June 25, 2015

Supreme Court Rules in Favor of Subsidies, Avoids “Death Spiral”

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In a 6-3 decision, the U.S. Supreme Court today sided with the government and ruled that federal subsidies under the Patient Protection and Affordable Care Act (PPACA) are legal.

No longer at risk of losing insurance are the approximately 6.4 million people who reportedly purchased insurance through HealthCare.gov. At the heart of the issue was whether the federal government could subsidize insurance to people in states that had not established their own health insurance exchanges. The issue was whether federal tax subsidies would be available to people who purchased health insurance through HealthCare.gov or only those who purchased through state insurance exchanges.

“Applying tax credits to the states with federal exchanges is a fundamental part of the PPACA,” said Andrew Wachler, managing partner at Wachler & Associates, in a written statement to RACmonitor. “Failure to apply these tax credits to federal exchanges could have essentially gutted the goals of the PPACA, including reducing the amount of uninsured individuals.”

The court stated in the opinion that “here, the statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any state with a Federal Exchange, and likely create the very “death spirals” that Congress designed the Act to avoid.” 

Wachler said the “death spirals” refer to a specific phenomenon emerging before the PPACA was implemented – the increasing cost of health insurance and the decreasing number of individuals with health insurance.

“The Supreme Court’s analysis and conclusion recognize the fundamental importance of reducing the amount of uninsured individuals to the goals of the Act and logically interprets the intent of Congress to apply tax credits to federal exchanges,” Wachler said. “With the Supreme Court’s decision, the PPACA will continue to have the opportunity to fulfill its intended goals, including increasing the number of people covered by health insurance.” 

Rural hospitals in particular would have felt the impact of the decision hardest had the court struck down the subsidies.

The National Rural Health Association (NRHA) said that it would take some time before the association could fully comprehend what today’s decision will mean for rural health.

“But we do know rural Americans tend to be older, sicker, and poorer than their urban counterparts,” the NRHA said in a statement posted on its website. “So they are more likely to need healthcare and less likely to have employer-provided insurance to help pay for that care.”

The association noted that it did not take a position on the PPACA but added that it would continue “to fight to ensure access to healthcare in rural America.”

“Because so many rural Americans live in states with exchanges and are in the income bracket eligible for subsidies, NRHA is pleased these vulnerable rural Americans can continue to receive the necessary subsidies to afford health insurance,” the statement read.

“The Supreme Court got it right,” Wachler concluded.

READ THE OPINION:

http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf

Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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