If the Supreme Court invalidates the legality of the Patient Protection and Affordable Care Act tax subsidies for health insurance, legal scholars say it could be the beginning of the unravelling of the healthcare law, according to Kaiser Health News.
Such a decision would undermine both the government-run insurance marketplaces and the mandate that requires most Americans to obtain health insurance, according to KHN.
In King v. Burwell, the law's challengers claim the PPACA only authorizes subsidies through exchanges in the states that have established their own exchanges, not in the 36 states using federal exchanges. The Supreme Court is slated to hear the case in early 2015. The following 5 thoughts describe the impact of a ruling in favor of the plaintiff, according to KHN.
1. More than 4.6 million people are currently receiving these healthcare subsidies, and this number is projected to grow to up to 13.4 million by 2016, according to the Kaiser Family Foundation. If the Supreme Court decides the PPACA tax subsidies are illegal, an immediate affect is that the IRS would stop paying subsidies to those in federally run exchanges, according to KHN.
2. Those who would lose subsidies would no longer be required to have insurance by the "individual mandate," because they would fall under the exception that exempts those who have to pay more than 8 percent of their family incomes for health insurance premiums, according to the report.
3. Notably, those who pay their entire premium to hold onto their coverage are often much sicker than those who let their coverage go under the exemption rules.
"When healthy individuals opt out of the individual insurance market, those who are left are, on average, less health (and therefore prone to higher-than-average medical expenses)," America's Health Insurance Plans said in a legal brief. "A sicker pool of consumers results in higher premiums, which causes an additional relatively healthy subset of participants to drop out, which in turn results in a further increase in premiums."
4. Eliminating subsidies for individuals would also eliminate the employer mandate that will require larger firms to provide coverage to their workers, according to KHN, because the mandate merely requires employers to pay a fine if their employees receive subsidies on the exchange.
5. Ultimately, hospitals will increasingly be treating uninsured patients without any compensation because many individuals currently receiving subsidies might have to drop their coverage due to cost, according to KHN.