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Subsidies Have Their Day In Court March 4

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Get out that crisp new 2015 calendar and circle the date March 4 in red.

That’s the day the U.S. Supreme Court will hear arguments in the case that we at InsuranceNewsNet often refer to as “the big one” – the case that will determine the legality of subsidies provided to consumers who purchase health insurance on the federal exchanges.

If the high court strikes down the legality of the subsidies on the federal exchange, it will mean that consumers in the 37 states that did not create their own health care marketplaces will no longer be eligible for the tax credits that help to keep the premium costs down for those with low and moderate incomes. Without these subsidies, many fear that the Affordable Care Act (ACA) will be driven into a “death spiral” where more consumers will opt to forgo coverage because it will be cheaper for them to pay the penalty compared with paying the unsubsidized cost of health insurance. Having fewer people in the risk pool would unravel ACA.

The federal subsidy issue affects 4.7 million people who have purchased coverage on the federal exchange, HealthCare​.gov.

The case, King v. Burwell, hinges on four words in the language of the ACA: “established by a state.” ACA opponents contend that the subsidies were intended to be distributed only to those who bought insurance on a state-run exchange, and not on HealthCare​.gov. ACA supporters of the law say the law was always intended to provide the subsidies to people who bought coverage on the federal exchanges as well.

Court observers note that the Supreme Court is expecting the March 4 argument session to be a lengthy one. The Wall Street Journal reports that the court will only hear arguments on King v. Burwell on that date. Usually, the court schedules two cases on argument days.

A decision in the case won’t come down until June. Meanwhile, we are more than one month in to the second ACA open enrollment season and consumers continue to sign up for coverage.

 

 

 

 

 

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Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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