House v. Burwell ruling could wreak havoc on ACA marketplace

A lawsuit brought by the House of Representatives that challenges the financing of the Affordable Care Act's cost-sharing reductions could put 7 million Americans' subsidies in jeopardy and therefore risk destabilizing the entire ACA marketplace, according to a report from The Commonwealth Fund.

If the plantiffs prevail in House v. Burwell, insurers would be forced to reduce the out-of-pocket costs for ACA customers who earn 250 percent or less of the federal poverty level--but would get no reimbursement for their expenses from the government, notes an article from CNBC. That would lead insurers to raise their premiums, on average, by $1,040 per person annually, and cost the federal government almost $50 billion more over a decade in subsidies in order to offset the price of premiums paid by most ACA customers.

"With higher premiums and cost-sharing protections eliminated, many consumers--particularly those in better health--might give up their coverage," the Commonwealth Fund researchers write. 

As they are currently designed, the ACA's cost-sharing reductions also lower deductibles for people with low or moderate incomes who select a silver plan, the report adds. Increased costs associated with high-deductible health plans often lead consumers to cut back on healthcare services, FierceHealthPayer has reported.

If large numbers of Americans drop ACA coverage in search of less expensive options, some insurers would drop out of the exchange business as well, the CNBC article adds. Already, UnitedHealth has said it might pull out of the ACA marketplace in 2017. 

Nicholas Bagley, a University of Michigan Law professor and ACA expert, tells CNBC that the fallout would be complicated if the court ruled against the Obama administration. "You'd see a lot of people forced to shed coverage, which would undermine the goals of the Affordable Care Act," he said.

To learn more:
- here is the Commonwealth Fund report
- read the CNBC article

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