Workaround for tax subsidies possible

ChewShould the U.S. Supreme Court deny tax credits to newly-insured Americans in 34 states where the federal government runs the Affordable Care Act (ACA) health insurance marketplaces, some policy wonks in Washington, D.C. and across the country think there might be a reprieve.

Last month the nation’s highest court heard arguments in the case of King v. Burwell, which challenges the legality of offering tax credit subsidies to low and middle-income individuals through federally-facilitated exchanges. The subsidies are applied to health insurance premiums, lowering their overall cost.

Plaintiffs argue the language of the statute allows subsidies to only be offered through state-run exchanges. Currently, 13 states plus the District of Columbia run their own health insurance exchanges.

In addition to dealing a blow to a health law that conservatives still are trying to overturn, an adverse ruling could result in millions of enrollees suddenly being unable to afford insurance coverage, thereby destabilizing the health insurance market.

The U.S. Department of Health and Human Services (HHS) has said that it doesn’t have a plan for an adverse ruling, but according to several reports, the agency has produced a 100-page document that includes “various contingency plans” detailing potential actions it could take if the court rules that the tax credits aren’t available to enrollees in federally-run exchanges.

One “Plan B,” could involve encouraging those states to declare that they are using the agency as a subcontractor, wrote Avik Roy, a senior fellow at the Manhattan Institute for Policy Research in an opinion post at Forbes.com.

In response, Jonathan Ingram, a research director at the Foundation for Government Accountability bolstered this potential solution on social media with photo of the text of Section 1311 of the statute that says states can enter an agreement with an “eligible entity to carry out one or more responsibilities of the exchange.”

After a close examination of Justice Samuel Alito’s remarks during the March 4th hearing, some experts think that the U.S. Supreme Court may consider delaying the effective date of any ruling against tax credits to avoid disrupting the insurance marketplace and give states time to set up their own exchanges. During the arguments Alito asked whether it would possible “to stay the mandate until the end of this tax year.”

New poll

Meanwhile, a Kaiser Family Foundation poll of 1,503 adults found that a good majority of Americans aren’t aware that the federal subsidies are at risk. In a telephone survey conducted between March 6 and March 12, 53% of respondents said they had heard nothing about the King v. Burwell and another 25% said that they had heard “only a little” about the case.

Interestingly, the survey found that a majority of the public, across party lines, said a ruling against subsidies would have a negative impact on the country and the uninsured.

Two-thirds of the respondents said that if the Supreme Court rules against the tax credits, “Congress should pass a law so that people in all states can be eligible for health insurance subsidies.”

As the ACA reaches its fifth birthday and second enrollment period where more than 11 million signed up for coverage through the marketplaces, responses to this latest Kaiser tracking poll indicate that public opinion about the law is narrowing. Forty-three percent of those surveyed maintained an unfavorable view of the healthcare law while 41% expressed a favorable view.

ABOUT THE AUTHOR

Cassie M. Chew is a freelance writer in Washington, D.C.