The Supreme Court is expected to make a ruling on the King v. Burwell case any day now.
The case ultimately hinges on just four words — “established by the state” — as it calls into question the legality of federal exchanges. While PPACA challengers say that phrase limits the tax credits to the 16 states that have set up their own exchanges, the Obama administration has defended an IRS rule that interpreted the law as allowing subsidies nationwide.
Regardless, it’s anyone’s guess what the Court will do. But here are 6 things that would happen should SCOTUS gut the subsidies under the Patient Protection and Affordable Care Act.
1. Millions will lose credit, and maybe coverage.
If the government loses in King v. Burwell, insurance subsidies that PPACA makes available will vanish and an estimated 9.6 million people stand to lose coverage, according to reports. That figure would equate to 70 percent of enrollment in the federal exchanges.
Researchers from the think tank the RAND Corp. said that if the Supreme Court declares the subsidies illegal in the federal exchange, the number of U.S. residents with coverage purchased on the individual market would decline from 13.7 million to 4.1 million. That’s because, they said, the ruling would have a domino effect on consumers: First, those losing subsidies would drop their coverage, decreasing the number of people in the insurance pool. That would cause soaring premiums, by nearly 50 percent, which would cause many more remaining consumers to drop their coverage.
2. Exploding premiums.
There’s been a lot of numbers thrown around as to just how much premiums could increase pending the case outcome.
But the most recent figures, from consulting firm Avalere Health, is perhaps the most dire warning yet. It said that 7.5 million Americans could face an average premium increase of 255 percent this year should the Court toss out the subsidies. And some could face an increase of as much as 779 percent.
Avalere said 87 percent of federal exchange customers receive a subsidy. Therefore, the firm said killing the subsidies would cause “average monthly premium contributions for enrollees” to potentially increase “between 122 percent and 774 percent, depending on the state.” Residents in Alaska and Mississippi would see the highest percentage increases in their premium contributions, if the court rules in favor of the plaintiffs.
“The federal exchange generally serves low-income populations in red states, so that’s where the premium increases would be concentrated,” said Avalere CEO Dan Mendelson. “If King prevails, we expect to see virtually all stakeholders aggressively seeking alternatives to ensure continuity of care.”
Premiums in the individual market are also expected to surge, as a result.
3. Some states will get hit especially hard.
Residents in Florida, Texas, North Carolina, Georgia and Pennsylvania will lose more subsidies than any other states with federal subsidies. According to the Kaiser Family Foundation, the highest increase per person would occur in Mississippi, with premium increases estimated at a whopping 650 percent higher than the current figure. Florida will lose the largest gross amount — $389 million in subsidies — with Texas a distant No. 2 at $205 million.