The states that set up their own insurance marketplaces have nothing to lose in King V. Burwell, the big Supreme Court case that will be decided by the end of June. But that doesn’t mean those states are breathing easy.
With varying degrees of difficulty, all of the state-based exchanges are struggling to figure out how to become financially self-sufficient as the spigot of federal start-up money shuts off.
A group of House conservatives on Thursday unveiled the latest version of their ObamaCare replacement plan — intentionally steering clear of a contentious court decision that could throw the law into flux.
The repackaged plan from the Republican Study Committee would fully repeal ObamaCare while creating new tax deductions and incentives for people to use health savings accounts.
It does not address Congress’s biggest debate over ObamaCare this year: how Republicans should respond to the looming case, King v. Burwell, if justices decide to strike down subsidies for 6.3 million people.
By May 15, insurers had to file 2016 premiums with their state regulatory agencies and provide an explanation for rate increases exceeding 10 percent. On June 1, the Department of Health and Human Services released this information for 41 states plus the District of Columbia. Based on these filings, it appears that premiums for many Obamacare plans, particularly those with large market share, will rise substantially next year. In these states insurers requested double-digit increases for 676 individual and small group plans. These are on top of individual-market premium increases averaging 49 percent between 2013 and 2014.
According to the Centers for Medicare and Medicaid Services, these states include 7.9 million total exchange enrollees – nearly four out of every five people enrolled in exchange plans across the country. The double-digit rate increases HHS reported affect more than six million people in these states. These increases apply for Obamacare plans sold on exchanges as well as Obamacare plans sold off the exchanges. The weighted average premium increase for these six million people is 21 percent. Because the HHS list does not include insurers requesting double-digit rate hikes in large states such as California and New York, final numbers will be even higher.
Obamacare plans have disproportionately attracted older and sicker people. In their rate request filings, insurance companies generally said that claims have been far above what they expected. Moreover, Obamacare contained a large subsidy for insurers through the law’s reinsurance program – equaling $20 billion over three years. The reinsurance program is rapidly phasing out. The combination of these factors means premiums may continue to spiral upward as healthier people choose not to buy the mandate-laden, high-deductible, and expensive coverage.
Millions of Americans could lose Obamacare subsidies under a Supreme Court ruling this month, but many in the GOP don’t need their votes anyway.
That’s a major political calculus for Tea Party Republicans, who are likely to resist any efforts to extend the subsidies, even temporarily. They’re much more worried about angering their base by appearing to concede to Obamacare than whether a handful of constituents lose their subsidies.
Relying on any system to continue requires that such a system is sustainable. If it is not,
then, as the late economist Herb Stein has said, “it will stop.” In stopping, however, such a
system will impact those who rely on it and assume that it will continue.
The American Action Forum recently assessed the plausible effects of a ruling for the plaintiff in the Supreme Court case, King v Burwell, concerning the legality of subsidies in the federally-run health insurance exchanges implemented under the Affordable Care Act. At the time of writing, the most up-to-date number for enrollees at risk of losing a health insurance subsidy was 7.7 million. But this week, the Center for Medicaid and Medicare Services released an update to enrollment figure that counts effectuated enrollment, which includes only households that have paid an insurance premium. As generally expected, roughly 15 percent of individuals with “plan selections” did not pay a premium and become actually enrolled. In light of this most recent update, roughly 6.6 million individuals across 37 states are at risk of losing their subsidies. The other impact estimates in the original AAF research remains unaffected, including 11.1 million people that will no longer face the threat of an individual mandate penalty.
If the Supreme Court later this month strikes down Obamacare subsidies in states with federal insurance exchanges, the narrative is simple: The health care law could be fatally crippled and marketplaces will fall into 34 simultaneous death spirals.
But what if Obamacare’s conservative challengers lose King v. Burwell?
If that question seems less sexy in a policy sense, that’s because it is. Essentially, if the Court decides the federal government is on the right side of the law, nothing happens; business continues as usual in all 50 states’ Obamacare exchanges. People keep their insurance as is.
But politically, an Obama administration win would mean volumes.
Just a few years ago, lawmakers in this left-leaning state viewed President Obama’s Affordable Care Act as little more than a pit stop on the road to a far more ambitious goal: single-payer, universal health care for all residents.
Then things unraveled. The online insurance marketplace that Vermont built to enroll people in private coverage under the law had extensive technical failures.
Washington has made a hash of health care. But that doesn’t mean that government should abandon the project of reforming our medical system. Those reforms are best carried out by the states. The federal government should provide states the resources and the opportunity to replace Obamacare with something better, something that is fair both to Julie and to those who are paying her medical bills.
The Supreme Court’s King v. Burwell ruling will make headlines whenever it arrives. It will also be genuine news to much of the country. The Kaiser Family Foundation’s Health Policy News Index, which tracks how closely the public follows health stories in the news, found that 59% of Americans have not been paying much or any attention to news stories about the case, and only 16% have been following very closely. That means that when the verdict comes the media’s first job will be to explain what the case was about.