Florida residents would lose $12.3 billion in financial assistance in 2016 if the U.S. Supreme Court strikes down insurance subsidies for states that haven't established their own exchanges, according to an analysis done by Democratic staffers on the House Energy and Commerce Committee (PDF).
That's by far the largest dollar amount at stake in the King v. Burwell case that's expected be decided in June. It reflects not only that Florida has the fourth largest population in the country, but also the high level of exchange enrollments in the state during the first year of Obamacare signups. Roughly 1 million Floridians selected health plans during the first open-enrollment period, trailing only California.
At issue in the King case is part of the Patient Protection and Affordable Care Act that says tax credits are available only to Americans who enrolled through an “exchange established by the state.” The Obama administration argues that the law's clear intention was to offer subsidies and expand coverage to individuals in every state. The Internal Revenue Service issued a rule interpreting the law to mean that subsidies should be available in all states, but the plaintiffs have challenged that IRS rule.
The Democratic analysis builds on a study done by researchers at the Kaiser Family Foundation that estimates 13.4 million residents of 37 states would lose access to subsidies. It also takes into consideration future enrollment projections from the Congressional Budget Office. Energy and Commerce committee staffers determined that the total works out to $65 billion in lost exchange subsidies in 2016.
It should be noted that a separate analysis by researchers at the Urban Institute found significantly lower subsidy reductions if the Supreme Court rules in favor of the plaintiffs. They estimated that 7.3 million low- and middle-income individuals in 34 states would lose access to tax credits worth $36.1 billion in 2016.
The Democratic analysis further examined the impact by ZIP code to determine how many residents in each congressional district would potentially lose exchange subsidies. Not surprisingly, those residents are disproportionately in Republican-controlled districts. That's in large part because conservative states have been less willing to establish Obamacare exchanges.
In Florida's 27th Congressional District, for example, represented by Republican Rep. Ileana Ros-Lehtinen, it's estimated that 176,000 residents would lose $850 million in tax credits in 2016. In Michigan's 6th Congressional District, represented by Republican Energy and Commerce Chair Fred Upton, the analysis indicated that 46,000 constituents would lose access to $224 million in exchange subsidies.
The legislative district breakdown highlights the potential political peril for Republicans if the Supreme Court ultimately strikes down subsidies—millions of their constituents will be losing financial assistance.
James Capretta, a conservative healthcare analyst, highlighted this danger in a recent column, along with the need for Republicans to coalesce around an ACA replacement package. “If the Supreme Court disallows premium credits in the federal exchanges, the president and his supporters will demand immediate action by Congress to restore the credits to prevent anyone from losing their health insurance,” wrote Capretta, a visiting fellow at the American Enterprise Institute. “This will be a potent political argument. The GOP must therefore be ready with an alternative.”
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