Meet John, a 53-year-old self-employed contractor in Southern Illinois who works construction jobs and earns about $23,000/year. Up until January 2014, when health insurance coverage under the Affordable Care Act (ACA) began, he had never had health insurance because it had never been affordable. John has suffered three heart attacks and a broken femur, and his hospital and doctor bills for these illnesses have been a heavy financial burden.
In October 2013, an in-person assister in Illinois helped John to complete a Marketplace application for health insurance through HealthCare.gov. John was pleased to be offered many options for affordable, quality coverage, ranging from paying $0 per month for a Bronze or low-end Silver plan to only $180 per month for a high-end Silver plan, because he was eligible for premium tax credits, which reduced his premium costs dramatically. John ended up selecting a Silver Multi-State plan that cost less than $15/month. It has a $250 deductible and an out-of-pocket maximum of only $2,000 for the year. John is relieved that he now has affordable health insurance and can receive the cardiac care he needs to stay healthy and continue working.
This is a great example of what the Affordable Health Care Act was meant to do—and what is at risk in the U.S. Supreme Court’s decision to review King v. Burwell.
On November 7, the Supreme Court announced it would review King v. Burwell, the Fourth Circuit’s decision upholding an Internal Revenue Service (IRS) rule extending tax credits to federally established marketplaces. The parties appealing the Fourth Circuit decision claim that tax credits should be available only to consumers purchasing insurance in a marketplace operated by a state, and not to consumers purchasing in a marketplace operated by the federal government. If successful, this case would remove the ability of health care consumers in about three dozen states, including Illinois, who use the federally facilitated marketplace to access premium tax credits to reduce the cost of private, quality health plans. In other words, the majority of low- to moderate-income health care consumers (those who earn up to $47,000 a year for one person and up to $95,000 a year for a family of four) would have to pay full price for health insurance in the individual marketplace, making it out of reach—again.
To put this into context, 77% of Illinois consumers and an overwhelming 87% of consumers across the nation accessed financial assistance to purchase plans in the federal Marketplace. If those tax credits were stripped away, not only would this have a devastating impact on the health and lives of millions of people like John, but it would create what economists call a “death spiral” in the health insurance market. Without financial assistance, healthy people would leave the Marketplace, making the premiums go up for those who remain, which would cause them to leave as well.
The implications of such a potential decision are severe. However, it’s critical to remember 3 things:
- Open enrollment—which starts on November 15—will not be affected in any way by the Supreme Court’s announcement. Health care consumers should review plans, enroll in coverage, and feel confident that their tax credits are safe and can be used to help lower the cost of their coverage.
- In the unlikely event the Court rules against providing tax credits to millions of Americans, consumers will not be required to pay back those tax credits.
- Premium tax credits have helped over 168,000 people in Illinois and over 4 million people across the nation access health care that they can afford, and the Shriver Center will continue to inform consumers about their health insurance options through the Affordable Care Act.
John and millions of other consumers relied on the promise of the Affordable Care Act (ACA) to provide affordable, guaranteed health care coverage. Over two thirds of states including Illinois relied on the intent of Congress in creating the ACA to provide financial assistance to consumers nationwide, regardless of whether the state or federal government administers the marketplace website. Now the focus turns to the Supreme Court to ensure that those promises are kept. Consumers and states will be watching the Court’s decision closely to ensure that healthcare stability and equality across the nation is maintained.