- The Washington Times - Thursday, July 17, 2014

A Washington-based consultancy estimated Thursday that 5 million Americans would see their health premiums spike if the courts rule in favor of a lawsuit that seeks to cut off Obamacare subsidies to about two-thirds of the states.

Consumers who purchased health plans on an insurance exchange run by the federal government would see an average premium increase of 76 percent if the plaintiffs prevail over the Obama administration, according to Avalere Health.

The suit, Halbig v. Burwell, argues the Affordable Care Act explicitly reserved subsidies for people who purchased a plan on an exchange “established by the State.” In real terms, that would mean the 15 exchanges set up and run by 14 states and the District.

The plaintiffs say Congress set it up this way to compel states to take responsibility for running their exchanges. But in 2012, the IRS unlawfully extended tax credits to all the exchanges, they argue.

The Obama administration and its allies say Congress always intended to treat the states equally. The law calls on the federal government to set up an exchange for states that refused to, they argued.

A three-judge panel from the U.S. Court of Appeals for the D.C. Circuit is mulling the case and may issue its opinion any day now. No matter the outcome, the losing side is certain to appeal, potentially cuing up yet another Obamacare battle before the Supreme Court.

The stakes are high, because cutting off financial assistance to more than 30 states would blow a hole in Obamacare’s popularity.

Avalere says that in the 36 states served by the federal exchange, 87 percent of Obamacare consumers received subsidies, with a high of 94 percent in Mississippi.

The subsidies reduced monthly premiums by an average of 76 percent across the states, by 95 percent in Mississippi and by 80 percent in Florida, Alaska, Missouri and Georgia.

“States, Congress, and the Administration will be under immense pressure to act to prevent large premium increases if the courts ultimately rule that individuals in federal exchanges are not eligible for tax credits,” said Elizabeth Carpenter, a director at Avalere Health. “No doubt the politics surrounding the Affordable Care Act will make any action difficult and could potentially make insurance unaffordable for millions of Americans who are already enrolled today.”

For its study, Avalere assumed that consumers do not switch plans following the ruling, even though the loss of subsidies would be considered a qualifying event that allows them to select a cheaper plan.

Researchers included Idaho and New Mexico in their study, even though each state set up its own exchange, because because both relied on the federal exchange during Obamacare’s first year.

• Tom Howell Jr. can be reached at thowell@washingtontimes.com.

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