Some health policy movers and shakers are using today’s oral arguments on the King vs. Burwell case as a chance to promote general approaches to reforming or replacing the Patient Protection and Affordable Care (PPACA).
The National Center for Policy Analysis, for example, says Congress should kill the PPACA exchanges, kill the individual and employer mandates and realign the PPACA premium subsidies – but keep the premium subsidies.
Gary Lauer, chief executive officer of eHealth Inc. (Nasdaq:EHTH), a company that was selling health insurance on the Web before selling health insurance on the Web was cool, is pulling for lawmakers to kill the mandates, keep the subsidies and promote use of private exchanges.
Some observers are weighing in what exactly PPACA drafters meant.
Rep. Rosa DeLauro, D-Conn., says the petitioners in King vs. Burwell (Case Number 14-114), who argue that only PPACA exchanges established by states can offer PPACA premium tax credits, are wrong.
“I was there when the Affordable Care Act was being conceived, debated and written,” DeLauro said in a statement. “I say with no uncertainty: The bill’s authors meant for tax credits to be available to all eligible Americans, regardless of whether their state has its own marketplace or participates in the federal marketplace.”
Meanwhile, some other commenters have been thinking hard about how exactly a ruling against the Obama administration might affect health insurance companies and health plan enrollees in the near term.
For a sampling of their thoughts, read on.
1. Moderate-income users in HHS exchange states
Avalere Health has pointed out that the effects of killing the PPACA premium subsidies in states with HHS-established exchanges could be strange and uneven.
More than 80 percent of the consumers buying private coverage through HHS-run exchanges have been using PPACA premium tax credits to reduce their share of the premium payments.
If the PPACA premium tax credit vanished, those consumers’ insurance bills could double, or triple.
PPACA requires people who can afford “minimum essential coverage” (MEC) to have MEC for most of the year or else pay a penalty. For 2015, the penalty for most of the people affected will be 2 percent of income.
PPACA and regulators have created hardship exemptions for people who cannot afford to pay for health premiums, but the hardship exemption cut-offs are different for younger consumers and older consumers.
“On average, a 50-year-old individual who makes less than $46,000 will be eligible for a hardship exemption from the individual mandate,” Avalere analysts say. “However, due to age rating differences, a 27-year-old individual will have to make less than $27,000 to receive the same hardship exemption.”
Hospital analysts at Moody’s Investors Service and Brian Wright, a securities analyst Sterne Agee, have agreed that the disappearance of the premium tax credit would hurt hospitals.
The PPACA Medicaid expansion has sharply reduced hospitals’ uncompensated care costs in some states, and the PPACA exchange program has helped some, the Moody’s analysts say.
If the Supreme Court kills the premium tax credit in the HHS exchange states, “many people will find insurance unaffordable,” the analysts say. “This would be credit negative for hospitals due to higher uncompensated care costs as more individuals give up insurance coverage.”
Wright argues that a recent op-ed, by three top Senate Republicans, about a “temporary” tax credit extension, shows that the tax credit might survive a Supreme Court ruling against the administration.
The “transitional period could be longer than initially contemplated,” Wright says. “
The senators write about having a transitional period last until the end of the year, but “we believe that such a position could easily morph into a transitional period that goes through the 2016 presidential election,” Wright writes.
James R. Napoli, a benefits lawyer in the Washington office of Seyfarth Shaw L.L.P., says elimination of the PPACA premium tax credit in HHS exchange states would eliminate the need for employers in those states to comply with the PPACA employer coverage “shared responsibility provisions.”
“Employers with employees in any of the states that have federally facilitated marketplaces would, effectively, not be subject to the employer mandate under the [PPACA], because it is the receipt of a federal premium assistance subsidy by a full-time employee that triggers a penalty under the employer mandate,” Napoli says. Simply stated, no receipt of a federal subsidy by an employee means no employer penalty triggered by that employee.”