What will states do if health insurance subsidies are struck down?

Health Care Reform and Policy
by Jacqueline Lee

One of the provisions of the Patient Protection and Affordable Care Act relates to how people are able to have their health insurance subsidized when it's purchased through government-run exchanges. However, opponents of the law say that it only allows for these funds to be extended to shoppers when they buy through state-run marketplaces, and that those at the federal level are technically illegal.

The case is now going before the U.S. Supreme Court, which is expected to rule on the issue relatively soon, according to a report from the Insurance Journal. Unfortunately for those who rely on subsidies to afford their coverage through federally-run exchanges, if this aspect of the law is struck down, then there might be a mass exodus of people having to drop those plans because they're no longer receiving financial help. In all, this could affect 8 million people nationwide.

The problem for these consumers, too, is that right now states don't really have a good plan for how to handle the problem if it arises, the report said. While some of the 30-plus states that run their own exchanges have at least started to have discussions about what a backup plan would look like, it seems as though nothing has come even close to being finalized.

Who would be affected?
The states where the discontinued health insurance subsidies numbers will be largest are population centers where the state government is largely run by Republicans, the report said. That includes Florida, Texas, Virginia, Michigan, New Jersey, and so on. The governments of some states where the exchanges would be unaffected by the Supreme Court's ruling - at least, if it comes down on the side of ACA opponents - may extend their marketplaces to those in neighboring states, but again, nothing is set in stone at this point in time.

Right now, many experts really aren't sure how the Supreme Court will rule, the report said. Among state governors, there's a belief that it could go either way, as things could change by the time a ruling is announced around the start of summer.

This is certainly an issue for health insurers to monitor as well, as it could lead millions to lose coverage, and significantly impact those companies' bottom lines. Any efforts they can make to catch affected people could go a long way toward benefiting both sides.