Small businesses in the U.S. will likely face steep cost increases in healthcare coverage if the Supreme Court rules against Obamacare, according to new data from the Urban Institute.

It is estimated that 7.5 million people could lose federal benefits that would amount to $28.8 billion in 2016 if the Obama administration loses the case. 

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And nearly 3.5 million people on small business plans will also face “substantially” higher premiums, according to Linda Blumberg, senior fellow for the Urban Institute, who is speaking before a Senate Small Business Committee panel today. 

The Hill is quoting Blumberg as reporting that at least 840,000 of those people would become uninsured.

Additional potential repercussions

Blumberg says further that families of people who work in small businesses have “disproportionately benefitted” from the Affordable Care Act, and are at particular risk if there is a healthcare "meltdown."

Healthcare experts have been warning lawmakers that the loss of Obamacare subsidies in 34 states would likely trigger an unraveling of the market nationwide.

Blumberg said that if the court rules against the Obama administration, people who lose their tax credits and are healthy would drop out of the market – disrupting the risk pool and sending the price of premiums skyrocketing across the board.

Republican response

In the case King vs. Burwell currently before the Supreme Court, challengers argue that the text of President Obama's healthcare law restricted subsidies to those who purchase health insurance policies on exchanges set up by their states, rather than by the federal government. 

Sen. David Vitter (R-La.), the chairman of the Senate Small Business committee, acknowledged the impact the Supreme Court ruling could have on small businesses, saying there are "alternatives to the federal government’s subsidies."

He specifically pointed to “an advanceable tax credit that actually flows directly from the government into the pockets of the insurance company, not into the hands of the consumer.”

The Washington Examiner reports today that Republicans are considering several responses to the eventual possibility that the Supreme Court might do away with subsidies for millions of Americans in the federal exchange states.

The Examiner says, "On one hand, they will be under tremendous political pressure to find a way to make sure that people who have been receiving subsidies don't lose them. On the other hand, they'll be under pressure from fiscal conservatives to avoid spending billions of dollars to help 'fix' a problem that they argue would have been created by the text of Obamacare."

Republicans are reportedly concerned that if they do offer a plan to provide millions of insured with subsidies after the Court kills them, it will be scored by the Congressional Budget Office as hefty new government spending.

Tags: Obamacare, Affordable Care Act, Health Care, Health care costs, Urban Institute, Washington Examiner, Linda Blumberg