Supreme Court Decision Is This Week. Will It Disrupt Your Health Coverage?

The Affordable Care Act (ACA) has provided Americans with access to quality healthcare. Now, millions of men, women and children are able to visit their choice of providers, quickly and conveniently. Prescription drug coverage has become much more affordable and manageable, as well. However, the promise of quality healthcare may be fleeting.

The nation is anxiously awaiting the Supreme Court’s decision on King v. Burwell, a potentially groundbreaking lawsuit. Depending on this ruling, a large number of enrollees may see their rates increase by thousands of dollars, leading to many dropping their coverage altogether. And beyond the premiums themselves, our national economy would be dealt a massive blow.

Four simple words, billions of dollars

At the heart of the King v. Burwell lawsuit is four simple words – “established by the state.” Specifically, this lawsuit will determine whether those states that didn’t establish their own government-run ACA-compliant Marketplaces should continue to receive federal tax credits (subsidies). This is a very crucial point, as these subsidies enable insurers to provide ACA enrollees with lower plan premiums.

Currently, only 13 states and the District of Columbia have state-run exchanges (also called marketplaces). Three other states do have marketplaces, but rely on the federal HealthCare.gov online market. The remaining 34 states declined to establish a marketplace, instead putting their residents’ healthcare coverage in the hands of the federal government. Should the Court rule against the plaintiffs (the president and his administration), about seven million people who enrolled through the government’s Healthcare.gov website will suddenly be forced to pay the full premiums for their plans.

According to the independent Congressional Budget Office (CBO), should the ACA be repealed, it would cause the federal deficit to skyrocket by $137 billion over the next decade. On a more personal level, this would lead to yearly premiums increasing by an average of $3,300, although some states — including Alaska, Maine, Mississippi and Wyoming — would face increases of $4,000 or more. In total, the CBO predicts that this repeal would result in 24 million people dropping their health coverage by 2020.

“Exchange enrollees are currently subsidized at a very high rate,” states Elizabeth Carpenter, director at Avalere Health, a leading healthcare advisory firm. “As a result, many individuals would likely find exchange premiums unaffordable without the tax credits provided under the law.”

While the potentially higher premiums are a big problem, the Supreme Court’s ruling could result in millions dropping coverage altogether. Generally, this would be an individual who was in generally good health, but unable to afford coverage. Studies suggest that once these enrollees leave, this would impact 2015 and beyond.  As many potential and existing consumers would seek cheaper coverage, they’d have to avoid re-enrolling in their previous plans.

Studies also show that about one-third of those beneficiaries affected by the Court’s decision had employer-sponsored insurance. Yes, a number of these enrollees would be able to re-enroll in their employer’s plan. But in light of the exchanges launching in 2014, insurance companies have reported that many small employers may have stopped offering coverage. And without the cushion of the ACA’s subsidies, this will lead to millions of people having to go without coverage.

How political support of federal subsidies breaks down

Not surprisingly, a majority of beneficiaries are not in favor of the Supreme Court ruling against providing federal subsidies. As a Kaiser Family Foundation poll (below) shows, should these subsidies be removed, 63 percent of Americans say that Congress should pass a law restoring them in those states with government marketplaces. For those states without government exchanges, 55 percent of people call for the establishment of government marketplace; 32 percent say their state should not.

The establishment of these state-run marketplaces actually has support among Republicans, as well. 44 percent of Republicans polled are in favor of their state-run marketplaces and 42 percent are opposed. And nationwide, studies show that those states at risk of losing federal subsidies are more likely to face political battles in the 2016 presidential and Senate contests.

Want to separate myth from fact? Read our list of the top 5 lies being told in this case.

Several new state-run marketplaces may be established

However, there may be some good news in a number of states. The governors of three states – Arkansas, Delaware and Pennsylvania – have received conditional approval to establish state-based ACA marketplaces. These states already have federal ACA marketplaces in place, but in light of King v. Burwell, enrollees could drop their coverage.

Democratic governors Asa Hutchinson of Arkansas,  Jack Markell of Delaware and Tom Wolf of Pennsylvania received their letters of approval from Department of Health and Human Services Secretary Sylvia Burwell. These states’ conditional approval could offer hope for other states with federal exchanges in place. Should these three states’ be granted approval for state-run marketplaces, this would ensure subsidies for about 18,000 residents in Delaware, 325,000 in Pennsylvania and more than 65,000 in Arkansas.