By Julie Appleby
Thu, Feb 26 2015
Making health insurance available and affordable to millions of people who buy their own coverage was a key goal for backers of the federal health law known as Obamacare.
But if the Supreme Court strikes down the insurance subsidies of millions of Americans who rely on the federal insurance marketplace, it could leave many worse off than they were before the law took effect, say experts.
“The doomsday scenario could materialize and it does impact everyone” — those getting subsidies, as well as those paying the full cost of their plans on the individual market in states using the federal exchange, said Christopher Condeluci, an attorney who worked for Iowa Republican Sen. Charles Grassley on the Senate Finance Committee staff during the drafting of the law.
That’s because millions of consumers likely would drop their policies, which they could no longer afford without subsidies.
Most insurers could not drop plans without giving one-to-three months’ notice. But the companies remaining in the market would likely seek sharp increases in premiums for the following year, anticipating that the consumers most likely to hold onto their plans would be those needing medical care.
One Rand analysis projects that unsubsidized premiums could increase by almost half — an average annual increase of $1,600 for a 40-year-old — and that 70 percent of consumers would cancel their policies.
Those price increases, in turn, would drive more people to drop coverage, spurring further price hikes and potentially leading to what insurance experts call “a market death spiral.”
“It’s not the subsidy market that will fall apart, it’s the whole market” for everyone who doesn’t get job-based insurance coverage, said Robert Laszewski, a consultant for the insurance industry who is no fan of the health law. “There will be millions of Republicans who are not subsidy-eligible who are also going to get screwed.”
Legal Arguments
At issue in King v. Burwell — slated to be argued before the Supreme Court March 4 — is the basis of subsidies that go to millions of low- and moderate-income Americans in the approximately three dozen states that rely on the federal marketplace. More than 85 percent of the 8.6 million people who purchased plans in those states qualified for subsidies, administration officials say.
source : Supreme Court Insurance Subsidies Decision Could Trigger Price Spikes
