Under the Affordable Care Act, most people must buy coverage or face a penalty. The federal law offers subsidies to help cover the cost for individuals whose income lies between 100 percent and 400 percent of the federal poverty level, or $11,770 to $47,080.
The issue in King vs. Burwell is whether people in states that didn’t create their own online health exchange for purchasing coverage — like Louisiana — can get the subsidies. Those opposed argued that the language in the legislation limits the subsidies to states with their own exchanges. The federal government says the law clearly intended to make the subsidies available whether a person bought coverage through the federal marketplace or a state exchange.
The ruling in favor of maintaining the subsidies means Louisiana will keep an average of $44.6 million per month in tax credit dollars, according to Kaiser Family Foundation estimates. Louisiana residents who enrolled in Affordable Care Act plans through HealthCare.gov would have seen their annual premiums jump 347 percent this year if the court ruled against the subsidies.
The subsidies mean that about 80 percent of Louisianans who bought the Obamacare policies pay $100 or less a month for coverage.
“It looked like they looked at what the intent was over what the actual wording was. We won’t see any changes,” said Brian Burton, director of Southwest Louisiana Area Health Education Center. “The subsidies will stay so that’s good.”
The center is home to the state’s largest group of navigators, who help advise people on enrolling in Obamacare plans.
Jeffery A. Drozda, chief executive officer of Louisiana Association of Health Plans, said the court’s ruling creates stability for the individuals in Louisiana and nationwide who have been getting the subsidies.
“So it does create a lot of stability in the marketplace on the exchanges. It also provides some clarity on the ACA,” Drozda said.”However, it does not end the discussion of how we need to continue to address the issues that we have in health care, especially the high cost …. and the drivers.”
Those drivers include the cost for hospital care and prescription drugs, Drozda said.
B. Ronnell Nolan, CEO of Baton Rouge-based Health Agents for America, said the ruling wasn’t a surprise. The authors of the law expected each state to establish an online exchange or marketplace and intended to make the subsidies available to everyone who qualified, she said. The Supreme Court obviously agreed.
Nolan said she hasn’t fielded any calls from concerned consumers.
“Nobody’s really said, ‘Am I going to lose my tax credit or my tax subsidy?’” Nolan said. “Now I’m wondering if I should say, ‘Surprise, you get to keep it.’ I’m not sure they were following it.”
That tracks the findings of Kaiser’s Health Policy News Index. Earlier this month, the index showed around 59 percent of American weren’t paying much or any attention to stories about the issue.
Thursday’s ruling also will stave off the mass exodus of healthy people from the individual market expected if the subsidies disappeared, according to Kaiser and other health policy experts. Without the subsidies most of the healthy were expected to drop their ACA policies. Meanwhile, many of the sickest consumers were expected to find a way to keep their insurance.
Insurance companies, stuck with only the sickest consumers, would have seen costs quickly outstrip revenue. Insurers would need big increases in premiums, which meant more healthy customers will leave. Most expected insurance companies would abandon the federal marketplace rather than enduring this “death spiral.”
The Urban Institute had estimated that the number of uninsured people in the United States would rise by 8.2 million in 2016. Kaiser Family Foundation estimated that nationally 6.4 million people would have lost subsidies this year while their health premiums skyrocket an average of 287 percent. The monthly loss in tax credit dollars would total $1.74 billion.
Follow Ted Griggs on Twitter @tedgriggsbr