The outcome of the latest challenge to Obamacare, King vs. Burwell, comes down to a single phrase in a 2,400 page bill, but that phrase could undo the entire Affordable Care Act.
And the outcome of the case, which was argued before the Supreme Court on Wednesday, could throw small business owners into chaos and wreak havoc on their ability to plan or provide critical health insurance benefits to their employees.
"Whatever the decision, the effect on business is going to be more uncertainty, and a roiling political problem," says Mark Rust, managing partner of law firm Barnes & Thornburg, of Chicago.
At issue is scarcely half-a-sentence in the ponderous health care legislation from 2010, which refers to subsidies for exchanges "established by the state." When the law passed, states were given the opportunity to set up their own health care exchanges, or let the federal government step in and manage one for them. Since then, 16 states have set up their own exchanges, and 34 have not. And that's where the interpretation starts to get muddy.
In its role as a regulatory body that functions as an extension of the executive branch, the Internal Revenue Service has established that tax subsidies, which help the majority of people pay for health insurance under the ACA, also apply to the 34 states that have not established their own exchanges. Conservatives who brought the case say the subsidies only apply in states that have established their own exchanges.
In fact, legal experts say, the subsidies were in part meant to serve as an incentive to states to set up their own exchanges, and so the language of the bill, and the IRS' broad interpretation of the bill could indeed be an overstep.
Nevertheless, close to eight million people claim subsidies in states that have opted to let the federal government run their exchanges, and without them, they could not afford health care. And suddenly cutting them from the rolls of the system could jeopardize the entire health care law, legal experts say.
The decision, which will be made in late June at the end of the High Court's 2015 term, will come down to either Justice Anthony Kennedy or Chief Justice John Roberts, legal observers say. The former previously wanted to do away with the entire ACA in his 2012 decision, when the first challenge to the nation's health care law wound up before the Supreme Court. By contrast, the latter voted to uphold the law on narrow grounds.
This time, they might swap roles. Kennedy aggressively questioned both sides in the argument, suggesting he may let the law stand. By contrast, Robert's sole question had to do with something in case law called the "Chevron deference," which essentially gives the executive branch and the agencies under its jurisdiction leeway to interpret laws.
Roberts asked the federal government's attorney Solicitor General Donald Verrilli whether, in fact, a subsequent administration could reinterpret the ACA using Chevron.
"The question suggests his discomfort with the idea that important questions of statutory interpretation, with so much riding on the line, should be left to one body," Rust says.
Either way, it's going to be a tough slog for businesses. The employer mandate currently requires businesses with 100 or more full-time employees in 2015 to provide qualified health insurance to workers, or face a tax of up to $2,000 per employee. In 2016, businesses with 50 or more full-time workers will have to comply or face similar penalties.
Should the high court decide in favor of the plaintiffs, it could also grant a one-year extension to the law, but instruct Congress to fix the ambiguity of the legislation. And in today's heated, overly partisan environment the outcome could be dicey at best.
In an editorial from Monday in the Wall Street Journal, Representative Paul Ryan (R, Wis.) who currently serves as the chairman of the House Committee on Ways and Means, suggested Republicans might create "an offramp for Obamacare," which would include tax credits for people in affected states to purchase health care.
But without a guaranteed pool of customers with subsidies to pay for plans, such a move would cause health insurance companies to flee exchanges in the 34 states, which could also destabilize all of Obamacare, Rust says.
And that, plus all the other legal wrangling over the ACA, troubles business owners such as Brad van Dam, president and chief executive of Marich Chocolates, a candy maker based in Hollister, California, who pays close to $1 million a year to cover his 130 employees.
"The legal issues, confusion, lack of clarity, and errors are failures that have become frustrating for all Americans," van Dam says.
For now, however, the best way to proceed is to stay the course, says Steven Friedman, a partner at Littler Mendelson specializing in employee benefits law.
"The decision in June could have a very disruptive effect on planning for businesses," Friedman says. "But we feel the only responsible course is to tell employers they should proceed, and assume that the ACA will be effective for the foreseeable future."