The Supreme Court on Wednesday will hear the case of King v. Burwell, with the legality of federal subsidies for ACA exchange enrollment hanging in the balance. If the high court rules that subsides on the federal health care exchange are illegal, consumers would on average see premiums rise 255% but industry analysts say it is unlikely to get to that point.
If the Supreme Court were to rule in favor of the plaintiffs, premium contributions for enrollees would increase between 122% and 774%, depending on the state, according to an analysis by Washington-based consultancy Avalere Health. The highest increases would come in Mississippi (774%) and Alaska (449%).
The final ruling is expected in a few months. Marcy Buckner, senior director of state affairs for the National Association of Health Underwriters, says shes not sure what ruling will be handed down. I cant tell you the future, she says. It will be an exciting day in June to see what happens.
Currently, 87% of federal exchange customers receive a subsidy and those on the federal exchange are largely low-income in red states, so thats where the premium increases would be concentrated, says Dan Mendelson, founder and CEO of Avalere.
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Many exchange customers currently purchasing coverage would therefore find it difficult to continue buying their insurance, adds Elizabeth Carpenter, a partner at Avalere.
If the subsidies are ruled illegal, many consumers who currently are required to maintain coverage under the Affordable Care Acts individual mandate would no longer be subject to it and its tax penalties. Under the Acts affordability exemption, the individual mandate does not apply to consumers if the lowest cost bronze plan available in a region is greater than 8.05% of their income. Assuming they dont have access to coverage through an employer or another government program, many of the people currently receiving subsidies would be exempt from the mandate, Carpenter says.
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What happens
The Obama administration has said it does not have a plan in place should the subsides be ruled illegal. That confirms how the misguided law is unworkable for the American people, says Sen. Orrin Hatch (R-Utah) in response. Im committed to working with my Republican colleagues on how Congress can respond to help those hurt by Obamacares broken promises, including those in a post-King v. Burwell world.
But Katherine Hempstead, director at the non-partisan Robert Wood Johnson Foundation, predicts there will be something to mitigate the impact should the court rule in favor of the plaintiff. Everybody is playing chicken. I cant really imagine this is going to come to pass, she says. I do think the non-group market is too big to fail and I dont think the worst-case scenario is going to be allowed to come to pass. There will be some kind of workaround.
Although Hempstead feels confident of a workaround, she does not know what that would look like, or if the court were to rule subsides illegal, when the repercussions of that decision would start to take effect.
A lot of bystanders will be impacted, she says, and everyone from carriers to providers has a lot of vested interest in the decision. There will be a fix, she says. I dont expect it to come from Congress, but I think there will be a fix.
However, it could be a little bit of rough road untie that fix gets worked out and that will be interesting to know what happens to consumers, she adds.
