Premiums Could Increase $3300 With King v. Burwell Ruling for the Plaintiffs

If the Supreme Court rules that individuals in states on the Affordable Care Act (ACA)’s federal marketplace are ineligible for subsidies, the annual consumer premium contribution could increase $3300 in 2015, according to an analysis from Avalere Health.

However, the impact of the Supreme Court ruling will vary by state. Alaska and Wyoming may be among the states with the fewest number of people affected (17,000 in each state), but they stand to see the largest premium contribution increases: $6400 in Alaska and $5100 in Wyoming. In comparison, the average yearly premium increase for Arizona’s 127,000 affected consumers would be roughly $1600.

“Exchange enrollees are currently subsidized at a very high rate,” Elizabeth Carpenter, director at Avalere, said in a statement. “As a result, many individuals would likely find exchange premiums unaffordable without the tax credits provided under the law. If the Court rules for King, many current enrollees are expected to drop coverage.”

Not only will the loss of subsidies will undoubtedly result in many enrollees dropping coverage and impacting the risk pool, but many consumers will likely be unable to return to their previous source of coverage, according to Avalere’s analysis of survey results from the RAND Corporation.

In 2013, 2 million of consumers who will be affected by the Court’s ruling were in employer-sponsored insurance, 2.3 million were uninsured, and 910,000 were in non-group coverage. Those 3 groups account for 83% of the total marketplace enrollees.

The individuals who were uninsured in 2013 are unlikely to continue purchasing coverage without subsidies, and many small employers may have stopped offering coverage after the exchanges were launched, leaving those who were previously insured by an employer without the option to go back to their previous coverage.

“We can’t assume that consumers will simply be able to return to previous sources of coverage if subsidies are struck down,” said Dan Mendelson, chief executive officer at Avalere. “The ACA has fundamentally shifted the insurance market, and the elimination of subsidies would mean the vast majority of those adversely affected will struggle to maintain access to care.”