It’s formally known as King v Burwell and its time has come. Beginning on March 4th, the Supreme Court will hear arguments that challenge the meaning of four key words in the ACA: “established by the state”. These words refer to health insurance exchanges—why are these words so critical? What are the consequences of the case?
The opinion rendered on King v Burwell in 2015 will impact the availability of subsidies to individuals who enroll in health insurance through the healthcare.gov website. This program is the federal health insurance exchange and is not state operated. So the question lies in the interpretation of those four words. Are those who enroll on the federal health insurance exchange eligible for a subsidy? Those who enroll on one of the thirteen state exchanges are eligible as the literal interpretation allows them a subsidy. But the residents of thirty six states are in a gray area, and their subsidies are what is now subject to interpretation by the Court. But what did the authors of the ACA REALLY mean? That is what the judges have to decide.
The availability of subsidies is not related to the individual mandate, the requirement that individuals purchase health insurance. The constitutionality of the ACA was decided by the Supreme Court in its decision in 2012: NFIB v Sebelius. Owning health insurance remains a requirement regardless if an individual qualifies for a subsidy when purchasing health insurance on an exchange.
If the Supreme Court disallows subsidies to be offered through the federal government’s exchange, what happens to those people who are already receiving subsidies from healthcare.gov? According to a study done by the Urban Institute, 9.3 million people could lose $28.8 billion of federal assistance in the first year alone. Most of these people couldn’t afford to purchase health insurance without a subsidy, so that number of uninsured could rise by as many as 8.2 million people.
If you don’t have your health insurance through an exchange, could this ruling have an impact on you? It might. Even if the subsidies are disallowed for the federal government’s exchange participants, individuals can still purchase insurance on the exchange without subsidies. So those who are most likely to need medical services will continue to purchase coverage through the exchange. The problem is insurers are likely to increase premiums in a state for everyone who buys their own individual insurance even if it isn’t purchased on an exchange.
A Supreme Court decision is expected in late June. Generally, decisions take effect twenty five days after they are issued. This would mean that subsidies would cease in July or August. The individual mandate remains in effect, except if the lowest priced plan is more than eight percent of an individual or family’s income. Without a subsidy (and a possibility of increased premiums) many people would not be required to purchase health insurance.
As of now, there are no solutions if the subsidies go away. Stay tuned.
For additional information, contact EAB HealthWorks.