Tim Liszewski didn’t have health insurance for a decade before signing up for a subsidized policy through the Affordable Care Act’s federal marketplace last year.
He likely will be uninsured again if the U.S. Supreme Court rules federal subsidies are illegal in states such as South Carolina that didn’t create their own insurance exchanges. The court hears arguments about that issue in the King v. Burwell case on Wednesday, with a decision likely coming in June.
The case against subsidies is simple – based on a few words in the massive legislation that set up the Affordable Care Act – and complicated enough to undermine the entire health care law. In the short term, a ruling would affect only one aspect of the law – the subsidies given to people who pay for federal marketplace policies in 34 states without their own exchanges.
That’s a lot of people, maybe as many as 8 million.
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In South Carolina, nearly 154,000 people selected policies in the federal marketplace enrollment period that ended Feb. 15. About 90 percent had income low enough to qualify for a subsidy.
Taking into account a 20 percent dropout rate,
about 115,000 people in South Carolina could lose subsidies with the court ruling. Losing the subsidy would translate into making the insurance out of reach for many of them.
“I couldn’t afford insurance,” said Liszewski, 55. “I’d have to cancel it.”
Liszewski not only is a consumer of the insurance, he spent the 2013-14 enrollment period helping others sign up as a navigator with the S.C. Progressive Network in Columbia. When finished with that role, he left the state to work on fall political campaigns. He’s now back in South Carolina, looking for a job and contemplating a long hike on the Appalachian Trail.
Having health insurance has reduced the stress caused when he came down with nagging ailments such as bad colds. “I now have a primary care physician, and that’s cool,” he said.
Liszewski hasn’t had any serious health problems or major medical expenses since getting the subsidized insurance. For him, it’s been more about peace of mind. Daniel Martin of Lake Wylie has severe back problems and needed spinal surgery soon after getting his insurance on the federal marketplace.
“If I didn’t have the subsidy, I’d be without insurance because I couldn’t pay for it,” Martin said.
Out of work because of the surgery, he had enough saved to pay the $76 per month for his subsidized insurance. He would have had a hard time affording the full rate of $700-plus per month without the subsidy. And he certainly couldn’t have afforded the surgery. “I probably would have had to sell my house” to pay for the back surgery without insurance, he said.
Martin turns 65 this summer and will be on Medicare soon, so the Supreme Court ruling won’t mean he will lose insurance coverage. “If they made it retroactive, that would really hurt,” he said.
Going after the subsidies already paid to insurance companies through advanced tax credits seems unlikely, though much about what would happen remains up in the air. The Obama administration has said it would be up to Congress to change the law to make the subsidies available in the 34 states that use the federal exchange. Sylvia Burwell, secretary of the Department of Health and Human Services, put pressure on lawmakers to do that in a statement this week.
“Millions of people would lose their health insurance subsidies and therefore would no longer be able to afford health insurance,” Burwell said. “Second, without tax subsidies, healthy individuals would be far less likely to purchase health insurance, leaving a disproportionate number of sick individuals in the individual insurance market, which would raise the costs for everyone else.”
Insurance companies who jumped into the Affordable Care Act marketplace face planning nightmares. BlueCross Blue Shield of SC is “doing contingency modeling in various scenarios,” according to spokeswoman Patti Embry-Tautenhan. But even some of the scenarios are difficult to predict at this point.
With the prospect of millions of people dropping insurance halfway through 2015, the American Academy of Actuaries has asked Burwell to allow insurance companies to submit two sets of rates for 2016 to regulators – one for if the subsidies are killed, another for if they aren’t.
Most people aren’t going to have sympathy for insurance companies, but the uncertainty will hit people even harder.
Andrea Fleming of Columbia recently started her own clinical supervision and training company, and she is switching to a federal marketplace insurance policy starting March 1. She found the insurance was the right fit for somebody whose income might take a hit while a new business grows. While income is low, the subsidies help pay for insurance. As income grows, the subsidies would fade away.
“Those who are self-employed can keep their peace of mind,” Fleming said.
But before her insurance coverage even begins, Fleming has to worry about not having coverage late this year if the Supreme Court rules the subsidies illegal.
“I would do everything I could to make sure that didn’t happen,” she said. “I’ve always valued my health.”