With the Supreme Court set to hear oral arguments in King v. Burwell on March 4, a new Policy Insight from the Kaiser Family Foundation’s Larry Levitt and Gary Claxton explores the policy implications for consumers and insurance markets if the Court were to side with the plaintiffs in the challenge to the Affordable Care Act’s consumer subsidies. A second issue brief by KFF’s MaryBeth Musumeci, a policy analyst and an attorney, explains the legal arguments underlying the case.
At issue in the case is whether the federal government can provide premium and cost-sharing subsidies to consumers who buy insurance in states that do not establish their own ACA Marketplace and instead rely on a Federally-facilitated or Partnership Marketplace. In 2015, roughly 7.5 million people who have signed up for coverage in the 34 states that use the federal Marketplace qualify for subsidies, or 87 percent of all people who picked a plan in such states.
The new Policy Insight, Insurance Markets in a Post-King World, explains that a Court decision to cut off such subsidies would cause millions to go without coverage, make the vast majority of consumers who were receiving subsidies exempt from the ACA’s individual mandate, and disrupt insurance markets by leaving insurers with a sicker pool of people to cover and limited ability to generate enough premium revenue to cover health costs. In some cases, insurers may choose to exit the individual market in affected states rather than face significant losses, according to the analysis. Governors, state legislatures and Congress would face pressure to take steps to preserve subsidies, but there are political and logistical challenges to doing so quickly.
The issue brief, Are Premium Subsidies Available in States with a Federally-run Marketplace? A Guide to the Supreme Court Argument in King v. Burwell, walks through legal aspects of the case, from who the plaintiffs are to what each side is seeking from the Court and how this legal challenge differs from other ACA cases already decided by the Court. It also explains the legal test that the justices are likely to apply in the case and the potential actions the Court could take.
For more on health reform and the King v. Burwell case, visit kff.org.