Health care reform
On March 4, the Supreme Court heard oral arguments in a case that challenges the legality of the insurance premium subsidies offered to consumers on federally run exchanges.
The Court’s decision likely won't be released until late June. However, at least four judges reportedly expressed some skepticism toward the plaintiffs’ argument that the Patient Protection and Affordable Care Act (PPACA) authorizes subsidies only on state-run exchanges.1
The subsidies — which are awarded as tax credits — are at the core of PPACA’s aim of broadening insurance coverage in the U.S. Without them, many people could not afford to purchase plans that include Essential Health Benefits, as defined by the law. Tax credits also trigger penalties employers must pay under the employer mandate. See our November 2014 article for more details.
If the Supreme Court determines that subsidies are available only through state-based exchanges, the employer mandate will be thrown into question in the 34 states that do not have their own exchanges. Employers in those states might still be subject to the law's requirements, but without tax credits to trigger penalties, the law would lack teeth. Employers who don’t provide insurance to their employees might see an increased number of uninsured people in their workforces. Some states might see increased pressure to implement their own exchanges so their residents would qualify for subsidies.
If the Supreme Court sides with the plaintiffs, millions of employees who enrolled on federally run exchanges could lose their tax credits to help them pay health insurance premiums. Many would be unable to afford their coverage.