015 Affordable Care Act open enrollment window. She was relieved to learn the outcome of the case.
“It means that people who have coverage do not need to be concerned about their subsidies,” Quenga said.
Gov. Nikki Haley, a longtime, outspoken opponent of the law, issued a statement through her spokeswoman, calling the legislation “a disaster.”
“In South Carolina, we will continue to work around it as best we can, finding better ways to make health care more affordable and give patients more choices,” Haley said. “I continue to support our federal delegation’s efforts to replace this terrible law.”
S.C. Department of Insurance Director Ray Farmer was not immediately available to discuss the ruling.
Sen. Tim Scott, R-S.C., said in a prepared statement that he was disappointed with the court’s decision.
“I will continue working to return our health care system to doctors and their patients instead of leaving it in the hands of government bureaucrats,” Scott said. “This includes working towards the repeal and replacement of Obamacare.”
The law’s opponents argued before the high court that the vast majority of people who receive help paying for their Affordable Care Act insurance premiums are ineligible for their federal tax credits. That’s because roughly three dozen states, including South Carolina, opted against creating their own health insurance marketplaces, or exchanges, and instead rely on the federal HealthCare.gov website.
In the challengers’ view, the text of the federal law makes it clear that subsidies are only available to people in states that set up their own exchanges.
The court disagreed.
“Given that the text is ambiguous, we must turn to the broader structure of the Act to determine the meaning,” Roberts wrote in his opinion. “It is implausible that Congress meant the Act to operate in this manner.”
S.C. Attorney General Alan Wilson said the court interpreted the law “in the broadest and most abstract way possible.”
“Congress is the proper venue to debate and fix our health care laws,” Wilson said in a prepared statement. “I hope this Congress will seek the opportunity to pass health care reforms which allow states to develop market-based solutions in order to provide citizens with access to the quality, affordable health care they deserve.”
Meanwhile, Sue Berkowitz, executive director of the S.C. Appleseed Legal Justice Center, praised the ruling.
“Now it’s time for people on both sides of the aisle to accept that the law is working and take important steps to fully implement it,” she said.
The outcome is the second major Supreme Court victory for the Affordable Care Act, which Congress passed in 2010 and is considered by many as President Obama’s most significant domestic achievement.
“Over those five years, as we’ve worked to implement the Affordable Care Act, there have been successes and setbacks. The setbacks I remember clearly,” Obama said Thursday. “But as the dust has settled, there can be no doubt that this law is working. It has changed, and in some cases saved, American lives. It set this country on a smarter, stronger course.”
Roberts voted with his liberal colleagues in support of the law. He was the key vote to uphold the law in 2012.
Justice Anthony Kennedy also sided this time with left-leaning justices, including Justices Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer and Elena Kagan.
Justices Clarence Thomas, Antonin Scalia and Samuel Alito dissented.
The Associated Press contributed to this report. Reach Lauren Sausser at 937-5598.