By Sarah Ferris - 11/07/14 01:05 PM EST
The Supreme Court on Friday agreed to take up a new challenge to ObamaCare that Democrats fear could dismantle the healthcare law.
The case, King v. Burwell, rests on whether the federal government can legally hand out healthcare subsidies in 34 states that have opted out of creating their own exchanges. About 87 percent of people enrolled in ObamaCare receive the subsidies.
The decision comes as a surprise to many court-watchers and healthcare experts, who have warned that the case could seriously undermine the future of ObamaCare.
If the high court rules against the premium credits, it would gut a core component of the law that’s already gone into effect for more than 4 million people in the U.S.
That number is expected rise to 7.3 million people by 2016, according to a report by the nonprofit health policy organization, the Robert Wood Johnson Foundation.
More than $36 billion in subsidies could be lost if the court sides with the law’s opponents, the report found. The ruling would a “domino effect” on other parts of the law, the researchers said.
Without subsidies, they cautioned that the federal government would be forced to rethink its policies on the individual mandate, regulatory reforms and state exchanges.
King v. Burwell, like the similar Halbig v. Burwell case, has a long history within the nation’s court system. On July 22, two U.S. courts delivered opposite rulings on the subsidies.
Halbig, one of several pending ObamaCare lawsuits, is slated to be reheard by a full circuit court panel on Dec. 17. The King case would likely be heard in March, according to SCOTUS Blog, which was first to report the news. The Obama administration – as well as top Democrats who helped write the law – have attacked the GOP-driven lawsuits as what they call false characterizations of the Affordable Care Act.
Five Democrats who crafted the law penned an op-ed in The Washington Post last week accusing the law’s opponents of trying to “cherry-pick” language from the statute to prove that the federal government doesn’t have power to enforce subsidy rules.
Rep. Diane Black (R-Tenn.) applauded the court’s decision to take up the case, blasting the president's "recklessness" in implementing the law.
"If the President has been overstepping his authority as the text of the ACA suggests, this means that his Administration has been misrepresenting the true costs of Obamacare to millions of Americans across the country," Black wrote.
"Even more worrisome is what implications this could have for Americans who have already received subsidies and may be on the hook for back taxes," she said.
Economists have predicted that if the lawsuit is successful, it would cause a “near death spiral” for the individual market, according to an October 2014 study by the independent research group, RAND.
“Without the subsidies, prices would jump sharply and many people simply could not afford to enroll,” said Christine Eibner, an economist who led the study, which was sponsored by the U.S. Department of Health and Human Services.