June 16A U.S. Supreme Court decision expected next week could decide the fate of thousands of Ohioans receiving health coverage under the Affordable Care Act.
The nation's highest court is expected to rule in King v. Burwell whether tax credit subsidies are legal in Ohio and 36 other states, where the federal government is operating a health insurance marketplace under the law, otherwise known as Obamacare.
Plaintiffs argue that as the law is written subsidies should only be available in states that run their own exchange, regardless of the Obama administration's intent to provide subsidies to all marketplace consumers.
If the court rules in favor of the plaintiffs, the government would lose the authority to pay subsidies to more than 161,000 Ohioans, based on the latest estimates from the U.S. Department of Health and Human Services (HHS).
Most subsidized policyholders could not afford health coverage without financial assistance, said Trey Daly, Ohio director of the pro-Obamacare group, Enroll America.
"The impact on Ohioans would be catastrophic," Daly said. "We know that on average people are receiving a more than 60 percent savings (on Obamacare health plans) because of the tax credits that are available in Ohio. I think it would be very unlikely that many of those folks could continue to afford their premiums if they experienced a 60 percent increase."
Subsidies are available to most people who don't have access to job-based insurance and earn less than four times the federal poverty level, which is about $47,000 annually for a single adult, and $97,000 for a family of four.
Ohioans receiving the tax credits represent more than 85 percent of the 188,867 state residents who were still enrolled and making premium payments on individual and family health plans sold in the Ohio marketplace by the end of March, according to HHS. Nationwide, an estimated 6.4 million Obamacare policyholders are in jeopardy of losing their subsidies.
Most Americans want residents in every state to continue receiving insurance subsidies, according to numerous polls, including one released earlier this week by the nonprofit Kaiser Family Foundation.
Nearly two-thirds of respondents in the Kaiser survey said Congress should take action to ensure people in all states remain eligible for financial help, while about a quarter of those surveyed disagreed.
Greg Lawson, a policy analyst with The Buckeye Institute for Public Policy Solutions, said consumers' reliance on subsidies underscores many of the shortcomings of the health insurance marketplaces, which launched in 2013 and now provide health coverage for about 10.2 million Americans.
"Obamacare certainly expanded coverage, but it didn't really address some of the fundamental problems driving up prices," Lawson said. "The outcome of the King v. Burwell case is going to really shine a spotlight on the structure of the program, and the flaws of the program."
A ruling invalidating subsidies would not only cause massive disruption in the health insurance marketplace for consumers but also for marketplace insurers, including Dayton-based CareSource and Premier Health, according to Kev Coleman, head of research and data at HealthPocket.com.
"We would expect a certain portion of the public to drop out" of the marketplaces, Coleman said. "The question is how dramatically would that affect risk pools for insurers."
Coleman was referring to what's known in the health insurance industry as "adverse selection," or the tendency of low-risk, healthy individuals to drop insurance coverage when prices increase, while very sick and expensive-to-treat customers hold onto their policies because they have no other choice. That forces insurance companies to raise premiums to cover higher costs.
"Even without subsidies, unhealthy people will still have an incentive to hold onto their policies because many of them couldn't get coverage before," Coleman said. "If that happens, you could see health insurance premiums go up significantly."
Despite the angst over King v. Burwell, the Supreme Court's decision could be mitigated in a variety of ways, experts say.
The court itself has broad authority to decide when and how it will implement it's decision and could maintain the subsidies until the end of the year, allowing people to keep the subsidies they have already received.
In addition, Congress could consider short-term legislation to help affected individuals until a long-term solution could be crafted but that would require agreement between a Republican-led Congress that has called for repealing and replacing the health care law and President Barack Obama, who considers the law his signature achievement.
In the meantime, some states are taking matters into their own hands.
The Obama administration on Tuesday announced that it has approved plans by Delaware and Pennsylvania to create their own state-based health insurance marketplaces instead of relying on the federal government.
In Ohio, Gov. John Kasich has stated publicly that something must be done to protect subsidies for tens of thousands of his constituents but has offered no specific solutions.
If lawmakers fail to maintain subsidies they risk alienating millions of newly insured Americans who have driven the uninsured rate in the United States to an all-time low of 13 percent.
And despite the naysayers, surveys show most Obamacare policyholders are pleased with their coverage and are using it to get needed health care.
About 86 percent of Americans receiving coverage under the Affordable Care Act from either government-run exchanges or the expanded Medicaid program for the poor are "very" or "somewhat" satisfied with their health insurance, according to the latest tracking survey from the Commonwealth Fund, a liberal think-tank.
"It's clear that the Affordable Care Act is working when it comes to access, affordability, and quality of care," Enroll America's Daly said. "Nobody knows for sure what the outcome (of King v. Burwell) will be, but we're both hopeful and confident that the Supreme Court will make the right decision and uphold the authority of states like Ohio to offer tax credits to its citizens."
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