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Small Business Employee Benefits and HR Blog

9.6 Million People Could Lose Health Insurance

February 6, 2015
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Since the Affordable Care Act’s passage in 2010, there have been a lot of legal questions surrounding interpretation of the law. Recently, the latest challenge for the ACA is focusing on whether residents of states which have not established their own insurance exchanges are eligible for premium tax credits. RAND Corp., a non-partisan think tank, recently wrote a report on the issue and the newly-brought-up Supreme Court case of King v. Burwell.

This article is a summary of their findings, predictions, and how 9.6 million individuals could potentially lose their individual health insurance.

About the RAND Corp. Report9.6 Million People Could Lose Health Insurance

The report (which this article is based upon) assesses expected changes in enrollment and premiums in the federally-run Health Insurance Marketplace. The report results from the RAND Corporation’s Investment in People and Ideas program. The research was conducted within RAND Health, a division of the RAND Corporation.

The King v. Burwell Case

Though few individuals know about the King v. Burwell case, it is the reason behind many potential changes which could take place if the Supreme Court rules in favor of it. So, what is the King v. Burwell case?

This lawsuit is specifically challenging the ACA and argues that the text of the ACA only allows for premium tax credit usage on state-run exchanges. However, individuals are currently purchasing health insurance through both state-run and federally-run exchanges to utilize their premium tax credits. The ACA opponents argue, among many things, that the entire purpose of the premium tax credits being used by individuals is to induce states to set up their own exchanges (source).

Knowing this, what are the potential effects if the Supreme Court is in accordance with the arguments against the ACA? Millions would lose health insurance.

Why 9.6 Million Could Lose Health Insurance

This spring, the Supreme Court will hear the King v. Burwell case, and a ruling is expected to take place in June. As previously mentioned, the plaintiffs argue that the law’s language specifically prohibits the law’s financial help (premium tax credits) from being administered in states with a federal exchange -- the Individual Health Insurance Marketplace.

Though this challenge to the ACA is not a new challenge, it was for a long time dismissed as being a matter of interpretation and misunderstanding of the rules. This misunderstanding baffled those who were involved in and were following the law’s drafting (source).

That being said, if the interpretation of the ACA and it’s ability to allow strict tax credit usage are incorrect, what will the repercussions be? With nearly 14 million individuals currently covered under state HealthCare.gov plans, it’s hard to imagine simply little-to-no effect.

Potential Effects of the Ruling

If the Supreme Court favors the King v. Burwell case, the ACA could undergo extensive changes in order to remain federally compliant. Nearly ten million individuals could lose their individual health insurance as a result. It’s estimated that in 2015, 13.7 million will be covered in the Individual Health Insurance Marketplace states and this would drop to 4.1 million in the event the Court rules against the Obama Administration. And so far this year, 6.5 million individuals have enrolled through Individual Health Insurance Marketplaces with nearly 90 percent receiving premium tax credits.

In addition to many individuals losing individual health coverage and premium tax credits, if the Court invalidates premium tax credits on the federal website, coverage for individuals would more than likely become difficult to afford. Additionally, Individual Health Insurance Marketplace plans would see an increase of 47 percent in cost -- making individual health insurance a lot less affordable.

Key Findings

  • Enrollment in the ACA-compliant Individual Health Insurance Marketplaces, which includes plans sold both in and out of the Marketplaces, would decline by 70 percent in Federally Facilitated Marketplace states if the Supreme Court rules in favor of the King v. Burwell case.

  • Unsubsidized premiums in the ACA-compliant Individual Health Insurance Marketplace would increase by 47 percent in Federally Facilitated Marketplace states.

Conclusion

With the King v. Burwell case’s hearing just around the corner, it’s unclear at this point what the consensus will be and what effects the ruling will have on the Affordable Care Act. However, if the Supreme Court rules in favor of the case, millions could lose health insurance.

What do you think about the King v. Burwell case? Are you in favor or against it? Comment below and let us know.

 

Report source: RAND Corp.

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