Are your Obamacare subsidies about to end?
Posted on May 25, 2015 11:22 am CDT
Springfield News Leader
Daniel Kaliszewski had been without health insurance for about four years before the plan he purchased through the federal exchange went into effect in January.
Daniel Kaliszewski recently obtained insurance through the federal exchange, which he could only afford with a subsidy. He could lose his subsidy, depending on the Supreme Court's ruling expected next month.
(Photo: Valerie Mosley/News-Leader)
Kaliszewski, 32, of Springfield, said he now makes about $335 a week after taxes as a warehouse worker for Bass Pro Shops and that he can't afford the insurance the Springfield-based company offers. The plan he purchased through the exchange — set up in the wake of the passage of the Obama administration's controversial Affordable Care Act — has a premium of $168 a month, of which almost $100 is covered by a subsidy.
A case the U.S. Supreme Court is expected to rule on next month, however, could take away the subsidies that Kaliszewski and tens of thousands of Missourians receive. It could also provide another economic challenge for the state's hospitals. The plaintiffs of King v. Burwell argue that language in the federal health care law means individuals in states like Missouri that didn't run their own exchange can't qualify for the subsidies.
Kaliszewski already has the cheapest — and thus highest-deductible — exchange plan available to him.
"If I was to lose that subsidy, I'd be screwed," he said. "I wouldn't be able to afford the exchange insurance."
The Affordable Care Act — which requires everyone in the United States to have health insurance or, starting this year, pay a penalty — gave states the option of either setting up their own online marketplace to offer private insurance to residents or rely on the federal exchange, Healthcare.gov. Missouri, along with more than 30 other states, relies on the latter.
Currently, individuals under certain income levels can receive subsidies to help pay for the insurance purchased through an exchange, whether state or federally run. Some individuals can also get a hardship exemption from the the insurance requirement based on low income.
The plaintiffs of King v. Burwell note that the Affordable Care Act makes multiple references to the subsidies being available to those enrolled in an exchange "established by the State." The plaintiff s argue that means subsidies aren't available to those purchasing a plan through the federal exchange. They argue that the language was deliberate and that Congress was establishing an incentive for states to set up exchanges.
"Given the plausible concern that at least some states would be reluctant to undertake the thankless job of establishing and operating Exchanges, offering them an irresistible incentive — billions of dollars in 'free' federal subsidies to their citizens — is a most sensible tactic," the plaintiffs argue in their Supreme Court brief.
The Obama administration draws attention to another phrase, in which the act says that when a state doesn't set up an exchange, the federal government "shall establish and operate such exchange."
(Photo: Pool, Getty Images)
The Obama administration draws attention to another phrase, in which the act says that when a state doesn't set up an exchange, the federal government "shall establish and operate such exchange." That phrasing implies that "each federally-facilitated exchange is the same state-specific Exchange as the State otherwise would have established," the government argues in its brief.
How the court will rule "depends on if they're going to follow the letter of the law or ... be a little more practical and apply a spirit-of-the-law type ruling," said Mike Merrigan, a clinic professor in management at Missouri State University and a former vice president and regional general counsel for St. John's and Mercy.
Merrigan wants to see the ruling upheld.
“Throw out federal subsidies and you've got a whole lot of people who won't have the means to buy insurance again.”MIKE MERRIGAN, MISSOURI SATE UNIVERSITY CLINIC PROFESSOR IN MANAGEMENT
"Throw out federal subsidies and you've got a whole lot of people who won't have the means to buy insurance again," he said.
Through Feb. 22, more than 8.84 million people nationally had selected or were automatically enrolled in 2015 insurance plans through Healthcare.gov, according to a March 10 report issued by the Department of Health and Human Services. Nearly 2.85 million had selected or were enrolled in plans sold on exchanges managed by the states.
Of those using the federal exchange, about 87 percent qualified for a subsidy. Those 7.7 million people could be directly impacted by the King v. Burwell ruling.
Approximately 223,000 people in the state at risk of losing subsidies.
(Photo: Don Ryan, AP)
In Missouri, 316,984 people were eligible to enroll in a plan through the federal exchange in 2013, and 248,697 — or 78.5 percent — were eligible to receive financial assistance, according to the report. Through Feb. 22, a total of 253,430 — or 80 percent of those eligible — had selected a plan, with 88 percent of them eligible for the subsidies.
That's approximately 223,000 people in the state at risk of losing subsidies.
Among Missouri ZIP codes, 65807 — which generally comprises southwest Springfield — had the second-highest number of enrollments in plans offered by the federal exchange as of Feb. 22, with 3,069 enrollments. The other ZIP codes in the top three — 63136 and 63116 — were both in St. Louis County.
That's in part due to the fact that 65807 is a relatively populous ZIP code, with nearly 55,000 residents; the number of people enrolled in plans as of Feb. 22 works out to 5.62 percent of that ZIP code's population. That's the sixth-highest enrollment rate by percentage among ZIP codes that include Greene County, using population data from the U.S. Census Bureau's ZIP code tabulation areas. The spot with the highest enrollment rate — with about 6.2 percent of the population enrolled — is 65804, which generally covers southeast Springfield.
Republic resident Katelyn Bossert signed up for insurance through the exchange last fall when she turned 26 and aged out of her parent's insurance (allowing people up to 26 to stay on their parent's insurance is another component of the Affordable Care Act, and one of the few bipartisan-supported provisions). For her, the coverage is temporary — she plans to marry her fiance in August and become covered by insurance he gets through his employer.
Bossert, who is self-employed as a commercial real estate appraiser, said she paid $208 a month for coverage from October through December, of which $175 a month was covered by a subsidy. When she did her taxes this spring, her income was higher than she'd projected when applying for insurance, which meant she had to return $800 in subsidies.
"So I basically had to pay all of it back," she said.
The monthly premium for her coverage increased to about $256 this year, Bossert said. She now receives a subsidy of $20 a month.
Bossert's insurance through the exchange has a high deductible — $6,000 — so she's paying for blood draws for hypothyroidism every three months and medication in addition to her premium.
When she had to pay her subsidy back earlier this year, Bossert said she contemplated just going without insurance until August, given the cost. But, in part due to a car wreck that left her fiance with tens of thousands of dollars in medical bills last year when he wasn't insured, she opted to keep it.
"I've always had insurance," she said. "I've been really lucky, getting it through my parents. I wasn't willing to go without it."
Avalere Health, a health care-focused advisory firm, issued a report in February with a state-by-state breakdown on the impacts of subsidy repeals. In Missouri, it estimated those losing a subsidy would see an average premium contribution increase of 330 percent.
“The range of potential options available to the Administration may hinge on the specifics of the ruling.”CAROLINE PEARSON, SENIOR VICE PRESIDENT AT AVALERE HEALTH CARE ADVISORY FIRM
"In the event that the Court strikes down subsidies in federal exchange states, the Administration, Congress and the states themselves will explore both short- and long-term solutions," Caroline Pearson, senior vice president at Avalere, said in the February report. "The range of potential options available to the Administration may hinge on the specifics of the ruling."
Individuals are currently generally eligible for the exemption if the premium of the lowest cost plan available to them exceeds 8.05 percent of their income. A ruling for the plaintiffs in King v. Burwell would likely increase the number of people qualifying for a hardship exemption from the mandate because they would be responsible for their full premium.
Keep this in mind when you hear predictions of how the Supreme Court will rule next month: Virtually no one foresaw the specifics of the court's last Affordable Care Act-related decision in 2012 — that the individual mandate was legal, but on the basis that it was a tax and that Congress had exceeded its authority by coercing states to expand Medicaid.
"I was surprised the way they ruled on the original case," Merrigan, the MSU professor, said.
If the Supreme Court rules for the plaintiffs, states that haven't already could build a state-based exchange and thus be able to offer the subsidies. Given that the Missouri legislature has not expanded Medicaid, it is not expected that legislators would be interested in a state exchange.
"They want Obamacare to die, so I don't see our legislature doing anything to help that cause," Merrigan said.
The Obama administration has not released any detail regarding possible plans if the court rules in favor of the plaintiffs.
"I've got to think they've got plans," Merrigan said. "I would certainly hope so."
In separate statements issued to the News-Leader, Springfield's two primary health systems — Mercy Springfield and CoxHealth — both said they will continue to provide care to anyone who needs it. Additionally, Mercy said in its statement that the system anticipates half of those patients with exchange insurance would be unable to afford their premiums without the subsidy. CoxHealth said a ruling in favor of the plaintiffs would result in more patients seeking financial assistance and that expanding Medicaid would benefit Missouri's working poor.
A survey of health care CEOs conducted by industry publication Modern Healthcare and released earlier this month found that about three-quarters believed the subsidies would be upheld by the court; the vast majority said that ruling would be positive news for their organization.
(Photo: Submitted photo)
Springfield resident Jennifer Nelson, 34, said the ability to get insurance through the exchange gave her "the confidence to switch jobs." Her previous employer offered coverage with a low deductible and coinsurance maximum — what she values in a plan — and the firm she works at now doesn't offer something similar. When she switched jobs, she bought a plan similar to her previous employer's through the exchange; she receives a subsidy of $132 toward her $303.80 monthly premium.
If she wasn't eligible to receive the subsidy, Nelson said she would have chosen a plan with a higher deductible, and run the increased risk of getting hit with a medical bill that she couldn't easily cover.
"I wouldn't have chosen the plan I have now," she said.
The exchange insurance is also a temporary situation for Nelson; she's marrying her fiance in June and will go on the plan he has through his employer.
"The ACA may not be a long-term solution, but it may be what people need to move on or transition," she said.
Kaliszewski, who previously worked as a single copy supplier at the News-Leader, had gallbladder surgery earlier this month. When the Affordable Care Act was being debated in Congress, he said, he opposed it.
"Now my answer has completely changed," he said.
Enrollments up in second year of exchange
While final enrollment figures for 2015 have not been released, enrollment figures through late February already show an increase compared to last year in the number of people who purchased insurance through the federal exchange in Missouri.
In a May 2014 report, U.S. Department of Health and Human Services said 152,335 people in Missouri had selected a plan through the exchange. Through Feb. 22 of this year, 253,430 had done so. That's an approximately 60 percent increase year-over-year, and more people have likely signed up since. The government had an additional enrollment period this year — March 15 through April 30 — for individuals in states using the federal exchange.
All ZIP codes that include a portion of Greene County saw an increase as well, between 41 and 95 percent. The percentage increase for one ZIP code — 65612 — can't be calculated because HHS only lists ZIP codes that saw at least 50 enrollments. 65612 was below that mark in 2014 but saw 71 enrollments through Feb. 22 of this year.
People who did not have health coverage in 2014 and did not qualify for an exemption were required to pay a penalty when filing their taxes this spring — generally $95 per adult or 1 percent of household income, whichever is greater. That penalty is slated to increase to $325 per adult or 2 percent of income when individuals file their 2015 taxes next year.
What politicians are saying ahead of ruling
"I'll keep fighting until we fully repeal and replace this deeply flawed law with common-sense health care solutions." - Senator Roy Blunt
(Photo: Molly Riley, AP)
Sen. Roy Blunt (R-Mo.):
The News-Leader reported earlier this month that Sen. Roy Blunt had signed on to a bill that would allow the subsidies to remain in place until August 2017 if the Supreme Court rules that they are illegal. The proposal, unveiled last week, would kill other elements of the health reform law, repealing the individual and employer mandates, among other things.
"I'll keep fighting until we fully repeal and replace this deeply flawed law with common-sense health care solutions," Blunt said in a statement to the News-Leader. If the Supreme Court rules that subsides are illegal, Blunt said, "then this bill would help the millions of Americans who were once again hurt by Obamacare's false promises."
Sen. Claire McCaskill (D-Mo.): "The Republicans in Congress have abdicated the responsibility of devising a replacement if the Supreme Court strikes down the law," McCaskill previously told the News-Leader. "I'm hopeful the court makes the right call on a reform that's currently providing private insurance to hundreds of thousands of Missourians."
Rep. Billy Long (R-Springfield): "Rep. Long continues to work with his colleagues on getting back to patient-centered healthcare reforms," Long's spokesman Cole Karr previously told the News-Leader. "If the court throws out insurance subsidies to certain states, his subcommittee will have an answer to a path forward."
Enrollment in area ZIP codes
Here are the number of plans purchased through the federal exchange, Healthcare.gov, for ZIP codes that cover a portion of Greene County. ZIP codes aren't listed if there are less than 50 enrollments.
Source: U.S. Department of Health and Human Services
Full statements from Mercy, CoxHealth
Asked by the News-Leader if someone was available to speak about King v. Burwell, Mercy Springfield and CoxHealth both issued statements.
Mercy: "Regardless of how the Supreme Court rules on King v. Burwell, Mercy will continue to offer care to anyone who needs it, just as we have always done. If the Supreme Court's ruling ends federal subsidies for those purchasing health insurance on the exchanges, we anticipate that at least half of those patients would be unable to continue to afford their premiums."
“CoxHealth is here for those who need us. Despite what the Supreme Court rules on King v. Burwell, we will provide care to anyone who needs it.”COXHEALTH
CoxHealth: "CoxHealth is here for those who need us. Despite what the Supreme Court rules on King v. Burwell, we will provide care to anyone who needs it.
The Affordable Care Act (ACA) is meant to be part of the solution by limiting uncompensated care costs. A Supreme Court ruling to end federal subsidies would impact the household budgets of many Missourians who use the subsidies to offset the cost of marketplace health insurance. Many individuals would struggle to afford their premiums, resulting in more patients seeking financial assistance.
Additionally, Missouri lawmakers have not approved Medicaid expansion. A restructured Medicaid program would create a bridge to health care for the working poor and allow those without insurance access to primary care. Without Medicaid expansion or health insurance through the exchanges, many working poor will continue to rely on the emergency department, where cost of care is more expensive, as their source for primary care. Unintentionally, they take on a burden of debt that many of them struggle to add to their budget."
Exchange: In the context of the Affordable Care Act, the health insurances exchanges are government-established online marketplaces that offer various private insurance plans to individuals. States can set up their own exchange, or states can opt to have their residents purchase plans through the federal exchange, Healthcare.gov.
Premium: The fee paid for health insurance for a defined benefit period. For plans purchased through an exchange, premiums are typically set per month.
Subsidy: In the context of the exchanges, a subsidy is financial assistance from the government that covers a portion of the premium for health insurance. Eligibility is generally dependent on household income.
Deductible: The amount that must be paid out-of-pocket for healthcare expenses before an insurance company covers the remaining cost. Deductibles vary between health insurance plans.
King v. Burwell: A case before the U.S. Supreme Court regarding whether individuals in states that use the federal exchange are eligible for subsidies that help cover the cost of health insurance.