A highly anticipated U.S. Supreme Court decision could end subsidies that thousands in the Augusta area use to help pay for health insurance under the Affordable Care Act. But even if the court sides with the plaintiffs in King v. Burwell, the ultimate impact could vary widely, depending on the analysis.
The court is expected to rule any day beginning Monday in a case challenging the issuance of subsidies under the act through the federal marketplace, which was used to enroll people in 34 states, including Georgia and South Carolina, that refused to set up exchanges. Estimates are that 6.4 million people in those states received subsidies, many of them substantial, to help pay for that insurance.
Using ZIP code information tied to recipients of those subsides, Families USA, a group in favor of the health care law, estimated that 25,000 people in the 12th Congressional District, which includes Augusta, received subsidies that could be eliminated. It does not include counties where fewer than 51 people were enrolled, so the estimate is conservative, Executive Director Ron Pollack said.
Overall, 412,000 people in Georgia got subsidies to help pay for coverage, the group said. Without the help, the average premium paid by people would rise from $73 a month with the subsidy to $346 a month without, Pollack said.
If the court rules the subsidies invalid, it would eliminate $28.8 billion in subsidies and cost-sharing reductions in 2016 for 9.3 million people and increase the number of uninsured by 8.2 million, according to an analysis by the Urban Institute, a policy research institute regarded as liberal.
“If the court rules against the subsidies, devastation will strike both health care consumers and the health care system at large,” Pollack said. “For most people when the subsidies are withdrawn, if they are withdrawn, it would mean health insurance premiums are unaffordable and most people would drop coverage because they couldn’t afford it.”
The result would affect people who have insurance outside the marketplaces as well, with average premiums increasing in those 34 states by 35 percent for everyone, the Urban Institute estimated. Younger, healthier people are more likely to drop insurance while sicker, older individuals would likely try to find a way to maintain coverage, which would continue to drive up premiums.
“As insurance pools increasingly are filled with older and sicker people, it means premiums will skyrocket and we will experience a never-ending death spiral as more and more young and healthy people drop out,” Pollack said.
There is a clause in the law that would free millions from the individual mandate requiring them to have health insurance, according to an analysis by the American Action Forum, a “center-right policy institute” critical of the law. Individuals are not required to have insurance if the cheapest policy is more than 8 percent of household income, which would exempt about 11.1 million in those states that stand to lose subsidies, according to the analysis.
If the court sides with the plaintiffs and against the subsidies, there is a way the court and the U.S. Department of Health and Human Services could continue the subsidies through the end of the year, said Douglas Holtz-Eakin, the president of the American Action Forum. The court can stay its decision for 90 days, a “fairly common thing,” he said, which would take it through the end of the third quarter. Just before the decision goes into effect, HHS Secretary Sylvia Burwell can direct the Internal Revenue Service to change its subsidy payments from monthly to quarterly and make them for the fourth quarter of 2015, Holtz-Eakin said.
The focus then goes to finding a contingency plan for 2016. One proposed by the American Enterprise Institute would allow states to decide to adopt a new plan that would provide age-based tax credits of $900 to $3,000 a year for families to purchase insurance and the ability for the states to automatically enroll those who don’t in catastrophic plans.
Regardless of which plan is chosen, it will likely be “what we have now moving onto something less generous with a bridge to 2017 and then another round of this,” Holtz-Eakin said.
While he is focused on caring for patients, Dr. Robert Campbell, a co-founder of Christ Community Health Services in Augusta, said his clinic and others have seen some good outcomes for those who have enrolled.
“This law has allowed basic preventive health care services to be provided for large sections of the population in Georgia that haven’t been able to access those in the past,” he said. “And it has allowed for improved management of chronic disease in certain patient populations as well.”
If change is needed, or an alternative created, this is probably not the way to go about it, Campbell said.
“Whether this health care reform overall is good or bad, the jury is still out on that,” he said. “Invalidating it on a technicality is going to cause real problems for real people. If we want to change the law to try to make health care more affordable and more accessible through some other route, it seems to me it is probably better done in a more thoughtful way.”