Not only would subsidies disappear for millions in 34 states, but premium prices would skyrocket as customers dropped coverage, leaving many nonsubsidized people unable to afford the plans, Urban Institute senior fellow Linda Blumberg said in prepared remarks to the Senate Committee on Small Business and Entrepreneurship. Her statement was provided to CNBC.
Blumberg said that exodus of customers also could hurt small businesses in the states that would be affected by such a ruling by putting them at a competitive disadvantage for hiring with larger firms that offer job-based health coverage, as well as with small firms in states not covered by the decision.
Blumberg's prepared testimony comes about two months before the Supreme Court is expected to rule in the King v. Burwell case.
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Plaintiffs claim that the Affordable Care Act does not allow tax credits to be given to customers of a federally run Obamacare exchange such as HealthCare.gov to help them pay for their insurance premiums. Citing explicit language in the ACA, they argue that only an exchange established by a state can sell subsidized coverage.
The claim, which the Obama administration strongly disputes, is significant because nearly 90 percent of people who buy coverage through HealthCare.gov or one of the 14 exchanges run by a state or the District of Columbia get a subsidy to help pay their monthly premiums.
The subsidies, available to people who earn between 100 and 400 percent of the poverty level, can greatly reduce the cost of insurance. A subset of low-income customers also get financial help paying their out-of-pocket health costs.
Earlier analysis by the Urban Institute found that an estimated 8.2 million people in HealthCare.gov states would become uninsured if the Supreme Court rules the subsidies are illegal.
Blumberg, in her testimony, said that 4.1 million people in families with a small business employees would become uninsured as a result of a negative court ruling.
About 840,000 others in these families would become uninsured because their premiums would jump an average of 55 percent, she said.
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And 1.6 million people in families with a self-employed person would become uninsured if their subsidies went away, Blumberg said. In addition, another 360,000 people in self-employed families would drop coverage as a result of rising premiums.
The tallies cannot be added together because of overlap between small business and self-employed families.
But, Blumberg told CNBC, "I'm presuming the overlap is pretty small."
And she noted that the 4.1 million subsidized people in small-business families alone represent half of the national tally that would lose coverage as a result of an adverse Supreme Court ruling.