On March 4, the Supreme Court will hear arguments in the King v. Burwell case, which could affect millions of people. If the justices rule in favor of the plaintiff, people in 37 states in which the federal government runs all or part of their health insurance exchanges will no longer receive subsidies to purchase coverage.
Larry Levitt and Gary Claxton of the Kaiser Family Foundation wrote a brief recently on what would happen if the Supreme Court declares subsidies are illegal.
They noted that 87 percent of people who signed up for insurance through the exchanges in those 37 states received subsidies. The average subsidy was $268 per month per person and covered 72 percent of the monthly premium.
If subsidies were eliminated, those people’s out-of-pocket premiums would increase an average of 256 percent and would make coverage unaffordable for a vast majority of the 7.5 million people who signed up for coverage through mid-February, according to the Kaiser analysis.
As of now, fewer than 3 percent of uninsured people are exempt from the individual mandate that states people must have insurance if the lowest-cost plan costs more than 8 percent of their income. The individual mandate was a major part of the Patient Protection and Affordable Care Act.
However, if the subsidies are deemed to be illegal, the Kaiser analysis found 83 percent of people who were previously eligible for insurance would be exempt from the individual mandate.
“As a result, the elimination of the subsidies would destabilize the individual insurance markets in states not running their own marketplaces,” the authors wrote. “Under the ACA, insurers would still be required to guarantee access to coverage irrespective of health status and prohibited from charging sick people more than healthy people. Even without the subsidies, many people who are sick would likely find a way to maintain their insurance in the face of substantial premium increases. However, people who are healthy would likely drop their insurance.”
If subsidies are no longer in place, the authors said premiums would increase significantly for everyone purchasing insurance on and off the marketplaces. They mentioned Congress could intervene and preserve the subsidies, although opponents of the Affordable Care Act would not support such a measure.
Executive Editor
Tim Casey joined TriMed Media Group in 2015 as Executive Editor. For the previous four years, he worked as an editor and writer for HMP Communications, primarily focused on covering managed care issues and reporting from medical and health care conferences. He was also a staff reporter at the Sacramento Bee for more than four years covering professional, college and high school sports. He earned his undergraduate degree in psychology from the University of Notre Dame and his MBA degree from Georgetown University.