The future of Oba­macare hangs on the Supreme Court’s rul­ing in King v. Bur­well for a very good rea­son: unless health insur­ance is sub­si­dized, mil­lions of Amer­i­cans don’t want it, even if they can afford it.

The Supreme Court heard oral argu­ments on the case yes­ter­day.  They are expect­ed to announce their deci­sion at the end of June.  Plain­tiffs, cit­ing the text of the statute, con­tend that sub­si­dies can only be paid to peo­ple who have enrolled in cov­er­age through an “exchange estab­lished by the state.”  Just 12 states and the Dis­trict of Colum­bia oper­ate their own exchanges.  The Admin­is­tra­tion argues that, regard­less of what the law actu­al­ly says, the IRS has pow­er to dis­pense tax cred­its and exact tax penal­ties in the 37 states that have not estab­lished their own exchanges.

As of mid-Jan­u­ary, an esti­mat­ed 6.2 mil­lion peo­ple had been deter­mined eli­gi­ble for sub­si­dies for cov­er­age they select­ed through fed­er­al exchanges.  If the plain­tiffs pre­vail, these sub­si­dies would no longer be avail­able, cre­at­ing con­sid­er­able dis­rup­tion for mil­lions of peo­ple and polit­i­cal crises for Gov­er­nors, Con­gress and the President.

Those who lose their sub­si­dies could, of course, con­tin­ue to obtain cov­er­age through fed­er­al exchanges.  That would mean pay­ing their own pre­mi­ums with­out help from the gov­ern­ment, impos­ing a hard­ship on many.  The aver­age month­ly pre­mi­um for a sil­ver plan for a 40-year-old non-smok­er is $276, accord­ing to the Kaiser Fam­i­ly Foun­da­tion.  A bronze plan can be had for less ($213), but requires more cost-sharing.

Those with seri­ous med­ical con­di­tions might try to find a way to pay their pre­mi­ums any­way, giv­en the cost of their treat­ment.  But most like­ly would not.

Among the more sur­pris­ing devel­op­ments of Obamacare’s imple­men­ta­tion has been this: many unin­sured peo­ple who can afford cov­er­age don’t want it.  In the first year, mil­lions of peo­ple who could have bought insur­ance chose not to, once they learned that tax­pay­ers wouldn’t help pay their pre­mi­ums.  There appears to be a lot less demand for health insur­ance than Wash­ing­ton pol­i­cy­mak­ers imagined.

Under the health care law, indi­vid­u­als and fam­i­lies whose earn­ings are less than four times the pover­ty lev­el are eli­gi­ble for sub­si­dies.  In most states, the medi­an income is below that lev­el, which means that most house­holds qual­i­fy for sub­si­dized cov­er­age.  A fam­i­ly of three, for exam­ple, would receive sub­si­dies unless their income exceed­ed $80,360.  That is high­er than the medi­an income for a three-per­son house­hold in all but two states that use the fed­er­al exchange (New Hamp­shire and New Jersey).

And yet, dur­ing the 2014 open sea­son, few­er than 800,000 of the near­ly 3.4 mil­lion peo­ple who were deter­mined eli­gi­ble to buy cov­er­age but inel­i­gi­ble for gov­ern­ment assis­tance signed up (click on chart below to enlarge).  Put anoth­er way, more than 2.6 mil­lion peo­ple – 78 per­cent of those whose earn­ings dis­qual­i­fied them from gov­ern­ment assis­tance – decid­ed to remain unin­sured rather than pay an unsub­si­dized premium.

The take-up rate was much high­er among those eli­gi­ble for pre­mi­um assis­tance.  Near­ly 4.7 mil­lion of the 6.1 mil­lion who qual­i­fied for sub­si­dies select­ed a plan.  Their take-up rate of over 76 per­cent was almost the exact inverse of the rate for those who didn’t qual­i­fy for tax-sub­si­dized help – 3 out of 4 peo­ple who qual­i­fied for sub­si­dies signed up; 3 out of 4 who did not qual­i­fy for sub­si­dies refused coverage.

The expe­ri­ence so far this year has been a bit dif­fer­ent, with take-up rates ris­ing both for those who get assis­tance (90 per­cent) and those who do not (64 per­cent).  The num­ber of peo­ple who select­ed a plan with sub­si­dized cov­er­age already has risen sharply (from near­ly 4.7 mil­lion to more than 6.2 mil­lion) with a month still remain­ing in open season.

The sto­ry is quite dif­fer­ent for those inel­i­gi­ble for assis­tance.  Plan selec­tions among this group have risen only slight­ly.  What is more strik­ing is that only 1.5 mil­lion appli­cants so far have been found inel­i­gi­ble for sub­si­dies.  That is less than half last year’s total of 3.4 mil­lion sim­i­lar­ly sit­u­at­ed appli­cants.  It is as though peo­ple who didn’t qual­i­fy for sub­si­dies last year did­n’t even both­er to shop on the exchange this time around.

It should be not­ed that the 2015 fig­ures are still pre­lim­i­nary, run­ning only through Jan­u­ary 15.  Open sea­son did not con­clude until Feb­ru­ary 15.  It is pos­si­ble that the num­bers changed sub­stan­tial­ly over that last month.  CMS also has decid­ed to hold anoth­er open sea­son on the fed­er­al exchange that will run from March 15 through April 30. This “spe­cial enroll­ment peri­od” will give peo­ple who refused cov­er­age in 2014 one last chance to sign up in 2015 and may pro­duce some inter­est­ing results.

Sec­ond­ly, I’ve looked only at data from the fed­er­al exchanges.  So far this year, state exchanges have pub­lished very lit­tle infor­ma­tion.  Cal­i­for­nia, Col­orado and Mass­a­chu­setts, for exam­ple, haven’t report­ed the num­ber of sub­sidy-eli­gi­ble peo­ple who have select­ed a plan.  State exchanges are, in any event, less a con­cern, since sub­si­dized cov­er­age will con­tin­ue to be avail­able there regard­less of what the Supreme Court decides.

The same can’t be said for fed­er­al exchanges.  Mil­lions of peo­ple who pre­sum­ably can afford their own cov­er­age with­out gov­ern­ment aid (those with incomes more than four times the fed­er­al pover­ty lev­el) have cho­sen to remain unin­sured.  Those for whom such pre­mi­ums would pose finan­cial stress almost cer­tain­ly would let their cov­er­age lapse, engen­der­ing a polit­i­cal conundrum.

Gov­er­nors of the 37 affect­ed states will be under pres­sure to keep sub­si­dies flow­ing by estab­lish­ing state exchanges.  Some will resist that pres­sure.  The House Repub­li­can cau­cus, which last Fri­day frac­tured over a rel­a­tive­ly rou­tine bill to pro­vide three weeks of fund­ing for the Home­land Secu­ri­ty Depart­ment, will strug­gle to reach con­sen­sus on much more com­plex health leg­is­la­tion.  Some Repub­li­cans will be hap­py that the sub­si­dies have been inval­i­dat­ed and will oppose efforts to “fix” Oba­macare.  Oth­ers will advance com­pet­ing plans to pro­vide mod­i­fied forms of pre­mi­um assis­tance and repeal some of the law’s man­dates.  Even if Repub­li­cans were to ral­ly around a sin­gle pro­pos­al, the Pres­i­dent may very well rather have mil­lions of peo­ple lose their cov­er­age than com­pro­mise with Congress.

Still, com­pro­mise is not out of the ques­tion.  Democ­rats have large­ly acknowl­edged that the law is flawed.  Were the Supreme Court to declare most of its sub­si­dies ille­gal, those flaws would cry out for atten­tion.  Many Repub­li­cans, though implaca­ble in their oppo­si­tion to Oba­macare, have embraced some of its goals.  Vir­tu­al­ly every­one believes that peo­ple with seri­ous med­ical con­di­tions should have access to afford­able health insur­ance and that low-income peo­ple with­out access to job-based cov­er­age should get some help in insur­ing them­selves and their families.

Should the high court rule in favor of the plain­tiffs, it would present Con­gress and the Pres­i­dent with that rarest of oppor­tu­ni­ties: a do-over, a chance to replace a health care law that has riv­en the coun­try along par­ti­san and ide­o­log­i­cal lines with one that would gar­ner at least some degree of bipar­ti­san consensus.

Judg­ing from reports of yes­ter­day’s oral argu­ments, at least four jus­tices doubt the capac­i­ty of the Pres­i­dent and Con­gress to achieve such con­sen­sus.  That leaves the out­come of the case to Chief Jus­tice Roberts and Jus­tice Kennedy.  One or both may decide that it is bet­ter in the cur­rent envi­ron­ment to let the IRS effec­tive­ly rewrite tax law than to affirm the con­sti­tu­tion­al axiom that Con­gress alone holds the pow­er to legislate.

If the Court grants the IRS such extra-con­sti­tu­tion­al pow­er, it will be Oba­macare’s most con­se­quen­tial and endur­ing deformation.