There could be serious fallout if the Supreme Court sides with plaintiffs challenging an IRS rule that extends tax credits to 4.5 million people who bought their health plans in states that declined to establish their own health insurance exchanges, a BUSPH researcher and colleagues warn in The New England Journal of Medicine.
David K. Jones, assistant professor of health policy & management, and co-authors from the University of Michigan Law School and Washington and Lee University School of Law, predict that if the IRS rule is invalidated in King v. Burwell, the 34 states that have declined to create their own exchanges under the Affordable Care Act (ACA) “probably won’t be able to stave off the immediate destabilization of (their) insurance market.”
“If the challengers prevail,” they write, “the U.S. Treasury will likely have to stop issuing tax credits to users of federal exchanges. Enrollees who are unable or unwilling to pay the full cost of their insurance premiums could see their coverage terminated, perhaps as soon as 30 days after they fail to make a payment.
“Those who retain insurance are likely to be sicker than those who drop coverage, which will skew the risk pools and expose insurers to large, unanticipated losses. Picking up the pieces would not be easy.”
The Supreme Court announced in November that it would hear King v. Burwell, a challenge to the ACA in which the plaintiffs argue that residents of states which have not set up their own state-run insurance exchanges are not eligible for tax credits that the law provides. A ruling for the plaintiffs, though considered unlikely, would be a significant blow to Obamacare.
Jones and his co-authors said that, in practical terms, such a ruling would put “enormous pressure” on states to establish exchanges. But they also said the commitment of ACA opponents to “resist the temptation of federal money” should not be underestimated.
Supporters of the ACA “thus have good reason to worry,” they wrote. “For at least several years, and perhaps for much longer, the outcome in King could determine whether millions of people continue to have access to affordable, comprehensive health insurance.”
Jones’ co-authors are: Nicholas Bagley, from the University of Michigan Law School, and Timothy Stoltzfus Jost, from Washington and Lee University School of Law.
Submitted by: Lisa Chedekel