If a lawsuit seeking to gut the Affordable Care Act succeeds in the Supreme Court, enrollment in plans purchased through the law’s health exchanges would decline by 9.6 million people and unsubsidized premiums in this market would spike by 47 percent in the states impacted by the ruling, according to a study released last week by the RAND Corporation. Although a footnote to the study explains that 1.6 million of these individuals would be able to find coverage through some other source, that still leaves 8 million people without health insurance.
RAND’s conclusions are largely corroborated by an Urban Institute study, also released last week, which concludes that “a victory for the plaintiff would increase the number of uninsured by 8.2 million people” and that “average nongroup premiums in 34 states would increase by 35 percent, affecting those purchasing inside and outside those Marketplaces.”
Although the RAND study predicts a 47 percent increase in premiums should the Supreme Court side with the plaintiffs in a case known as King v. Burwell, the actual consequences for most people insured through Affordable Care Act plans would be even worse. The law gives states a choice to either set up their own exchange or allow the federal government to do so for them. A single passage of the Affordable Care Act, if read out of context, seems to suggest that tax credits that help most Obamacare customers pay for their insurance are only available in states that run their own health exchange. Although the entire law makes clear that all exchanges, whether run by the federal government or a state, should provide tax credits, a minority of the lower court judges to consider the issue — all of whom are Republicans — have agreed with the plaintiffs’ reading of the law. The Supreme Court has five Republicans and only four Democrats.
RAND’s prediction that premiums will spike 47 percent in states impacted by a hypothetical victory for the plaintiffs in King refers to “[u]nsubisidzed premiums in the ACA-complaint individual market.” In other words, this is the premium spike that consumers will face after accounting for the fact that they’ve already lost a tax credit that dramatically reduces the cost of most exchange consumers’ premiums. Approximately 87 percent of consumers in the exchanges receive some level of tax credit.
According to data from the Department of Health and Human Services, the average Obama consumer who receives a tax credit would face an immediate 322 percent premium hike if they lost that credit — and that’s before accounting for the additional premium spike described by the RAND study. In poorer states, the average hike is likely to be much higher. In Mississippi, according to health reporter Jonathan Cohn, it could be as high as 1,800 percent!
For this reason, the grim predictions in the RAND study may be too optimistic. When premiums spike, healthy people often decide to drop their insurance, either because they cannot afford it or because they decide it no longer makes financial sense at a higher price. Yet, as healthy people drop out of the market, insurers lose the revenue they need to cover their sick customers’ health costs — forcing them to raise premiums even more in order to cover this gap. The result is a death spiral. Higher premiums beget fewer healthy customers; which beget higher premiums; which beget fewer healthy customers.
In the pessimistic scenario, in other words, health insurance doesn’t just become unaffordable to people in the exchanges, it becomes completely unavailable.
The biggest losers in this scenario will be people with life-threatening conditions who literally could die if they lose their health insurance. ThinkProgress profiled one such individual, Jenn Causor, a double-lung transplant patient whose transplant surgery alone carried a sticker price of $279,379 — far more than she could afford if she was uninsured.