The U.S. Supreme Court agreed on Friday to hear a challenge against the legality of the Affordable Care Act's subsidies, which could dramatically impact the future of healthcare reform ... and insurers' business.
At issue is the 4th Circuit Court of Appeals' ruling in King v. Burwell that said subsidies are legal on both federal- and state-run health insurance exchanges.
If the high court overrules that decision, consumers wouldn't be able to rely on subsidies to help them pay their premiums. "The loss of these subsidies would make insurance unaffordable for many, if not all, of these newly insured individuals," David Blumenthal and Sara Collins wrote in a post for the Commonwealth Fund.
Many consumers would, therefore, drop their coverage--and insurers would lose millions of members. That's why Ron Pollack of Families USA told the Wall Street Journal that this case currently represents "the most serious existential threat" to the ACA.
Some of the possible outcomes of nixing federal subsidies, according to Blumenthal and Collins, include:
- It would mean major financial losses for insurers. Although insurers' business has grown steadily with the ACA, it could lose millions of members who can't afford premiums with subsidy assistance.
- It would render individual and employer mandates meaningless. If consumers can't find affordable coverage, which is defined as premiums that cost less than 8 percent of income, then the individual mandate doesn't apply. And employer penalties for not providing insurance to their workers wouldn't apply, either, since their uninsured workers wouldn't be able to obtain coverage through exchanges with subsidy help.
- It would threaten other ACA reforms: Since the ACA prohibits insurers from limiting benefits or denying coverage based on consumers' health, insurers must enroll enough low-risk, low-cost consumers to offset those additional costs maintain affordable premiums. But without subsidies, many individuals won't be compelled to purchase plans that would help insurers cover their costs.
America's Health Insurance Plans is well aware of the potential fallout if the Supreme Court rules against subsidies. "This issue is now in the hands of the justices, but it's clear that significant policy changes would be required to ensure an affordable and stable market for consumers were the court to rule against the government," AHIP Director of Communications Clare Krusing said in a statement provided to the New York Times.
The Supreme Court will likely hear the case by next spring and issue a decision by the end of June, the NYT noted.