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Get out your checkbooks.
The 6.4 million Obamacare customers who are risk of losing financial aid from a pending Supreme Court case would end up paying an average of $3,300 more annually for their health insurance if subsidies are taken away, a new analysis finds. (Tweet This)
That kind of sticker shock in turn could lead to many of those HealthCare.gov enrollees dropping their coverage instead of trying to dig deeper into their wallets, the Avalere Health report released Tuesday says.
Customers in Alaska would face the biggest hit, with premiums an average of $6,400 higher for the year. Those in Arizona would see the lowest average premium increase, about $1,900 annually, according to Avalere.
People in the 32 other states at risk from the case, who all rely on the federal Obamacare exchange for enrollment services, would see average premium increases of anywhere from $5,100 annually in Wyoming to $2,500 in several other states.
The dollar amounts are equal to the annual value of the tax credits that most Obamacare customers receive to help pay for their coverage—an average of $272 per month. If the subsidies are taken away because of the case known as King v. Burwell—which could be decided as early as Thursday—those customers would be responsible for paying the full amount of the premium.
"Exchange enrollees are currently subsidized at a very high rate," said Elizabeth Carpenter, director at Avalere. "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, " Carpenter said.
The plaintiffs in King v. Burwell argue that those tax credits, which are available to people with low and moderate incomes, can only be given to customers of one of the 17 Obamacare insurance marketplaces set up by an individual state or the District of Columbia. They point to language in the Affordable Care Act which only explicitly mentioned such subsidies for customers of state-established market, not an exchange set up by the federal government.
Michael Cannon, the Cato Institute health-care studies director who helped craft the argument, has said that the federal government is illegally taxing Americans to subsidize HealthCare.gov customers who get the subsidies.
Analysts have predicted that up to 8 million people would lose their insurance if the subsidies are ended in HealthCare.gov states. That total would include the majority of currently subsidized customers, about 6.4 million people, as well as many others who would be faced with much higher insurance premiums after insurers raised rates to make up for the lost customers.
Some states have allowed insurers to file two sets of proposed rates for 2016: for a ruling that leaves HealthCare.gov subsidies intact and for a ruling against them. Some other states have indicated they may allow insurers to file new proposed rates for next year if the plaintiffs win.
Avalere's analysis found that about 2.3 million customers who would lose subsidies were uninsured in 2013, while 2 million or so others had been covered by employer-based insurance.
Three HealthCare.gov states, Pennsylvania, Delaware and Arkansas, have taken action to protect their residents' subsidies by proposing to establish their own Obamacare exchanges.
On Monday, the federal government gave conditional approval to all three states' plans. The Pennsylvania and Delaware exchanges would be able to enroll people with subsidies for 2016, while Arkansas would be ready for 2017 plans.
Avalere's analysis found that about 349,000 people in Pennsylvania would end up owing an average of $2,700 in additional annual premiums if the plaintiffs win and if the state remained on HealthCare.gov. In Delaware, 19,000 Obamacare customers would owe an average of $3,200 in premiums annually, and in Arkansas, 48,000 people would owe an average of $3,400 more per year.
But other states are disinclined or not able at the moment to set up their own exchange. Notable among them are two large states, Florida and Texas, which together have more than 2.1 million subsidized Obamacare customers. Such enrollees in Texas would pay an average of $3,000 more per year if the subsidies are taken away, and Florida's customers would owe $3,500 more on average.
Because of strong opposition to Obamacare among Republican political leaders of Florida and Texas, and opposition in state governments elsewhere, some Republicans in Congress have on their own proposed continuing the subsidies for HealthCare.gov states, at least temporarily, to avoid having the GOP blamed for the loss of health coverage for millions of people.
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"If the court rules against the subsidies, Congress, the [Obama] administration and the states will face immense pressure to take action," said Caroline Pearson, senior vice president at Avalere. "While some stakeholders may advocate for a short-term fix, others may see the ruling as an opportunity to reform the Affordable Care Act."
In the following chart, FFE refers to HealthCare.gov.