PI Original Ellyn Fortino Tuesday June 9th, 2015, 4:48pm

Supreme Court Obamacare Ruling Could Impact Subsidies For 232,000 Illinoisans

Progress Illinois takes a look at what's at stake in the Supreme Court case on Obamacare and its tax subsidies. 

The U.S. Supreme Court will hand down a decision this month on a case challenging the Affordable Care Act. The ruling could invalidate health insurance subsidies for 6.4 million Americans, including more than 232,000 in Illinois, who get their coverage through the federal government's health care exchange.

Illinoisans could lose monthly ACA health care subsidies totalling $49 million if the nation's high court rules in favor of the plaintiffs in the King v. Burwell case.

The four plaintiffs who brought the case against President Barack Obama's signature health reform law argue that the tax subsidies were not intended for people purchasing insurance through the federal government's exchange. The challengers point to the law's "exchange established by the state" language in claiming that the tax subsidies were meant only for people in the states operating their own insurance marketplaces.

Sixteen states and the District of Columbia have state-run insurance marketplaces and 34 states use the federal Healthcare.gov website. In Illinois, the insurance marketplace is available via a state-federal partnership.

For its part, the Obama administration believes the nation's high court will side in its favor and has not outlined a backup plan should the Supreme Court rule against the subsidies.

During a Monday press conference at the G-7 summit in Germany, Obama questioned why the Supreme Court is even considering the case.

"This should be an easy case. Frankly, it probably shouldn't even have been taken up," the president said. "Since we're going to get a ruling pretty quick, I think it's important to assume that the Supreme Court's going to do what legal scholars would expect them to do."

Andrew Koppelman, a John Paul Stevens professor of law and professor of political science at Northwestern University, is at least one local legal expert who anticipates a Supreme Court ruling against the plaintiffs.

"It's pretty easy," Koppelman said. "On (the plaintiffs') reading of the statute, the statute essentially requires the federal government to set up these health care exchanges in these states and then doesn't allow anyone to enroll in them. So it just makes no sense as a reading of the statute. So the easy way for the court to dispose of it is just to say that. It really is a scandal that this theory has been taken as seriously as it has been."

But if the Supreme Court were to side with the plaintiffs, Koppelman said such a decision could have severe negative consequences. 

"There are large parts of the health care industry, which (represents) a fifth of the American economy, that are integrated with this program. If you cut off funding to them, it's going to be a financial disaster for the hospitals that are providing that care and to the insurers who are providing that care," Koppelman said. "It would have a ripple effect. And, of course, it would be a personal catastrophe for somebody who is getting chemotherapy for their cancer to suddenly be told, 'Sorry, no more chemotherapy for you,' because some clever lawyers came up with a strange reading of the statute. That would be big."

An analysis by the Henry J. Kaiser Family Foundation shows that the average monthly subsidy for the 232,371 Illinoisans currently at risk of losing their ACA premium tax credits is $211. If Obamacare subsidies go away, the average health insurance premium through the marketplace in Illinois could increase more than twofold.

"Absent the subsidies, health insurance gets a lot more expensive [and] people would be inclined to drop their plans," explained Anthony LoSasso, associate professor of health policy and administration at the University of Illinois at Chicago. "Sicker people would probably be those who stay in the pool and continue to pay, even if it is more expensive, because they're actively using it."

If the Supreme Court rules in favor of the plaintiffs and some sort of fix is not implemented to protect the ACA subsidies, LoSasso expects there would eventually be an "unraveling" of the health insurance marketplaces created under the health reform law.

"I don't know that Congress and the administration would let things get (to a) point that bad," LoSasso said.

But Koppelman said he does not have confidence in Congress to prevent such an outcome.

"Congress is presently under the control of such irresponsible political hacks that I have no faith at all in the capacity of Congress to cope with that situation," he said. 

At his Monday press conference, Obama pointed out that Congress could easily clear up the issue "with a one-sentence provision" clarifying the law.

But Congressional Republicans, who control both chambers, are unlikely to go along with that approach.

"Let's be clear: if the Supreme Court rules against the administration, Congress will not pass a so called 'one-sentence' fake fix," U.S. Sen. John Barrasso (R-WY) said in a statement in response to Obama's comments.

"Instead of bullying the Supreme Court, the president should spend his time preparing for the reality that the court may soon rule against his decision to illegally issue tax penalties and subsidies on Americans in two-thirds of the country," Barrasso said, adding that, "Republicans didn't create the ongoing mess - but we are prepared to help the American people who have been hurt by President Obama's unlawful actions and his failed law."

State Solutions

Obama declined on Monday to give states guidance on what steps they could take in preparation for a potential adverse Supreme Court ruling.

"What I can tell state leaders is that under well-established precedent, there is no reason why the existing exchanges should be overturned through a court case," Obama said. "It has been well documented: Those who passed this legislation never intended for folks who were going through the federal exchange not to have their citizens get subsidies."

As for the states using the federally-run exchange, only two, Delaware and Pennsylvania, have detailed their approach to safeguard subsidies in the event that the Supreme Court rules against the ACA, reports the Los Angeles Times.

In Illinois, Republican Gov. Bruce Rauner plans to "take appropriate action depending on how the Supreme Court rules," his office has stated.

The Illinois Hospital Association has warned the governor about the potential negative impacts in Illinois if residents lose their ACA subsidies. 

In a March 31 letter to Rauner, the Illinois Hospital Association wrote: "The loss of premium subsidies would be devastating to business productivity and the economy in Illinois. For example, Illinois hospitals have already absorbed nearly $2.3 billion in state and federal cuts over the past five years alone, with continuing fiscal pressures. The loss of insured patients will inhibit hospitals' ability to provide quality services to Illinois residents."

"Without subsidies," the letter adds, "hundreds of thousands of low- and moderate-income families in Illinois would no longer be able to afford health insurance and the overall cost of insurance premiums in the state would likely increase significantly, pricing even those who do not currently receive subsidies out of the individual health insurance market. This would likely lead to an increase in the number of uninsured families, who would be forced to rely on hospitals and other safety-net providers for care."

In response to a Supreme Court ruling against the ACA, "We would hope that Congress takes action" to "extend these subsidies," said Danny Chun, a spokesman for the Illinois Hospital Association. "If Congress fails to act, then we're urging the state of Illinois to take appropriate steps, including the possibility of establishing a state-based exchange. That's one option."

As for Illinois-specific solutions, Joan Sheforgen, interim executive director at the Campaign for Better Health Care, an Illinois health care coalition that has helped people get enrolled in coverage under the ACA, also favored the option of a state-operated marketplace based on best practices. Given the state's fiscal pressures, she said it would be important for Illinois stakeholders and decision makers to consider "all opportunities to take advantage of any federal sharing dollars." 

"If this is not a ruling in favor of the ACA, I think that it would be dangerous to respond with a knee-jerk reaction," Sheforgen added. "I think our responses need to be thoughtful, but they need to be responsive with some solutions ... I also think it has to be a health care delivery system, as (the Campaign for Better Health Care has) said since 1995, where everybody is in and nobody is out -- and that really means everybody."

The nation's high court is expected to issue its ruling on the King v. Burwell case by the end of June.

Public Opinion On ACA Subsidies

Meanwhile, a new national Washington Post-ABC News poll shows that a majority of Americans, 55 percent, believe the Supreme Court should not rule against subsidies for people purchasing insurance through the federal government's exchange. Of the 1,001 adults polled, 38 percent said the Supreme Court should take action to block the subsidies.

Among those polled, 65 percent of Democrats, 57 percent of Independents and 34 percent of Republicans said the Supreme Court should not rule against the ACA subsides.

While the majority of those polled favored the ACA subsidies, 54 percent said they opposed the overall health reform law, compared to 39 percent who said they supported it. 

When broken down by political party affiliation, Democrats supported the Affordable Care Act by a 64 percent to 30 percent margin. Independents opposed the health reform law by a margin of 56 percent to 34 percent and Republicans by 78 percent and 19 percent.

The telephone poll, conducted May 28 through May 31, has a margin of error of plus or minus 3.5 percentage points.

Comments

I am trying to read others' comments

Where is the state getting the money to pay for all these entitlements?

How were they paid for in the past?

Isn't getting the money from the federal government the same as getting your own money back? 

Maybe it would help if we didn't have to pay so much in taxes to the federal government and we could instead pay it to the state for the things we wanted in the state.

 

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