The King v. Burwell case now before the Supreme Court has attracted heated rhetoric from both opponents and supporters the Act. But what would be the actual dollar impact if the Justices rule against the administration?
First Capitol Inc. looked at the impact – consumers, and the – a pro-King ruling that disallowed subsidies in the 37 states without an independently operated exchange.
A total 13.4 million people are expected to purchase subsidized in these states this year. These policyholders – and their companies – will receive nearly $42.5 billion in subsidies in 2015.
At issue in the case is the interpretation the clause in the that authorizes subsidies to consumers who purchase through an exchange “established by the state.”
Most observers believe a ruling against the Obama administration would mean , or subsidies, could not go to consumers who buy through the federal exchange rather than via a state-run exchange.
Currently 13 states and the District Columbia operate their own marketplaces, meeting the literal meaning the words in the .
Another 7 states have federal-state partnership exchanges, where the state provides information and some services, and 3 states have federally-supported state-based marketplaces. There is no way to know in advance if the court will opine as to whether these 10 exchanges would qualify as having been “established” by the states.
An estimated total 13.4 million people are expected to purchase subsidized in the 37 federal exchange states this year, according to an analysis prepared by First Capitol .
The average subsidy is $264, equal to 75% the total . Both premiums and subsidy vary by state. Subsidies range from $243 in Utah to $536 in Wyoming. The paid by a policyholder after the subsidy ranges from $23 in Missouri to $148 in New Mexico.
The aggregate outlay for the 13.4 million Americans who are expected to enroll would be over $4.6 billion. After the subsidies, the out--pocket to these insureds would be $1.1 billion. The subsidies more than $3.5 billion would total nearly $42.5 billion annually.
Between the premiums and subsidies, companies will receive nearly $56 billion if the projections are accurate.
“It’s unknown how many the millions consumers who are expected to buy subsidized would be able to afford without the subsidy, but we believe the majority would not,” saidRobert S. Sheen, president First Capitol and Editor in Chief The Times. Los Angeles-based First Capitol advises companies implementing mandate solutions under the .
“What is clear is that many millions Americans with policies would revert to being , which would cause profoundly negative impacts public , the healthcare delivery system and the industry,” according to Sheen.
individuals would have little access to routine preventive medical , Sheen noted. Many with advanced problems would seek at busy hospital emergency rooms, which must by law provide even if the patient is unable to pay.
“Hospitals would be treating more people with acute and chronic conditions, and would be receiving no reimbursement for that treatment,” he said.
Another unknown is what effect a “King” ruling striking down subsidies in these states would have in regard to the mandate on with 50 or more workers to to these workers.
“We could see an outcome which says workers in these state cannot receive subsidies, but does not free from the obligation to provide for their employees,” said Sheen. “The result would be an unexpected multi-billion-dollar financial burden for these companies.”
companies would also face a potentially devastating financial impact, Sheen noted.
If most subsidized policyholders cancel their , the industry would forego a the anticipated $56 billion in revenue.
Many those likely to drop their upon losing subsidies would be younger, healthier people – the customers insurers want.
Those who have serious medical conditions would have a strong incentive to maintain their policies even without subsidies, and the requires insurers to cover them, Sheen noted.
“companies would have lots very sick people as their customers, and would lose the millions healthy individuals who previously had been brought in by subsidized policies. They’d have much less income to cover the very costs caring for a relatively people with serious medical conditions,” he said. “The financial stability the industry would be jeopardized,” Sheen stated.