Court Rulings Leave Doubts About Obamacare Subsidies

Thursday, 24 Jul 2014 04:42 PM

By Sandy Fitzgerald

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Conflicting court rulings about the subsidies used to help people living in states that rely on the federal insurance exchanges pay for their healthcare coverage has recipients across the nation worried that they'll no longer be able to afford their new Obamacare plans.

There have been two rulings this past week alone, reports The New York Times. A federal appeals court panel in Washington, D.C., found on Tuesday that people living in states that rely on the federal insurance exchange can't use subsidies to pay for their healthcare plans. 

But a second, less-publicized ruling in an appeals court in Virginia found the opposite in a separate case, leaving much unresolved as the cases are appealed further.

Gloria Spottswood, 56, who works in food service and uses a CareFirst Blue Cross Blue Shield plan to cover herself and her 17-year-old son, told The Times she barely manages to pay its $482 monthly premium, and if she loses her $181 subsidy, she will not be able to afford insurance.

The cases still aren't resolved, and will likely remain in the appeals process for months, reports The Times, and yet more cases concerning the federal exchanges are in the works in Indiana and Oklahoma.

But it's the Washington case, Halbig vs. Burwell, that has raised the likelihood that many of the 4.5 million people covered for subsidized insurance could lose their new coverage when they find it's no longer affordable.

About 87 percent of the people who got insurance in the 36 states that rely on the federal insurance exchange qualified for subsidies to pay much of the costs of their monthly premiums, according to a Department of Health and Human Services report, with an average monthly subsidy amount of $264 monthly.

The loss of the subsidies may also help Americans be exempted from the Obamacare requirement that they obtain coverage. People are exempted if the cost for coverage totals more than 8 percent of their household income, and without subsidies, the insurance premium costs would be past that threshold.

Businesses could benefit from the ruling, however, because they would no longer be subject to penalties if they do not offer insurance to employees, as under Obamacare, certain employers are penalized if workers get subsidies to help them buy insurance through a healthcare exchange.

Many businesses, too, may be hoping the plaintiffs prevail because they would no longer face penalties if they failed to offer health insurance to employees. Under the health care law, penalties are imposed on certain employers once any of their workers receive federal subsidies to buy insurance through an exchange.

Nashville resident Robert Benson said that it would be devastating for him and his wife to lose the $600 monthly subsidy they receive for their insurance.

"The subsidy makes it possible for me to actually have insurance and healthcare,” Benson, 62, told The Times, "and I’m perfectly happy to pay my co-pays."

Tennessee's Republican-led legislature opposes establishing a state exchange, however, and Benson is not faithful that will change if subsidies are outlawed through the federal exchanges.

"I have no faith in the Republican-led legislature in the state of Tennessee to be concerned about anyone’s health care except their own," he said. "If the courts let this happen, Tennessee will not set up a state exchange, and I personally and most of my neighbors may have to stop going to the doctor."

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