Image source: White House on Flickr.

Stop me if you've heard this one before: the Affordable Care Act, better known as Obamacare, is being challenged for review at the highest court in the United States.

The Supreme Court has heard multiple Obamacare challenges
This won't be the first time that the nine Supreme Court Justices of the United States have taken on a controversial argument involving Obamacare, and something tells me it may not be the last. Looking back, Obamacare, the relatively new law of the land when it comes to healthcare, has survived three direct/indirect rulings from the Supreme Court of the United States (SCOTUS).

In 2012, SCOTUS upheld the ability of Congress to "lay and collect taxes" as it relates to non-compliance with the individual mandate. This mandate is the actionable component of Obamacare requiring individuals to purchase health insurance or face a penalty come tax time. Accused of being unconstitutional, SCOTUS ruled that Congress was within its power to levy a penalty on consumers for failing to purchase health insurance.

In March 2015 another challenge emerged. The case, known as Coons vs. Lew, argued that Obamacare created artificially low Medicare reimbursement levels that wouldn't adequately cover medical practitioners' costs. The U.S. Circuit Court of Appeals threw the case out in August 2014, and SCOTUS indirectly offered its opinion by backing the decision of the appellate court and refusing to hear the case.

Most recently, in June 2015, SCOTUS issued its highly anticipated ruling on King vs. Burwell. This case challenged the validity and legality of allowing the federal government to hand out subsidies to enrollees via The law gives only "states" the right to do so, but with more than three dozen states handing the responsibility for the marketplace exchange to the federal government and, this definition was a bit cloudy. By a vote of six to three SCOTUS sided with the defense.

Image source: Flickr user Phil Roeder.

Round four
Last week SCOTUS agreed to once again be an Obamacare mediator and hear objections from religious groups that want exemption from the requirement to provide employees with insurance covering contraception under Obamacare.

Based on a federal government compromise issued in 2013, religious groups that object to contraception coverage are allowed to opt out of paying for this coverage legally, but they could still face fines of $100 per day for each employee that is denied contraception coverage. In other words, the middle of the road approach isn't working.

Plaintiffs in the case argue that the arduous process of validating their exemption infringes on their religious freedoms since, even though they aren't paying for the contraception coverage and insurers are forced to pick up the tab, the law still authorizes contraception coverage for employees. SCOTUS anticipates hearing arguments from both sides in March 2016 and issuing a ruling before the end of June 2016.

If there is one solace here for consumers and insurance companies, it's that there's no question about whether or not Obamacare will survive this ruling. What SCOTUS will decide does have broad applicability, but it's not a "meat-and-potatoes" argument that'll determine whether or not Obamacare will remain the law of the land. For many consumers and most insurers, it means business as usual. 

Image source: White House on Flickr.

Bigger challenges are still looming
As noted earlier, bigger challenges are likely to come along for Obamacare.

For instance, a challenge from Republicans in House of Representatives vs. Burwell alleges that the money being used to provide Advanced Premium Tax Credits and cost-sharing reductions to low-income individuals hasn't been appropriated by Congress. It's unclear at this time whether or not this case will gain enough traction to make it to SCOTUS, but it's possible that future subsidy payments, assuming opponents of Obamacare grow in numbers in the House and Senate, could be curtailed by Congressional vote. More than 85% of people enrolled in Obamacare qualify for some level of financial assistance, so any sort of subsidy interruption would be construed as devastating to the program.

Another big concern for Obamacare is what might happen once current President Barack Obama leaves office. Ushering in a new president and potentially altering the make-up of Congress in the 2016 elections could lead to significant changes in the law itself, including, but not limited to, a complete repeal. The House of Representatives has undertaken dozens of votes to repeal Obamacare over the last couple of years, although none have gained serious traction. Nonetheless, it demonstrates that political and ideological differences still exist in Congress, and Obamacare's long-term future is very much clouded.

Image source: U.S. Food and Drug Administration.

Can insurers survive massive changes to Obamacare?
Speaking hypothetically, because there's no reason as of yet to believe that Obamacare will be changed or is going away anytime soon, I believe that most insurers would be able to cope with changes made to Obamacare in 2017 and beyond.

Admittedly, though, making changes to Obamacare could be difficult. The insurance, primary care, and hospital industries have all adapted to Obamacare; and while there was quite the pushback against Obamacare from individuals and businesses when it was first signed into law, scaling it back cold turkey could prove problematic, especially for the millions of people counting on subsidies or expanded Medicaid coverage for their healthcare.

From the standpoint of insurers, even though Obamacare has made life a bit tougher on their bottom-line by requiring them to spend at least 80% of their premium revenue on medical care and improvements for members, it's also generated strength in numbers by adding millions of newly insured people to the fold. Yet even after nearly two full years, Obamacare remains but a revenue blip for most insurers. Employer-sponsored insurance and Medicare Advantage plans tend to make up the bulk of revenue and profit generation for insurers. Thus, even if a repeal of Obamacare eventually did occur, it wouldn't be devastating for insurers.

In short, expect the Obamacare challenges to keep rolling in, but don't expect insurers to sweat these challenges much, if at all.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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