In summary: Some 1.6 million Floridians enrolled in the Affordable Care Act, including close to 6,000 in Flagler County. About 90 percent qualify for federal subsidies. Those subsidies may be lost if the U.S. Supreme Court rules that residents of states like Florida, which have no health marketplace of their own, may not qualify for federal subsidies. The Supreme Court hears arguments in the case next week (on Wednesday, March 4), and will decide it by the end of June. For the complete documents and background on the case, King v. Burwell, see the Scotusblog’s briefing here.
Making health insurance available and affordable to millions of people who buy their own coverage was a key goal for backers of the federal health law known as Obamacare.
But if the Supreme Court strikes down the insurance subsidies of millions of Americans who rely on the federal insurance marketplace, it could leave many worse off than they were before the law took effect, say experts.
“The doomsday scenario could materialize and it does impact everyone” — those getting subsidies, as well as those paying the full cost of their plans on the individual market in states using the federal exchange, said Christopher Condeluci, an attorney who worked for Iowa Republican Sen. Charles Grassley on the Senate Finance Committee staff during the drafting of the law.
That’s because millions of consumers likely would drop their policies, which they could no longer afford without subsidies.
Most insurers could not drop plans without giving one-to-three months’ notice. But the companies remaining in the market would likely seek sharp increases in premiums for the following year, anticipating that the consumers most likely to hold onto their plans would be those needing medical care.
One Rand analysis projects that unsubsidized premiums could increase by almost half — an average annual increase of $1,600 for a 40-year-old — and that 70 percent of consumers would cancel their policies.
Those price increases, in turn, would drive more people to drop coverage, spurring further price hikes and potentially leading to what insurance experts call “a market death spiral.”
“It’s not the subsidy market that will fall apart, it’s the whole market” for everyone who doesn’t get job-based insurance coverage, said Robert Laszewski, a consultant for the insurance industry who is no fan of the health law. “There will be millions of Republicans who are not subsidy-eligible who are also going to get screwed.”
At issue in King v. Burwell — slated to be argued before the Supreme Court March 4 — is the basis of subsidies that go to millions of low- and moderate-income Americans in the approximately three dozen states that rely on the federal marketplace. More than 85 percent of the 8.6 million people who purchased plans in those states qualified for subsidies, administration officials say.
The law’s challengers point to four words in the Affordable Care Act that say subsidies shall be distributed through marketplaces “established by the state.” They argue that that wording bars the government from subsidizing insurance purchased through a federally administered exchange.
Supporters of the law argue that Congress intended the subsidies be available through both federally run and state-run markets, which they say is clear in reading the overall bill.
The ruling would have no effect on the subsidies provided to residents through state-run markets, such as those in California, New York and Washington.
The Obama administration has declined to discuss contingency plans, expressing confidence that it will prevail with the justices. “Congress would not pass a law that 87 percent of folks would not get subsidies, but people in say, New York, would,” Health and Human Services Secretary Sylvia Mathews Burwell said Wednesday.
Experts say Congress could also apply “fixes,” such as voting to allow subsidies to continue through the rest of the year.
But whether a Republican-controlled Congress that has pledged itself to the law’s repeal would agree to that is uncertain.
Aetna spokeswoman Cynthia Michener said the insurer is talking with lawmakers from both parties “about how to make a grand bargain should the Supreme Court decide against federal exchange subsidies.” A decision to strike the subsidies would likely “spur bipartisan action to resolve the issue promptly,” she added.
At the state level, officials could decide to establish state-run marketplaces, but they would have to move fast before the start of open enrollment for 2016, tentatively set to begin Nov. 1. And lawmakers in many GOP-led states are likely to resist such steps, citing opposition to the law.
Governors in at least five of the states — Louisiana, Mississippi, Nebraska, South Carolina and Wisconsin — told Reuters they would not create their own exchanges if the court invalidated subsidies.
In another four — Georgia, Missouri, Montana and Tennessee — politics could make it very difficult to set up a state program, Reuters reported.
Florida and Texas, where there is strong opposition to the health law, but also large numbers of residents benefitting from subsidized coverage, officials would face even tougher decisions. “Florida has the highest number of enrollees in the federal marketplace and guess who is running for president? The former governor of Florida,” said Condeluci.
That might make Florida lawmakers more agreeable to a solution that would keep subsidies flowing, he said, noting that “Republicans are going to be blamed for the subsidies ceasing.”
Insurers that sell plans in the federal exchange states would find themselves in a drastically changed market.
Joel Ario, a managing director at consultancy Manatt Health Solutions, said insurers are already working on rates for 2016, which are scheduled for submission by April — two months before the court is expected to rule.
Some insurers have asked state regulators if they could submit two sets of rates for 2016, one that would reflect the subsidies being struck, he said. That idea was backed this week in a letter to the Obama administration by the American Academy of Actuaries, a professional society of the nation’s actuaries, who help insurers set rates.
As for the states, Ario estimated that perhaps one third would set up their own markets fairly quickly. If states move at the same rate as they have to expand Medicaid, it could take several years before two-thirds of states have their own markets he said.
Even if insurers wanted to drop coverage immediately in the event the high court struck the subsidies, most could not do so legally. State laws require anywhere from 30 days to 90 days’ notice for an insurer to exit a market. And, if they withdraw, they have to pull all their plans, not just those offered through the federal exchange.
Regulations keep insurers from coming back into the market for years, however, creating a disincentive to bail out, said Laszewski, whose clients include major insurers.
Many insurers don’t yet have contingency plans, he said, partly because it’s so hard to tell what may happen or what alternatives might be available.
“This is the nuclear option and there really isn’t a contingency plan for nuclear destruction,” Laszewski said.
Others don’t see a ruling against the administration in such dark terms.
“The Supreme Court generally doesn’t go out of its way to wreck the economy or the health system,” said Stuart Butler, a conservative scholar and senior fellow at the Brookings Institution.
He believes the court is likely to offer some temporary remedy, such as a grace period when the subsidies could continue to flow.
“The idea that there will be some cataclysm the day after is extremely unlikely,” Butler said. “We’ll see a number of states moving toward essentially setting up a state exchange. We could still see Texas and a few others saying no. But if two-thirds of states find a way to accommodate it, I don’t see that a critical mass for the collapse of the Affordable Care Act is there.”
–Julie Appleby, Kaiser Health News
This could very well be the “Death” of the Republican/Conservative/ Tea Bagger Parties, would not surprise me if the people who loose coverage would take pitch forks and do in these Terrorists once and for all.
How is it that Justice Antonin Scalia’s Nasal Proctologist Clarence Thomas will not recuse himself from this decision? His wife Ginni rakes in over a million dollars every damn year lobbying and giving speeches for Obamacare opponents, plus $675k “working” for the Heritage Foundation, a Republican think tank. This is corruption so blatant a Banana Republic would feel embarrassed, but not one word about it in the media. The last official to press on this subject was Anthony Wiener, and remember what happened to him a few weeks later.
What is the term for a country less principled than a Bananaland? Whatever it is, that’s what we’ve become.
Just ran across another example of how our illustrious politicians insure that the people with the money get heard by and legislate for the rich bastards. North Carolina just made it legal for lobbyists to hire prostitutes to take care of politicians. Of the two, we know who the real whores are:
Obama 2015 says
They will pass it. I wonder how many millions of dollars have been wasted to get this to the Courts.
Shame I try to contact the justices as just a simple citizen and I was told I can only write to the justices…is this a joke? They should have open e-mails to hear our pleads! We want our healthcare for all to remain and even improve…not done away with. America in the last 20 years has become a land for, by and owned by the wealthy the rest can be discarded by the side. While GOP is in control we will continuo the downwards trend for the middle class and poor.
“The Supreme Court generally doesn’t go out of its way to wreck the economy or the health system,” said Stuart Butler, a conservative scholar and senior fellow at the Brookings Institution”
— No but Barak does. His plan in this form is not good for America. Get rid of it or fix it. Its another give away that I don’t want to pay for. PERIOD
Rick Gardner says
Hey here’s an alternative that’s sure to shake every Right Winger a little… A public option or how about Medicare for all?
Of course, it’s much more important for us taxpayers to subsidize the Viagra that some people on Medicare get through their entitlement than any help a younger person may may need with a healthcare subsidy for, let’s say, life-saving medical care. C’mon, you selfish hypocritical Tea Baggers, give us a break!
It is not fair that I have to work 40 hours a week and still pay for over $300.00 a month for health insurance and $300.00 a month in taxes. Maybe the government could ” Subsidize” may part of the health care cost with may tax payment. Whoops, sorry, that would never work, there would nothing for everybody else.
I think your concept is pretty much the definition of Obamacare.
We can thank Governor Scott for putting us all in this position. I was so relieved to get reasonable coverage at a reasonable rate. Life changed for the good. And now????? So worried.
As for Clarence Thomas recusing himself – Texan Sandra Day O’Connor with all her oil money interests and her husband’s, along with the Bushes, still got to decide the presidential election in 2000. Sometimes they get it right, but sometimes “they” act above the law. Sighing loud enough that they should be able to hear me in D.C.
Im sure our left of center SCOTUS will make up another reason to help out this horrible law know as 0bama care.
Sherry Epley says
This is an explicit example of how the Republicans are so obsessed with destroying the ACA that they would throw thousands of citizens “under the bus” by taking away these subsidies! The Republican packed Supreme Court will of course cooperate in destroying anything President Obama has accomplished. What is going on with these heartless people? Oh yes, I forgot. . . they “hate” Romney’s 47% “takers” so much that they will do anything to diminish them and make their lives even harder.
What is so hypocritical about Romney’s statement and position is that he. . . like the majority of billionaires in the USA. . . keeps his wealth “off shore” and does absolutely everything he can to AVOID paying income taxes in the USA, himself. Yet, he feels worthy of being President. . . how outrageous! Also, Mr. Romney, we ALL pay taxes at every turn. . . sales taxes, property taxes (built into the price of rent), utility taxes, etc. etc.
The Medicare type option would have made affordable health care available to everyone, and driven down the cost of those services across the board. . . but NO. . . the Republicans would not hear of it! Where is your BETTER plan for healthcare, Republicans?
Republicans don’t have to “destroy ACA”…it will do that under it’s own weight.