February 24, 2015 -- Health and Human Services Secretary (HHS) Sylvia Mathews Burwell recently sent a letter to Capitol Hill stating that the administration has no back-up plan if the Supreme Court rules against the health care law's system for distributing insurance 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 that would be caused by an adverse decision," Burwell wrote. The name of the letter's recipient is redacted, but an HHS spokeswoman said it went out to Republican offices.
The letter comes one day before Burwell is scheduled to testify before the House Labor-HHS-Education Appropriations Subcommittee and two days before she's slated to appear before the House Energy and Commerce Health Subcommittee—both occasions that she would be expected to face questions about whether the Obama administration has contingency plans for the Supreme Court case, King v. Burwell.
Earlier this month, Burwell drew fire from Republicans on the Senate Finance Committee for repeatedly dodging questions about contingencies.
The Supreme Court will hear oral arguments March 4 and a ruling is expected by the end of June. The case focuses on whether the subsidies that low- and middle-income Americans receive under the 2010 health care law to help cover the cost of health coverage are contingent upon whether a state created its own insurance marketplace or whether it uses the federal marketplace.
According to the plaintiffs, the wording in the law restricts the subsidies to residents of states that set up their own exchanges and an IRS rule that also provides them in the 34 states that defaulted to the federal exchange is illegal. Some experts have predicted chaos in insurance markets and a rise in the uninsured population if the justices uphold the challenge.
In her letter, Burwell said the administration is "confident that we will prevail because the text and structure of the Affordable Care Act demonstrates that citizens in every state would be entitled to tax credits, regardless of whether they purchased their insurance on a federal or state marketplace." But she said a decision against the government would cause "massive damage"—millions would lose their subsidies and be priced out of coverage, the enrollee pool in the individual market would skew toward those who are sick, raising costs for everyone, and the uninsured would seek care in emergency rooms, further increasing costs.
The letter could boost pressure on GOP lawmakers in both chambers who have said they're working on their own response if the court sides with the plaintiffs.
"By admitting they have no contingency plan to assist the millions that may lose subsidies, the administration confirms how the misguided law is unworkable for the American people," Senate Finance Chairman Orrin G. Hatch, R-Utah, said in a statement. "I'm committed to working with my Republican colleagues on how Congress can respond to help those hurt by Obamacare's broken promises, including those in a post–King v. Burwell world."