By Julie Rovner
Tue, Dec 2 2014
Exactly what would happen to the Affordable Care Act if the Supreme Court invalidates tax credits in the three dozen states where the federal government runs the program?
Legal scholars say a decision like that would deal a potentially lethal blow to the law because it would undermine the government-run insurance marketplaces that are its backbone, as well as the mandate requiring most Americans to carry coverage.
In King v. Burwell, the law’s challengers argue that Congress intended to limit federal tax credits to residents of states running their own insurance exchanges. Currently only 13 states and the District of Columbia operate exchanges on their own; another 10 are in some sort of partnership with the federal government. Federal officials run the rest.
The court is slated to hear the case in early 2015. Should it find that subsidies in federally run exchanges are not allowed, “I don’t think there are any rosy scenarios,” said Timothy Jost, a law professor at Washington and Lee University and a supporter of the law. “It’s a complete disaster.”
The immediate impact is that the Internal Revenue Service would stop paying subsidies to those in federally run exchanges. In 2014, more than 4.6 million people were getting those subsidies but the number may grow to as many as 13.4 million by 2016, according to the Kaiser Family Foundation, (Kaiser Health News is an editorially independent program of the foundation.)
Most of those who lose subsidies would no longer be required by the “individual mandate” to have insurance, because they would fall into an exemption in the law for those who have to pay more than 8 percent of family income for health insurance premiums.
“Since a lot of people can’t afford insurance without the tax credits, you’re looking at a lot of people shedding coverage,” says Nicholas Bagley, a law professor at the University of Michigan.
Those who hang onto their coverage and pay the entire premium without help “are likely to be sicker on average than the people who shed their coverage because they’re the ones who need insurance the most,” he said.
source : If High Court Strikes Federal Exchange Subsidies, Health Law Could Unravel
