Sen. David Vitter wants to hear proposals for what Congress should do if the U.S. Supreme Court blocks the ability of the public exchange system to offer premium tax credit subsidies in the HealthCare.gov states.
Vitter, R-La., chairman of the U.S. Senate Small Business and Entrepreneurship Committee, held a hearing on the premium tax credit case, King vs. Burwell (Case Number 14-114).
The drafters of the Patient Protection and Affordable Care Act (PPACA) created the tax credit system in part to help low-income people pay for coverage, and in part to compensate for the effects PPACA rules on the cost of coverage.
PPACA now forbids major medical issuers from considering health status when issuing individual coverage, or using health status factors other than age and tobacco use when pricing individual coverage. PPACA also requires issuers to cover a standardized essential health benefits package and caps enrollees’ annual out-of-pocket pockets.
Regulators have applied the PPACA limits to all individual major medical coverage, whether the coverage is sold inside the exchange system or outside the exchange system.
The PPACA rules have led to dramatic increases in the full, unsubsidized cost of health insurance for young, healthy consumers in states that allowed the use of medical underwriting before 2014.
More than 75 percent of PPACA exchange plan buyers have been using the tax credit subsidy to pay the premiums.
The plaintiffs in King vs. Burwell say PPACA makes the tax credit available only in states that establish their own exchange programs, not in the states in which the U.S. Department of Health and Human Services (HHS) is offering exchange services through HealthCare.gov.
HHS officials say PPACA gives all state public exchanges authority to offer the tax credit; that, if there is any ambiguity, HHS Secretary Sylvia Burwell has the authority to clear up the ambiguity; and that, even if the court believes that the text of the law fails to give the HealthCare.gov exchanges authority to offer the tax credit, or Burwell the authority to interpret the law that way, the court should let the HealthCare.gov exchanges offer the tax credit anyway, to carry out the obvious intent of the PPACA drafters.
Analysts at the Urban Institute and other organizations have argued that, if the court sides with the plaintiffs in King vs. Burwelll and blocks HealthCare.gov users’ access to the tax credit program, the majority of the current exchange plan users would have to drop their coverage. The consumers who kept their coverage in the HealthCare.gov states would be older and sicker, and the poor health of the remaining enrollees could lead to a “death spiral,” or a self-perpetuating cycle of premium increases and enrollment decreases, analysts say.
Vitter brought in witnesses to ask them for ideas about what to do if the Supreme Court does kill HealthCare.gov’s ability to ask the tax credit.
Vitter said he wants to know what Congress should do to help those who might be left in the lurch if tax credit program rules suddenly change.
“How can we best help our fellow citizens?” Vitter asked.
The witnesses, and lawmakers, spent most of their time, talking about which side should win the case, and what the effects of a ruling against HHS might be, but they also spent some time talking about their ideas for how Congress should respond to a ruling against HHS.
For a look at some of what they said, read on.
1. Figure out how to get the premium tax credit subsidies back.
Linda Blumberg, a health policy specialist at the Urban Institute, said elimination of the PPACA tax credits in the 34 HealthCare.gov states would cause the number of uninsured people in those states to increase by about 8.2 million in 2016, and the median, unsubsidized cost of individual and family coverage to increase about 55 percent.
To avoid harm to small firm employees and other people affected by a ruling against HHS, “New legislation to re-instate [PPACA's] financial assistance in any state in which it would be prohibited would be required to reverse such damage,” Blumberg testified.