King and His Court (Preserve and Protect)

The fate and future of the Affordable Care Act will soon be decided by the United States Supreme Court.  The court is weighing the argument brought by David King, an individual taxpayer in Virginia who sued the Department of Health and Human Services Secretary Sylvia Burwell over the subsidies provided to enrollees in the federal insurance exchange.

At issue is whether Congress meant to provide subsidies for people living below the poverty level in the 34 states that have chosen to create new healthcare marketplaces by using a federal tool, rather than a unique and distinct state approach. These exchanges are places where people can go online to buy health coverage, and see plan options in their area.

Few really have any doubt that Congress meant to provide the subsidies in both federal and state based exchanges as they passed the ACA. But whether they expressed this in a satisfactory way is the legal issue. Legally, it rides on the question of which method of statutory construction one uses. More cynical observers see it through the lens of the various Justice’s political ideology. Either way, it is too close to call.

Should the Court invalidate the subsidies in these states, there would be a major national impact. Latest data suggests that up to 6.4 million people could lose their subsidies worth $1.7 billion per month. Without financial assistance, it’s expected that most of those people would drop their health coverage. The Kaiser Family Foundation looked at the financial fallout, state by state, if the challengers win and the government loses.

Should you care about this in Arizona? If you have subsidized coverage, the answer is yes. We are a federal exchange state, and these would go away absent action by Congress or the state legislature to fix the problem.   Few believe this could happen; our legislature even passed a law making it illegal to use funds to try. So, up toward 150,000 Arizonans could lose subsidies to help them buy health coverage and many would likely be left uninsured.

But even if you don’t get a subsidy, you should take note. That is because these exchanges are typically a major component of the individual insurance market in each state, and such big changes will likely spread to all who buy such products, subsidies or not. Some predict rate increases of 50-150% to other policy holders because of how much a ruling for King could upset insurance markets. This means that your policy could go up in cost substantially.

It might even go away as an option over time. Some predict an insurance “death spiral”, where healthy people drop their coverage leaving such a sick and costly pool of remaining enrollees that insurers decide to withdraw from markets. It is also possible that these effects could spill over into the group insurance market. These things have happened before, so it is not out of the question.

Perhaps these are overblown predictions of catastrophe? Or perhaps help will be on the way from either Congress or our state’s political leaders? More likely is that there will be some significant negative impacts in Arizona to the insured and others.

Where do you stand? Worried about your health insurance? A believer in the ACA model for expanding health coverage? Or a foe of Obamacare willing to dismantle the Act at all costs? If nothing else, the spectre of King v Burwell should get us all thinking about our health coverage and what we want into the future.

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