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7.5M Obamacare Customers Face 255% Premium Increase If SCOTUS Strips Subsidies

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If a U.S. Supreme Court ruling eliminates subsidies for Americans who bought coverage on federal exchanges under the Affordable Care Act, nearly 7.5 million Americans could face a premium increase of 255 percent on average yet this year, a new report indicates.

A new analysis from Washington research and health policy firm Avalere Health looks at the impact such a scenario would have should the Supreme Court rule this spring that the Affordable Care Act does not allow subsidies to help Americans pay for health insurance in those states that did not set up their own online marketplaces.

The case to be heard next week by the court is King v. Burwell, which pits opponents of the law against the Obama administration over whether subsidies are illegal because wording in the health rules out subsidies in states that don't establish their own exchanges. Most of the states using the federal marketplace are led by Republicans.

"The federal exchange generally serves low-income populations in red states, so that’s where the premium increases would be concentrated,” Dan Mendelson, chief executive of Avalere Health said in a statement accompanying the firm’s report, which is linked here.

Avaelere’s is the latest in a parade of reports showing potential harm to consumers who bought coverage on federal exchanges. A few words in the law say an exchange should be set up by states, but the legislation’s proponents and the health industry providing benefits say the law also has many other provisions that indicate the federal government agreed to step in and run an exchange if the states didn’t set up their own.

The health insurance industry and lobbyists that represent the likes of Aetna (AET), Cigna (CI), Humana (HUM), UnitedHealth Group (UNH) and Blue Cross and Blue Shield plans as well as the hospital industry and other medical care provider groups have submitted briefs supporting the Obama administration in the case.

Avalere said 87 percent of those “federal exchange customers” currently receive a subsidy. Thus, the firm said declaring the subsidies illegal would cause “average monthly premium contributions for enrollees” to potentially increase “between 122 percent and 774 percent, depending on the state.”

Wondering how Obamacare will affect your health care? The Forbes eBook Inside Obamacare: The Fix For America’s Ailing Health Care System answers that question and more. Available now at Amazon andApple.