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What's at stake for insurers in latest legal threat to ACA

If gov't stops paying subsidies to health plans, threat of 'death spiral' looms

Now that a judge has ruled House Republicans can sue the Obama administration over a provision of the Affordable Care Act, this time it's insurers even more than consumers that stand to feel the pain if the ACA's opponents get their way.

In the last big legal challenge to the ACA, the Supreme Court case King v. Burwell, the tax credit subsidies that go directly to enrollees were at stake in states that didn't set up their own exchanges. The GOP lawsuit, however, targets the money the federal government reimburses insurers after they subsidize the premiums of exchange enrollees who are 250 percent below the federal poverty line, according to the Washington Examiner.

The crux of the lawsuit's argument is that it's illegal for the Obama administration to pay these subsidies to insurance companies, as the funds were never appropriated to Congress. While the original complaint, filed in 2014, pegged the amount of subsidies set to be paid out during the next decade at $175 billion, as FierceHealthPayer has reported, currently $136 billion is at stake, according to Investor's Business Daily. Of that, the government is expected to pay out $5 billion this year, notes the Examiner.

The lawsuit's backers, led by House Speaker John Boehner (R-Ohio), get a boost from the fact that the Obama administration appears to have reversed its position on whether the funds in question require annual appropriation, adds the Investor's Business Daily article. On the other hand, this ACA provision also doesn't fit the standard definition of an appropriation because it doesn't designate a source of the funds.

If these subsidies disappear, insurers are likely to raise premiums in response, Ron Pollack, executive director of the consumer advocacy group Families USA, tells the Examiner. This in turn could mean steep rate increases for higher-income enrollees not covered by tax credits, causing them to drop coverage and possibly sending insurance marketplaces into a "death spiral," the article states.

Yet one group, at least, thinks the threat is overblown: Spokesman Justin Nisly for ACA advocacy group Enroll America tells the Examiner that despite all the attempts to derail the healthcare reform law, "it's still the law of the land."

To learn more:
- read the Washington Examiner article
- here's the Investor's Business Daily article

Related Articles:
House GOP files lawsuit, attacks Obama's hand in ACA implementation
Judge rules House can sue Obama administration over spending on healthcare law
Beyond King v. Burwell: Payers brace for 'death spiral'
Republicans vow to keep fighting healthcare reform despite King v. Burwell decision