Government: 8 Million People Could Lose Federal Health Insurance Subsidies

According to a government report released Tuesday, nearly 8 million people could lose up to $24 billion a year in health insurance subsidies in a Supreme Court case threatening President Barack Obama’s Health Care law.

Estimates by The Associated Press show what’s at stake in the case. Health overhaul opponents argue that subsidies are illegal in some three dozen states where the federal government took charge of running the health insurance marketplaces, or exchanges. The justices heard arguments last week, and the court’s decision is expected in late June.

Department of Health and Human Services shows that about 7.7 million people in the 37 states with federally run markets are getting an average of $263 a month to help pay premiums. That works out to around $2 billion a month, although it may drop over the year as the number of people insured fluctuates., reported Tuesday.

The subsidies are delivered in the form of tax credits. The biggest potential loser would be Florida, with nearly 1.5 million residents getting an average of $294 a month. That works to $440 million a month currently, or up to $5.2 billion a year for the state.

In Texas, more than 1 million residents are getting an average subsidy of $239 a month, or nearly $3 billion a year, and in North Carolina more than 515,000 subsidized customers would lose an estimated $1.9 billion a year.  HHS Secretary Sylvia M. Burwell said, the figures “tell a story of health coverage (that) consumers rely on for financial and health security and of coverage they don’t want to lose.”

A total of 11.7 million people nationwide signed up for 2015 coverage in the insurance markets created under Obama’s law.

Other findings from AP’s analysis:

  • After subsidies, the average premium for consumers in states with federally run markets rose by $19 a month, or 23 percent from 2014. Officials said that may reflect people who picked higher quality coverage, and to a lesser degree, the impact of higher premiums for tobacco users.
  • Consumers in Alaska received the highest average subsidy, $534 a month.
  • After subsidies, Mississippi residents paid the lowest average premium, $52 a month. Insurance premiums vary by state.

The Supreme Court case focuses on the literal wording of the complex law. Opponents say it allows subsidies only in states that set up insurance exchanges. Only 13 states and Washington, D.C., are running their own online insurance markets. The administration says that, when read in context, the law allows subsidies in all 50 states regardless of whether the federal HealthCare.gov is in charge of sign-ups.

During oral arguments last week, the court seemed divided. If the Supreme Court invalidates the subsidies, Republican-led states would bear the brunt of the consequences.

 

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