In late June, the Supreme Court ruled that the Affordable Care Act (ACA) can continue to provide tax subsidies to Americans who need help when they go to buy health insurance regardless of whether or not the state they call home operates its own exchange.
Specifically, the 6-to-3 ruling addressed concerns about a phrase in the law, often referred to as Obamacare, that said these subsidies could only be made available to those below a certain income threshold who are looking to obtain insurance via “an exchange established by the state.”
“For people buying insurance on the federal exchange—and that is millions of people—[this decision means they will continue to be] eligible for tax credits,” explains Margaret Riley, a professor of law at the University of Virginia. It also means “the difference between insurance costs being affordable and insurance costs that are a real burden.”
“Even for those not directly affected,” she adds, “the ruling gives stability, and stability in the insurance markets are good for both insurers and the insured.”
A decision favoring the plaintiffs—the four Virginia residents who felt the wording above should prohibit the federal government from providing subsidies to consumers who live in states that lack their own exchanges—could have put the Obamacare law as a whole into jeopardy. The reason: nearly three dozen states currently piggyback off of the federal marketplace or exchange--as opposed to maintaining their own—and about 6.4 million people in those 34 or so states rely on subsidies worth approximately $1.7 billion a month to make their health coverage affordable.
As such, Democrats and other Obamacare supporters welcomed the ruling with a huge sigh of relief—especially since this is the second time in three years that this particular piece of legislation has been challenged at this level. (The earlier case, resolved back in 2012, focused on the “individual mandate” portion of the law, with the Supreme Court’s justices declaring, by a 5-4 margin, that it was constitutional.)
Should you feel similarly relieved about this decision even if you’re a regular citizen as opposed to an elected official of some sort or other? You should be able to answer that question for yourself after you read through the following information related to what the latest ACA ruling does or could or mean for American consumers in terms of their ability to obtain or maintain health coverage:
If you have health insurance through your employer, nothing’s likely to change
That may not have been the case if the Supreme Court had decided in favor of the plaintiffs and as a result stifled the portion of Obamacare that allowed the federal government to supply subsidies to insurance customers in need.
How so? Well, had Obamacare been gutted in such a way, that action could have undermined and even unraveled the law in a few serious ways—one of which likely would have resulted in businesses in a number of states dropping the health insurance coverage they provide to hundreds of thousands of employees, according to a recent Time report.
That’s due to one specific section of the ACA that requires employers to provide health insurance to their staffers or pay a penalty. They’re only hit with such a fine if they fail to meet two criteria, though—one of which is that they provide quality health coverage to 95 percent of their full-time employees, and the second of which is that at least one of those employees buys a plan on the marketplace and receives a subsidy. In other words, if a state doesn’t offer its citizens subsidies, its employers can’t be fined if they don’t provide adequate health insurance to their employees.
If you obtained health insurance through the federal marketplace or a state exchange, you’re also unlikely to see any changes to the cost or amount of your coverage
This is true even if you currently receive a subsidy that makes your insurance policy more affordable.
Which makes sense, as the Supreme Court’s ruling means that the particulars of the Affordable Care Act will remain as they’ve been since it was signed into law more than five years ago.
So, as has been the case since 2010, if you make more than a certain amount of money per year, and if you’re not experiencing any of a number of hardships or if you’re not someone who fits into any number of categories that are exempted from this so-called individual mandate, you have to buy a certain amount of health insurance or pay a fine.
In both cases, you could say that the recent Supreme Court decision has helped keep health insurance premiums from skyrocketing
Don’t take our word for it. Consider the following:
Had the Supreme Court declared Obamacare’s nationwide tax subsidies to be unconstitutional, a lot of people probably would have dropped their health insurance policies and paid the resulting penalty—which for 2015 comes to $325 per person, or 2 percent of someone’s annual household income, depending on which is greater.
After all, a lot of people are only able to afford the plans they get through the marketplace or exchanges due to the subsidies that at the moment average $263 per person per month, or $3,155 per person per year, according to the Department of Health and Human Services.
If that form of financial aid fell by the wayside, though, the $128 that federal enrollment data says your average American currently pays for health coverage would jump to about $336, if various projections are correct.
That would have a pretty disastrous impact on the insurance industry as a whole, as with a good portion of the healthiest people removed from the system, only the sickest—and most expensive—to insure would remain. With the pool of insured individuals both smaller and less healthy than had been the case before, insurers probably would have hiked premiums to make up for the lost revenue and increased losses.
“Had the ruling gone the other way, there would have been [a lot of] uncertainty that likely would have lasted at least for months,” Riley suggests. “That would have affected everyone by raising costs throughout the market—insurance companies would have had to prepare for many contingencies each with their own transaction costs—and would have left many people uncovered.”
Don’t take any of this to mean that this is all you’re going to get from Obamacare from here on out
In fact, many experts suggest a lot still can be done when it comes to implementing and improving the Affordable Care Act.
For instance, Ira Wilson, professor of health services, policy, and practice at Brown University, recently told commonhealth.wbur.org that “there’s a lot to do to continue to implement, and implement effectively, the ACA. This is a marathon, not a sprint. It’s a long process. And what the ruling means is that people can keep focused on doing that implementation work rather than rethinking it altogether.”
Michael Doonan, assistant professor at the Heller School for Social Policy and Management at Brandeis and executive director of the Massachusetts Health Policy Forum, on the other hand, told the same site that he expects “some of the states who are not participating [to] participate by expanding their Medicaid, [and] by looking to the federal government to see if they can cover more people in creative ways.”
Riley isn’t so sure about that last point, adding, “the big open question is Medicaid expansion—and whether those states that have refused to expand Medicaid will gradually do so. That affects more people than most people realize because it affects costs and what kind of services hospitals can afford to offer. Some hospitals are even closing.”
That said, you probably can rest assured that the current version of Obamacare, if not an improved one, is here to stay
“Repeal of Obamacare is almost off the table,” Doonan said in his recent interview with commonhealth.wbur.org, while Wilson suggested that “repeal still could happen” but accomplishing that feat just became “much, much harder” as a result of the Supreme Court ruling on June 25, mainly because “you have two major Supreme Court decisions in support of the constitutionality of proceeding in this direction.”
“Although the court’s ruling does mean that the ACA is likely here to stay,” Riley adds, “it is still a political lightning rod. That means that it may be possible for some limited improvements at the agency levels, but any major changes that would require legislation would quickly get caught up in politics.”
Still, she says, “it’s certainly better than what would have happened if the court’s ruling had gone the other way. If it had, every single decision would have become a political bargaining chip.”