A looming Supreme Court case against Obamacare threatens to undermine millions of Americans’ access to affordable health insurance. And the latest data about the current enrollees in the law’s new marketplaces suggests that the stakes may be even higher than analysts initially predicted.
In November, the Supreme Court agreed to take up King v. Burwell, a case that would essentially gut the current system for extending financial assistance to help Americans purchase health insurance plans. If the legal challenge is successful, the government will no longer be authorized to provide tax credits in the 37 states with federally-run marketplaces. Those states declined to set up their own marketplaces under Obamacare because they’re governed by politicians who oppose the law.
A ruling against Obamacare’s subsidies would affect the vast majority of the people who are signing up for plans in those states. According to the latest enrollment report from the Department of Health and Human Services, which includes data up to December 15, about 87 percent of the people who have selected coverage in federally-run marketplaces during this enrollment period qualify for tax subsidies to help them afford their plans.
That works out to be about 2.9 million of the 3.4 million people who have signed up so far. Plus, during the law’s last open enrollment period, an estimated 4.6 million people who enrolled in federal exchanges were eligible for tax credits, according to HHS. (Some people could be double counted in those figures, since it’s not yet clear how many people are re-enrolling after selecting Obamacare plans last year.)
Furthermore, the pace of enrollment is particularly strong in states that declined to run their own marketplaces, suggesting that a significant portion of new customers may have a stake in the upcoming Supreme Court decision. On Tuesday, the Obama administration reported particularly large numbers of new enrollees in federal exchanges in Florida (330,000), Texas (205,000), North Carolina (110,000), Georgia (103,000), and Pennsylvania (95,000).
Enrollment in state-run exchanges, meanwhile, has been more modest. That’s partly because the states with federal marketplaces already had higher numbers of uninsured residents on average before Obamacare started taking effect. A ruling in favor of the law’s opponents would simply further this red-blue divide.
“The impact of a potential Supreme Court decision against the law continues to grow,” Larry Levitt, a policy analyst at the Kaiser Family Foundation, told the Washington Post’s Greg Sargent after the latest enrollment data was published.
Previous analyses have calculated that, if states with federally-run marketplaces were no longer allowed to extend tax credits, the cost of health care there would increase by an average of 76 percent. In some states, monthly premiums could jump by nearly $400.
So it’s perhaps no wonder that even the states that declined to participate in Obamacare aren’t necessarily eager to see King v. Burwell succeed. In November, eleven states with federally-run marketplaces filed a court brief in opposition to the lawsuit, raising concerns about the “draconian result” of denying tax credits to low-income Americans. In that brief, attorneys argued those states declined to build their own marketplaces “with the understanding that relying on a federally facilitated exchange would not harm state citizens or interfere with state insurance markets.”
A decision on the case is expected by June. If the court rules against the health law, states will be likely be left scrambling; as the New York Times recently reported, it will be impossible to build complicated new state-level marketplaces quickly enough to insulate low-income Americans from the consequences of the ruling.