Joshua Benson, a 28-year-old diabetic in Delray Beach, Florida, said he was uninsured until signing up for an Affordable Care Act plan this year. He was put in touch with Bloomberg News by Enroll America, a Washington-based advocacy group that promotes the law in 11 states including Florida.

“For a lot of people like me, it’s really saving our lives,” he said in a phone interview. “We’re just kind of scared now, because we don’t know what’s going to happen.”

The Obama administration said subsidies will continue to flow while the issue is resolved, and that it would ask the full appeals court to consider the case. A second appeals court panel in Richmond, Virginia, ruled unanimously on July 22 in a similar case that subsidies can be offered everywhere.

Going Forward

“The probabilities are that the program will go forward and you have to treat it that way,” Charles Kahn, the president of the Federation of American Hospitals, a Washington lobby group that represents for-profit hospitals, said in a phone interview. “We are pretty convinced this is going to be a clear decision of proper interpretation of intent and the IRS should provide the subsidies to all whether they get coverage through a state exchange or a federal exchange.”

Even if the Supreme Court takes the case and rules against the Obama administration––something that wouldn’t happen for at least a year––subsidies may continue in most states. That’s because it could be relatively easy for states in healthcare.gov to create their own exchanges.

Nicholas Bagley, an assistant law professor at the University of Michigan who specializes in health-care law, said the Affordable Care Act doesn’t spell out what it means for a state to “establish” its own insurance exchange.

State Fixes

A state that is part of the federal system may be able to simply pass legislation, or even issue an executive order, declaring that it has its own exchange––and contract with the U.S. Department of Health and Human Services to run it. To meet the letter of the law, states may have to use an intermediary such as a nonprofit agency to contract with the government, Bagley said.

The Obama administration “will have lots of incentives to make this painless for states, and considerable legal flexibility to do so,” Bagley said in a phone interview. “It would smooth the path toward the establishment of state exchanges if HHS could make it cheap, and offering healthcare.gov as the back-end IT infrastructure for a state- established exchange would potentially be very cheap.”