The costly side effects of the Halbig v. Burwell subsidy ruling
About 4.6 million people in 34 states could lose their premium subsidies if an appeals court ruling in Halbig v. Burwell , which states that subsidies are illegal on federal exchanges, stands. What's more, there are roughly 9.5 million uninsured Americans who are eligible for subsidies in states with federal marketplaces, notes the Kaiser Family Foundation.
Listed below are two potential side effects of the Halbig ruling, according to Larry Levitt, senior vice president for Special Initiatives and Gary Claxton, vice president and director of the Health Care Marketplace Project, both part of the foundation.
Bye-bye to employer mandate fines
If the Halbig ruling is upheld, the employer mandate would cease to exist in states using the federal marketplace. There are two instances where employers face fines under the mandate. Firstly, employers are fined $2,000 per employee if they choose to not offer coverage. Yet the penalty applies only if at least one of the employees gets a subsidy. If there are no subsidies, employers won't be penalized at all.
Secondly, if employees are offered coverage that is not affordable, they may be eligible for subsidies--meaning, employers could face a fine of $3,000 for offering pricey plans. Again, if subsidies disappear, employers won't be fined, notes the authors.
Hello to a rocky individual market
Without subsides, many low-income individuals who require healthcare would not be able to afford coverage. The individual mandate would still take effect and hopefully urge younger, healthy people to enroll. But if Halbig pulls through, an estimated 8.1 million uninsured, subsidy-eligible individuals would end up being exempt from the individual mandate. Meaning, it may take more of an effort to enroll the "young invincibles." This could result in an unstable market, especially if healthy people forgo coverage. The end result may lead to a spike in already costly premiums.
- here's the KFF article
Appeals courts disagree on whether ACA subsidies are legal
Subsidy rulings mean more enrollment work for insurers
How should feds prevent subsidy overpayments?
Court rules subsidies legal in all states, on both exchanges