Today, two federal appeal court panels issued conflicting rulings on whether the federal government can subsidize health insurance premiums through the Affordable Care Act. According to Robert Pear’s article in today’s New York Times, “the Court of Appeals for the Fourth Circuit, in Richmond, upheld the subsidies… and the Court of Appeals for the District of Columbia Circuit, said that the government could not subsidize insurance for people in states that use the federal exchange.” It is now certain that the Supreme Court will have to weigh in on the matter. If the Court does strike down the subsidies, how much could this cost the millions of Americans eligible for subsidies?
Today’s court decision could cost consumers $36.1 billion.
The above number comes from study conducted by Linda J. Blumberg, John Holahan and Matthew Buettgens of the Robert Wood Johnson Foundation and the Urban Institute titled Halbig v Burwell: Potential Implications for ACA Coverage and Subsidies. The research projects that 11.8 million individuals are expected to enroll in the 34 Federally Facilitated Marketplaces (FFMs) in 2016. Of those, 7.3 million people are estimated to receive federal subsidies. Losses of federal funds would be as high as $4.8 billion in Florida and $5.6 billion in Texas.
All told, this could take a real toll on consumers’ wallets. Kathleen O’Brien sheds light on the cost of this decision in an article today in NJ.com: “In New Jersey, 136,000 consumers bought policies through the federal exchange qualifying for a subsidy… and the average monthly subsidy was $317.” A related June study put out by the Department of Health and Human Services found that the average tax credit amount was $264 for an individual in the FFM.
Whatever the outcome of any future Supreme Court decisions, the residents of the 34 states whose exchanges are run by the federal government will have to worry about the significant financial ramifications.